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Workplace safety legislation and franchisors

Workplace safety legislation and franchisors

Recent changes to workplace safety legislation in most states and territories have led some

franchisors to question whether the legislation affects them given it is their understanding that they do not directly “employ” persons working in a franchised business. Nothing could be further from the truth.

The wording of the Work Health and Safety Act 2011 (the WHS Act) (applicable in all states and territories except Victoria and Western Australia1) goes beyond a traditional employer—employee

relationship and captures any business that directs or otherwise controls the manner in which work may be conducted. The Act achieves this by imposing duties on “persons with the conduct of the business or undertaking”, commonly referred to as a “PCBU”.

The general duty.

The WHS Act imposes a duty on PCBUs to ensure the health and safety of individuals (workers or other persons), so far as reasonably practicable.

The duty cannot be delegated and—where more than one organisation is involved—all organisations involved will concurrently have that duty and must fulfil it to the extent they have control over the

particular activity, giving rise to a risk or hazard.

In practical terms, this means an organisation with “an undertaking” or business will have a duty to ensure the health and safety of persons who are affected by its operations—whether as employees, contractors, subcontractors or members of the public. No more is required than what is “reasonably practicable” for that organisation to do.

“Reasonably practicable”

What is “reasonably practicable” is determined, objectively, with regard to the particular circumstances of the business or undertaking and the extent to which that business can control matters giving rise to the risk or hazard. Factors taken into account in assessing reasonable practicability include:

  • the knowledge of the hazard or risk
  • the likelihood of a hazard of risk occurring
  • the degree of harm that may result
  • whether any controls or mitigation strategies are known, and
  • the costs associated with seeking to address any potential hazard or risk.


“Officers” of a PCBU (i.e. directors or individuals who make or participate in decision making that affects a substantial component of the PCBU) also have an obligation to exercise due diligence to ensure the PCBU complies with its obligations.

“Due diligence” includes ensuring appropriate resources are available as well as remaining informed, making enquiries and implementing action as necessary with respect to potential health and safety risks.

What this means for franchisors

Courts have made clear that franchisors and franchisees may be PCBUs. The commercial arrangements between a franchisor and its franchisees do not, in and of themselves, absolve a franchisor of its WHS obligations. Franchisors and franchisees are concurrent duty holders and must each do what is reasonably practicable in their circumstances. As a minimum, franchisors should:

• ensure appropriate mechanisms are being implemented by franchisees (the extent of the

involvement required by the franchisor will depend on what is reasonably practicable in the

circumstances), and

• consult, co-operate and co-ordinate activities with the franchisee/s when determining how the

franchise arrangements are to operate.

While putting documentation in place, setting out policies, procedures and checklists is a good starting

point, franchisors should also demonstrate the continued use, review and improvement of these

systems as required.


Sparke Helmore Lawyers

Sparke Helmore Lawyers has a client first approach to everything we do.  We are a firm with more than 800 people working from nine offices across Australia, serving the needs of the insurance, government, financial services, technology, mining, construction and property sectors. Our expertise spans corporate and commercial to construction, workplace to insurance, IP to IPOs, mining to manufacturing, and property to procurement.

About Carlie

Carlie is the first person many organisations call when a workplace incident occurs. Carlie is onsite immediately, giving clear advice about what steps to take in the first hours and subsequent days. Sometimes these incidents lead to coronial inquests or companies and their executives being prosecuted; all matters that Carlie assists with. Carlie has been involved in many high profile coronial inquests and SafeWork prosecutions. Many of Carlie’s clients work 24 hours, seven days a week and her clients are confident that she is always just a phone call away regardless of the time of day, or night.

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