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UpdatesOct 13, 2020

Franchisors and document production

In September 2017, the Fair Work Act 2009 (Cth) (FW Act) was amended to allow holding companies and franchisors to be held liable for breaches of the law engaged in by their subsidiaries and franchisees, where they (or one of their officers) knew, or should reasonably have known, about the contravention.

By Kelly Godfrey

In September 2017, the Fair Work Act 2009 (Cth) (FW Act) was amended to allow holding companies and franchisors to be held liable for breaches of the law engaged in by their subsidiaries and franchisees, where they (or one of their officers) knew, or should reasonably have known, about the contravention. The purpose was to try to prevent underpayment of vulnerable workers.

In 85 Degrees Coffee Australia Pty Ltd v Fair Work Inspector Rodwell (2020), the Fair Work Ombudsman (FWO) had issued a notice to 85 Degrees Coffee Australia Pty Ltd (85 Degrees) to gain access to documentation in its investigation of underpayment and non-compliance claims.

85 Degrees argued that it was not required to produce documentation to the FWO, as the documentation was created prior to the 2017 amendments and did not relate to a contravention period. However, the Federal Court held that the FWO could obtain access to those records as it was needed for the FWO to decide whether or not proceedings would be commenced. The Court also noted that there were no restrictions on the Court having regard to such documents in determining the case.

The Court said “the mere fact that documents and records do not relate to, or cover, the contravention periods does not mean that the request was not made for a compliance purpose”.

The FWO can require production of documents held by a holding company or a franchisor, even those created prior to the September 2017 amendments. However, the FWO must ensure that any notice to produce documents is clear and relevant to the purpose of the notice.

The Court held in this case that some categories in the FWO’s notice were “impermissibly broad because it require[d] the production of documents or records of ‘all or any audits or reviews’ without any apparent connection to the compliance purpose”. As such, if you receive a Notice to Produce from the FWO, you should obtain legal advice to check the ambit of the documents being sought.

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