Industrial relations is not most people’s favourite reading, which is exactly why it catches businesses out. Damian Gooden from ER Strategies — a platinum partner of the Franchise Council of Australia — came into the studio to walk through what’s changing: super that has to be paid every payday, junior wage rates moving up to adult rates, and a shift in how salaries and overtime are assessed that Damian reckons not enough people are talking about.
If you employ even one person, the last section of this one matters to you.
Here’s the conversation, edited for length and clarity.
Tell us about ER Strategies and who you help.
Damian: It’s never a dull moment in industrial relations in the current environment. We look after a number of different franchise groups, helping them with their industrial relations compliance. What that looks like is different for different groups, but we take an approach that goes across the whole network.
The franchisor as an employer has their own responsibilities, and they have responsibilities under the Vulnerable Workers Act — we’ve got support and products that speak directly to that. We do a lot of going on the road, educating franchisees and presenting at conferences. We do payroll auditing. And we have support networks for the franchisees themselves as employers, because while they’re sitting inside a franchise network, if they’ve got 10 staff they’ve still got to make sure they’re paying them correctly.
The other part of the Vulnerable Workers Act is: how do you know what’s happening in your network? So we provide helpline services for employees of franchisees — they can go around their franchisee and up to the franchisor if they can’t get a resolution. And payroll auditing, so the franchisor knows their franchisees are paying people correctly.
Let’s start with Payday Super. What actually changes?
Damian: Super has been able to be paid quarterly — you could leave it as long as a quarter. As of 1 July, that changes to Payday Super. Literally when you pay someone, not only do you pay them the money in cash, you also have to pay whatever super allocation to the super fund, and it has to clear within seven days.
That’s a big change. If you were paying three or four times a year, you could bank up that cash over time. You’re not going to have that.
Hopefully a lot of businesses have already stepped in and changed their model from quarterly to monthly, if not weekly. If they haven’t, I’d recommend they talk to their bookkeepers and their payroll people really quickly to figure out the best transition, because it’s a hard start.
The news has been out for a long time. Unfortunately, industrial relations is not super popular, so sometimes things take a while, and then the deadline looms and everyone goes, “Oh, right, what do I do now?” It’s hard to catch up on cash flow late in the piece.
There’s a bit of lending activity coming along, because it’s been identified that businesses are going to be really stressed. And from a franchisor’s point of view — if you can talk to your franchisees, see who might be at risk and see what you can do to support them, that’s going to help them keep their heads above water and make sure they’re compliant.
What’s the actual risk if someone doesn’t do it?
Damian: It’s fines. It’s similar to what it was before, it’s just going to be more frequent. If you pay weekly, for example, and you don’t pay super every week, you’re going to get a fine. Whereas if you pay monthly, it’s every month — instead of a quarterly fine.
I fear it’s going to be fines, and lots of them. I’m hopeful the ATO might not be ready to piece it all together straight away, but I wouldn’t be taking that risk — and we’re certainly not in our business.
Junior wages are changing too. What was decided?
Damian: There was an application a while back from the SDA to increase rates of pay for all juniors in three different awards to the same as the adult rate. There were submissions back and forwards, a few different organisations had a say, and the ruling has just come through: the pay for 18, 19 and 20 year olds will be moved up to the same as 21 year olds for those three awards.
It’s going to be phased in between December 2026 and, I think, 1 July 2029. So it’s not happening right now, but it’s really important. If your business model relies on junior employees and the rates you can pay them to be profitable, this could be a big change.
I think it’s a great headline and great framing by the SDA — you’re an adult when you turn 18, now you’re going to be paid like an adult. But flip it and look at it from an employer’s point of view. If I’ve got an 18-year-old here and a 21-year-old here and they cost me the same, am I going to put the 18-year-old on the shift, or the 21-year-old who probably has more experience and more life experience?
So I wonder whether, for all it’s a great headline, there might be a circumstance where 18, 19 and 20 year olds in those industries are actually employed less — under-employed, if you like.
Let’s get into the Vulnerable Workers Act. What are franchisors on the hook for?
