New regulations have increased liability for franchisors in some circumstances. While that might be scary, feigning ignorance of serious poor payroll practices is not the answer.

And yes, poor payroll practices are rife – even with franchisees who want to do the right thing. The new legislation flags that it’s time to make a change.

But apart from this, franchisors need to address payroll issues because it’s the right thing to do, it makes commercial sense, and it helps franchisees who can often be overwhelmed or confused by processes and systems – even those put in place to help them.

Let’s take a look from this angle, ending up with three action suggestions that might surprise you!

Do what’s right

The other day, we were asked to confirm that we meet a client’s standards regarding supply chain, including compliance with labour laws. It’s a sign that ‘doing the right thing’ is no longer a nice idea for a handful of socially aware business owners.

How about you? What does ‘doing the right thing’ mean?

In your business it might include ‘treating people justly’, ‘paying them their entitlements’, ‘helping them do their best in this job’. Looking further afield you might be concerned about whether fair pay is received by workers in factories that supply your uniforms and coffee farmers who supply the beans you roast.

So far, so warm and fuzzy, but how about in practice?

Actively caring about how people are treated throughout your business is surely at the core of ethical business practice. And actively caring means being as interested in the wages and conditions of employees in Camberwell as you are coffee growers in Colombia.

Scrimping on wages isn’t commercial

Surely commercial sense is in favour of the business owner who underpays her employee (let’s call her Anjeli) so they can stay in business? Especially if Anjeli says she is happy with the money.

Or Benny, who runs his roster in such a way that most employees (who are casual) remain under the Super threshold.

Actually, no. There’s often more commercial sense in paying decent wages to a mainly part time crew. Here are two reasons:

• Decent pay and conditions encourage staff to stay in a job. This reduces staff turnover – and saves time and money.

• Rosters and pay runs are a nightmare when you have a lot of staff on short shifts. The time spent on this can be better spent.

With good payroll systems, the business owner can work on how to better use their people resources. And in our experience that helps customer service, sales and cost management. Now that’s commercial sense!

Payroll can feel overwhelming

Pay day can be stressful for franchisees. They battle with calculating pay, age-related wage adjustments and the bank processing side of things. Then there’s the question of how to lodge Super and PAYG.

And regrettably, many franchisees are handed a harder task than necessary when it comes to paying people.

It happens when you (the franchisor) provide inadequate guidance on the framework and language of paying people. And when people don’t know the words to use it’s hard to understand the FWO website or to ask questions.

On top of this, your rostering systems may not help. Especially if they are cumbersome, or inadequate for payroll compliance. I know you think the one you chose is straightforward, but it may not be so for your franchisees.

Sounds like a world of pain? Yes, which is why many cope by cutting corners and run the risk of breaking the law.

What should franchisors be doing

Here are three things you can do to start fixing the payroll issues in your franchise:

1. Set the ethical compass. By this I mean thrash out what you see as the right way to run the people side of the business. You could even contemplate the life of a minimum wage worker or migrant with no reliable income. What if your franchise stood out for good reasons?

2. Take a look at how things work in real life. Run a study of pay and conditions in your franchise and relate this to revenue and profit. For instance, a sample of stores at the same sales volume and examine their staffing, pay, management and training practices. You will surely learn something.

3. Provide access to effective help. Help your franchisees learn the language of payroll and make it easy for them to implement the payroll software that suits them. Prioritise effective solutions on the ground over the dream of uniformity.