Andrew Douglas: Franchising, our main topic. How about that?

Laura Pavia: Yes.

Andrew Douglas: You’re going, well, you’ve said about three words.

Laura Pavia: Yeah, I’m getting there.

Andrew Douglas: You’re surviving, aren’t you? Tom, can you just see what you’ve done to Laura? Just Tom, if you’re out there, Laura, you’re killing her.

Laura Pavia: Wait for tomorrow, Tom, I’m joking.

Andrew Douglas: So there’s a reason I put a franchising case in, and that is one of the difficulties with the franchising law has been is that both the franchisor and franchisee both have liabilities around wages. And it’s common for the franchisor to go out and set the enterprise agreement. But as you all know from the 7-Eleven case, that an underpayment by a franchisee at wages set by a franchisor, if it’s an underpayment, will leave the franchisor and franchisee liable. That’s a lot of franchise talk, isn’t it?

Laura Pavia: Yes.

Andrew Douglas: The franchisor is the big body.

Laura Pavia: Yeah.

Andrew Douglas: The franchisee is the person who buys a little business but has to comply with the rules.

Laura Pavia: And this matter wasn’t about the underpayment of wages, was it?

Andrew Douglas: No, no, this was about an enterprise agreement. And what they did is, in respect of penalties, is they tried to fix the penalties as a set rate rather than a percentage of the underlying base rate. Which meant as the base rate went up, the penalties probably didn’t meet the boot test.

Laura Pavia: Right, right.

Andrew Douglas: But what came out in the commission is a whole lot of things. And it’s interesting and for everybody, it’s a really important thing, in the fast food industry, you have a high turnover of staff, commonly young, of all different levels. And so at no stage was the Fair Work Commission satisfied that there was an appropriate group of people voting on this that understood the complexity of what the franchisor was trying to do.

Laura Pavia: Right.

Andrew Douglas: Nor were they satisfied it past the boot test. And for the franchisors out there, and we act for both franchisors and franchisees, there needs to be enormous clarity around what you’re doing. But if you keep trying to chip away at the edges to keep the cost down, the Fair Work Commission is focused on gig style or uncertain employment and it will never let it through. And undertakings were given, everything was done here and the Fair Work Commission said we’re just not satisfied we’re protecting young employees.

So I thought a really interesting case, it’s industry based. If I said there were two industries where the Fair Work Commission were going to crack down, it is definitely franchising and gig economy. So it’s food delivery services and it’s that, why don’t we go on to now have a look at the case study. All right, that’s over to you. This is where you get chance to talk.

Laura Pavia: All right, so Basil, Basil again.

Andrew Douglas: Yeah, no, no, that’s why Basil, because I like the name. So ever since Basil Fawlty, I’ve liked the name.

Laura Pavia: Alrighty, so Basil was a managing director of Lift It High Logistics and Warehousing Proprietary Limited, a company dealing with aluminium sheet and plating. He was a halfway house for international distribution for this aluminium. The central warehouse at the Greensboro site was ageing. The racking had been recently refurbished, but the line marking and bollards were not as well maintained.

There had been several near misses involving forklifts in 2024. Basil was investing in a full warehouse overhaul at each site where the packing, picking and storage would be fully automated, eliminating the need for forklifts. But his financing was delayed and the increasingly protect.

Andrew Douglas: Protection global economy.

Laura Pavia: Especially the Trumpian influence, made money harder to borrow for business heavily exposed to the US market.

His safety manager had conducted a risk review of traffic management and made strong recommendations for physical barriers where forklifts operated, along with the re marking, securing the bollards and training. Basil had authorised the painting and line marking along with new signage, but held off on capital works pending the new automated fit out. He ensured that a rigorous training regime was implemented for everyone within the warehouses and had competency evaluations undertaken.

On the 2nd of February, 2025, a truck driver from Toll arrived at the seventh bay to collect a load. He didn’t see a supervisor to sign his delivery chit.

Andrew Douglas: You said it again. Keep that in.

Laura Pavia: And walked onto the floor where he was struck by a forklift and killed. The forklift had flashing lights and a siren. Both were operating, but the driver was wearing ear protection and sunglasses and must have missed it. All right.

Andrew Douglas: All right, here, what is the first question for us?

Laura Pavia: Could Lift It High be liable under safety law? And if so, what for?

Andrew Douglas: Okay, so here’s the thing. We’ve talked about the case where you have knowledge, here is clear knowledge as the nature of risk. You’ve got a very large warehouse moving very heavy things with forklifts. And what do we know? Well, we know that safety is attribution. So the leader of it, which is Basil, knew that he didn’t have sufficient resource and tried to skimp to get through until he could actually automate the place. So the organisation clearly reasonably practicability what they know, knew what the hazards were, knew what the risk was.

It was very high, knew what the appropriate controls were, and chose to use lesser controls because they didn’t want to allocate the resources. And therefore it was an unsafe workplace, particularly because the training was only directed at people who are employees. And there was no restrictions on people coming from outside. So it is unquestionably a breach of a primary duty, unsafe workplace. It is unquestionably a breach of a system of work which exposes basil personally, okay?

Laura Pavia: Okay.

Andrew Douglas: And remember, it doesn’t have to be an employee to be a breach of a primary duty. It can be anybody externally. But the difficulty here is, when we talked about the case earlier, this is just like hold case that I talked about. This is reckless engagement because the knowledge is of an imminent serious risk of injury or harm. And not only was he indifferent, which is the test of reckless endangerment, he deliberately chose not to do it. So that goes tick to reckless endangerment for the organisation. But it probably pushes it close to industrial manslaughter because you’ve got the duty breach. It is a duty breach, which is the worst type of breach. So the knowledge of risk and deliberately not doing about it. So this organisation anywhere in Australia be facing between five to $8 million fine for industrial manslaughter and coming back to Basil, I think Basil is staring down the gun of certainly reckless endangerment.

Laura Pavia: For sure.

Andrew Douglas: But maybe industrial manslaughter, in Victoria it’s called workplace manslaughter.

Laura Pavia: Yeah.

Andrew Douglas: So what should the sentencing be? Let’s just say if it was reckless endangerment, we know the sentencing in Victoria, New South Wales, Queensland and SA is probably north of a million dollars. Okay, that’s for the organisation. Would Basil be imprisoned? He’d probably get community service orders and a suspended sentence. If we get up to industrial manslaughter, he’d get those. But industrial manslaughter, we’d go past the million dollar fine. So reckless endangerment, unlikely to go to jail, community service orders, industrial manslaughter, unlikely to go to jail, community service orders. But the fine’s somewhere between three to five, maybe up to $8 million.

Laura Pavia: Wow.

Andrew Douglas: So interesting case study, isn’t it? Because it shows when you learn something, you’ve got to act upon it. Now that means don’t not act upon it and not get any experts in. Don’t go, well, no, if I find that out, I’m in trouble. No, actually find out and do something because if you do nothing, but you’re aware it’s a risk, no steps at all, you’re even more liable for reckless endangerment. Even more liable for industrial manslaughter as a likelihood. So I thought it’d be a fun case. And Laura, can I just say, you’ve done a great job today.

Laura Pavia: Thank you, Andrew.

Andrew Douglas: Tom, you will not be forgiven quickly.

Laura Pavia: That’s right. Thank you very much for having me.

Andrew Douglas: Yeah, now don’t forget, we’ll see you next week and thanks very much, Laura, it’s great.

Laura Pavia: Thank you, see you, bye.