Damian: Unfortunately, due to pressure from the press after some activity in the franchising industry that wasn’t so great, legislation came through in 2019 called the Vulnerable Workers Act. The idea is to protect vulnerable workers and make sure they get paid what they should.
A key part of that legislation says — rightly or wrongly — that as the franchisor, you’re responsible for so many things for these franchisees. You make sure their brand is okay, you make sure their products are okay. We’re now going to put it on you, the owners, to make sure they are paying people correctly, and we’re going to fine you if you don’t.
The wording is that you need to take reasonable steps to make sure your franchisees are doing the right thing.
What do “reasonable steps” actually look like?
Damian: There’s a guide that came out from Fair Work with case studies and examples, but really there are four elements.
One: a compliance outlook across your network. How are you confirming and promoting compliance as a general rule, and payroll compliance in particular?
Two: education, tools and training. How are you empowering your franchisees so they know what the right thing is, they can check they’re doing it, and then actually execute?
Three: what are you doing to find out? There are two ways. You go and look, or you give people the opportunity to come and tell you. We do payroll audits to go and look, and employee helplines so employees can call the franchisor, or us on their behalf, to raise issues. If they’re underpaid, they go to their franchisee, the franchisee says “no, it’s fine”, and they’re still not happy — they can come to us and we can resolve it.
Four: what do you do about people who don’t do it? If you find someone, or you’re alerted to someone not doing the right thing, what have you done about it? You’ve got to take reasonable steps to get it fixed, and if not, take some action against that franchisee.
Joel: That’s a lot of things people won’t have in place. So they’d either have to build it internally or engage someone — you can’t just do nothing and run the risk.
Damian: Lawyers will tell you “reasonable steps” is in that Fair Work guide, and there are examples. If you’re a franchisor with a thousand people in head office, we’d expect your reasonable steps to be different from someone running a four-person head office on the smell of an oily rag with not many franchisees. So it’s very much about your resources.
But those four things can be done pretty easily, at not too much cost — even if you do them internally or get someone else to do them. It doesn’t have to be super expensive. If you don’t do anything, I’d imagine you’ll be in big trouble.
You don’t have to go and spend a fortune with lawyers, or with us — although we’d love you to. Put it on the agenda at your state or national conferences. “Don’t forget everyone, payroll is really important. Here’s the latest award rates.” These things are publicly available. You can take steps, and you can document that you’ve taken them, so if anything did happen you could show what you’ve done.
For a Jim’s division with 20 to 40 franchisees, what should be in place?
Damian: First, you’ve got to promote compliance — that’s free. Every time you’re communicating, if you send a newsletter out, have an article in there about the latest news, or a risk issue. If something’s happening in the network, inform the whole network: here’s a risk, here’s how we resolved it. That information piece is first.
Second, how are you giving your franchisees the best chance to be compliant? Realistically that’s contracts, templates and pay rates. But also bookkeepers and payroll people — can you help them get to someone who’s really good? Use the Jim’s Bookkeeping people and the payroll people to actually execute, because they know the rules for that industry. Sometimes people know the rules, or think they know the rules, and execute incorrectly. They genuinely make mistakes.
The last piece is that you probably want to be doing at least self-auditing, where the franchisee signs a form to say they’ve checked the payroll for a week or a month, and we check it against the award and confirm it’s correct.
Joel: That’s new for us, because Jim’s is a bit different — we have a flat-fee model, so we don’t know what franchisees make financially. We don’t take a percentage of revenue. So that would be a new step for us to add.
Damian: I think so. Or if you’ve got business managers going between the franchisor and the franchisee, make it part of their check-in each month or quarter — a spot check. How many people did you pay? Did you pay super? Have you got any people on visas, and are you making sure they’re not working too much? There needs to be some sort of check around that.
Whether it’s a self-audit by the franchisee — even better than that is getting the business manager to do it, and even better than that is getting an expert to do it.
Joel: In the past, if there was a pay dispute between a worker and a franchisee, a franchisor might have just thrown their hands up. They obviously can’t do that now.
Damian: Not at all. Doing nothing and saying “it’s not my responsibility” or “I don’t care” has been off the table since 2019.
