Swim school franchise network Swimland – which underpaid its staff across a six-year period – is now required to implement extensive measures to ensure compliance with workplace laws, after signing up to an Enforceable Undertaking (EU) with the Fair Work Ombudsman.
Franchisor Paul Sadler Swimland Pty Ltd and 12 franchisees entered into an EU following the disclosure of widespread underpayments throughout its network, with 1308 workers underpaid a combined $1,425,477 between July 2010 and March 2016.
The EU imposes significant obligations on the franchisor and franchisees, including requiring third party audits of the swim schools across Melbourne and Bendigo during the next two years to ensure ongoing compliance.
The underpayments related to breaches of both the Fitness Industry Award 2010 and individual enterprise agreements signed by each of the 12 franchisees in 2013.
The underpayments arose from failing to correctly progress employees according to their experience, implement junior workers’ age increments; and apply the Award’s transitional wage provisions. Most workers were swim instructors or administrative staff, with a large proportion being young workers.
In recognition of its contrition for the underpayments, under the EU the franchisor has also undertaken to make total donations of $50,000 to two charities, with The Smith Family and Western Chances to receive $25,000 each.
Paul Sadler Swimland COO Mark Cecil acknowledged the mistake and apologised to all staff impacted.
“We always want to do what’s right, but acknowledge that on this occasion we could have done better, and we accept the determination of the Fair Work Ombudsman,” Cecil says.
“We’ve taken this matter very seriously and have worked closely with the FWO over the past twelve months. We appreciate their guidance and recognise their decision is a fair one.”
Wake up call
Acting Fair Work Ombudsman Kristen Hannah says that while the underpayments were not deliberate, this has been a significant, expensive wake-up call for Swimland and serves as a clear reminder to those in franchise networks that all are responsible for ensuring workers entitlements’ are met.
“Breaching the terms of an EU is grounds for litigation and the community can be assured that we will be monitoring Swimland closely to ensure it complies with the terms of the undertakings,” she says.
Law changes passed last year and in effect from 27 October 2017 have since expanded the circumstances in which franchisors can be held responsible if their franchisees don’t follow workplace laws.
Hannah says an EU was an appropriate outcome in this matter given the full cooperation from the franchisor and franchisees and the rectification of back-payments.
Ms Hannah says employers should be aware that the Fair Work Ombudsman places a high priority on ensuring young workers receive their full entitlements because they can be vulnerable if they are not fully aware of workplace rights or reluctant to complain.
The Fair Work Ombudsman’s online tools and resources can assist employers to determine their applicable Award, as well as classification and pay rates, allowances, overtime and penalty rates.