One Not-so-McHappy Franchisee

A McDonald’s Queensland franchisee has been ordered by the Federal Court to pay penalties totalling $82,000 for contraventions of the Fair Work Act 2009 (Cth).

The multisite operator of 6 restaurants refused to let an employee use the toilet and drink water outside of 10-minute scheduled breaks. The franchisee also threatened young staff on Facebook when they complained. Justice John Logan categorised this “sinister” threat as having “a quality of cruelty”.

The penalties the franchisee was ordered to pay consisted of $72,000 to the Retail and Fast Food Workers Union who initiated the legal proceedings and $10,000 to the former employee.

There are currently talks about the Retail and Fast Food Workers Union initiating a broader class action by up to 250,000 employees against McDonald’s regarding similar issues.

This judgment acts as a timely reminder that all employers must ensure that they strictly comply with all workplace laws. Not only do employers face the possibility of claims by employees, but the Fair Work Ombudsman can also undertake random inspections and audits of businesses.

Franchisors in particular should pay careful attention to whether their franchisees are complying with workplace laws. The Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 (Cth) holds franchisors and holding companies responsible for underpayments and workplace law breaches by their franchisees or subsidiaries if the franchisor or holding company:

  1. have a significant degree of influence or control over the affairs of their franchisees;

  2. knew, or reasonably should have known, about the contravention; and

  3. failed to take reasonable steps to prevent it.

This means that if a franchisee underpays an employee, fails to keep proper employment records or contravenes another workplace law (for example, discrimination or bullying) then the employee can potentially make a claim against the franchisor. The Fair Work Ombudsman can also institute proceedings against the franchisor. In the eyes of the law the franchisor may be seen as the party at fault, responsible and liable to pay compensation.

The team at Salerno Law are experienced in acting for:

  1. franchisors and franchisees in all aspects of franchising law; and

  2. employers and employees in all aspects of employment law.

Get in contact if you need our assistance.

By Luke McKavanagh


DISCLAIMER: This article is only meant to give you general information and should not be relied on as legal advice. Speak to one of our lawyers for more information.


Salerno Law is managed by Emma Salerno, Managing Partner and CEO, who has a wealth of experience from operating her own businesses across Australia as well as a range of in-house and commercial experience both in Australia and overseas.