And at the individual franchisee level — what should they be doing?
Damian: Step one, if the franchisor is providing information — here are the awards we’re under, here are the rates of pay — just make sure your bookkeeper and payroll people have that information. That’s thing one.
Then, the thing as an employer is that things change. People have birthdays, and that might mean a change in wages. People change duties, and that might mean a change in wages. So you’ve got to be aware. Don’t just put it in and forget about it.
There’s an annual review where all wages are reviewed and will probably go up three to three and a half per cent this year, I’d say, given inflation. Who knows. But that’s about three months away. So don’t set and forget. Take the advice from the franchisor, then execute and review often.
Joel: The change of duties one is interesting — I wouldn’t have thought about that. And if you’ve got a disgruntled employee who doesn’t leave the business well, they can claim all these things against you.
You keep coming back to timesheets. Why?
Damian: The fundamental thing for every person employing one person or more is timesheets. You need to be able to prove what people worked. If a claim comes back to you later and someone says “I worked overtime”, you need a record of what everyone worked.
And I’m talking about everyone. Even the people who are traditionally “I work at a computer, I’m a salaried employee, I don’t need timesheets.” You need timesheets. Everyone.
There are 12 awards with specific annualised wages provisions, and in those awards you can pay someone a salary, but after 12 months you have to compare the hours they worked — and what they would have been paid at award rates — against what they were paid as a salary. If you’ve paid them less, you have to make good.
That’s 12 awards. For everyone else, the way salaries work as we’ve known them is a risk, because you have to make sure people are paid the amount they worked in a pay period, at that payday.
Let’s go through the salary case study you’ve brought in.
Damian: We’ve taken an employee on the clerks award.
| Base hourly rate (ordinary hours) | $26.96 |
| Overtime rate (first two hours) | $40.44 |
| Weekly rate (38 ordinary hours) | $1,024.40 |
| Annual minimum | $53,268.80 |
That’s the minimum you have to pay that employee if they work every week, including leave.
So let’s say you think, I don’t want to go close to it — I’ll pay $55,000 so I’m definitely safe. Your buffer is $55,000 minus $53,268.80, which is $1,731.20. Divide that buffer by the overtime rate of $40.44 and you get how many overtime hours are in your buffer: about 42 hours a year. Break it down weekly and the buffer is about $33 a week, or 0.8 of an hour. Just under one.
Now take a contrived example, purely to explain it. Someone works the first week of the year with 10 hours of overtime — two hours a day across five days — and every other week they work 38 hours on the dot.
That first week they’re due the weekly rate of $1,024.40 plus 10 hours at $40.44, which totals $1,428.80. For the other 51 weeks they’re due $1,024.40. Add it all up and the total due is $53,673.20. They were paid $55,000 as a salary — so effectively a $1,326.80 overpayment.
That was the old way of the world. You left a buffer in there, and if someone worked overtime the buffer took care of it. Most contracts say “plus reasonable overtime.”
In most awards that’s no longer the case. With the clerks award and some others there are provisions specifically to do this, but outside those awards, the new way of life is you have to look at just the one week, as an isolated week.
So in that overtime week, the amount due is still $1,428.80, but they’d have been paid $1,024.40 — because that’s the weekly pay of the salary, which they get every week regardless of what happens in the other 51 weeks. In this case there’s a payment due in addition of $404.40 for that week.
And this is per pay cycle. If you pay weekly, it’s every week — your buffer only applies to that week. If you pay fortnightly, it’s the fortnight. Monthly, the month.
This is a really big change in the way things are calculated, and in the assumptions business owners make when they put someone on a salary and say it’ll all smooth out over the year.
So what do people need to do about it?
Damian: Timesheets. Record keeping. I know I’ve been banging on about it, but if you can’t prove what someone worked, you can’t prove what they were due.
If someone makes a claim later and says “I did two hours of overtime every day”, they could come back and say they were due $400 a week more. And you could say: no, you’re not, because I know you worked these hours — you put the timesheet in, I approved it, and we have that record.
Whether that’s a piece of paper, which will be terrible to go back through later but will work, or a punch card, or a cloud-based system — even Excel sheets. You just need evidence. That’s what’s going to protect you.
You also need to check all your salaried employees every pay cycle to see what overtime they worked and whether the buffer for that pay cycle was enough to cover it. If not, you might have to make an extra overtime payment.
Joel: A lot of our franchisees might shout their workers lunch if they put in a couple of extra hours. That doesn’t fly anymore.
Damian: No, definitely not. Timesheets bring it all back. If someone says “I worked an extra hour every day” and you say “no you didn’t” — well, prove it. You’ve got to disprove it. Having those timesheets, it’s locked in.
A lot of casualised workforces have time and attendance built into the way they operate — the roster goes up, timesheets get done, pays come straight off that. They’re probably at less risk. It’s more your professional services people, people working in offices who have never done a timesheet in their life. Administrators, receptionists, bookkeepers. Those roles where they’re on a salary which seems fine, but if you did it over the whole year, maybe it’s not fine. And if you do it over just that pay period, particularly weekly, you have a bad week — that happens — and you could be behind.
So everyone just has to do timesheets. That’s my recommendation. Every employer, make sure you know what anyone worked, because then if anyone ever says you didn’t pay them correctly, you can say: here’s what you worked, here are the rates that applied at the time, here’s the level you were at, we can do the maths. If you can’t do that, you’re in a position of negotiation.
The only way to sit safe and sleep well at night is to say, I know what everyone worked, and I know I paid them at least that.
What’s the single biggest takeaway?
Damian: Record keeping. That’s the number one takeaway. It’s not hard to do — we’ve got technology that does it, and there are plenty of systems out there that make it light touch. But the value of that five minutes a week, or five minutes a month, spent on timesheets is immense from a security point of view going forward. I can’t speak highly enough about how important it is.
You need a position on this the same way you do with a cyber security threat. What is your company going to do if there’s a cyber issue? What’s your plan? Well — what happens if Fair Work knocks on the door and says, show us what everyone got paid? You need a strategy.
Joel: It just takes one disgruntled employee to throw a whole light on your organisation.
How do you work with Jim’s Bookkeeping?
Damian: We do work closely with them. I’ve presented at the bookkeeping conference a few times, and we support the bookkeepers with advice for their clients. We’re sort of their back office for HR.
Joel: So a division or franchisor could reach out to ER Strategies and get an overview of what they’ve actually got to do, and then have that phone support in place.
I’d also add — if the franchisor is a member of the FCA, there’s a hotline members can call, and part of your membership includes an element of that advice at no charge. It’s a pretty efficient way to get access to industrial relations assistance, on top of everything else you get as a member.
We’ve been running meetings from a head office point of view for our own compliance, but I still think more needs to be done at the division and franchisee level.
Damian: If you’re having those meetings, that’s the first step. You’re talking about compliance culture and promoting it across the network. That’s phase one — you’re doing the right thing.
The short version for Jim’s franchisors and franchisees
- Payday Super starts 1 July. Super must be paid at the same time as wages and clear within seven days, instead of quarterly. If you’re still on a quarterly cycle, talk to your bookkeeper now — the cash flow shift is the hard part, not the paperwork.
- Every employer needs timesheets. Everyone. Including salaried office staff who have never filled one in. Paper, punch card, app or Excel — the format doesn’t matter, the evidence does.
- The salary “buffer” no longer covers overtime across the year. Outside a handful of awards, each pay cycle is assessed on its own. Check salaried staff every cycle and top up where overtime exceeded the buffer for that period.
- Junior rates for 18 to 20 year olds move to the 21-year-old rate in three awards, phased between December 2026 and 1 July 2029. If your model depends on junior rates, start modelling it now.
- Franchisors must take “reasonable steps” under the Vulnerable Workers Act: promote compliance, provide education and tools, actively check (audits and helplines), and act when someone isn’t complying. What’s reasonable scales with your resources — but doing nothing hasn’t been an option since the legislation came in.
- Wages get reviewed annually and Damian expects a rise of around 3 to 3.5%. Don’t set and forget: birthdays and changes of duties can both change what someone must be paid.
Listen to the full episode of the Jim’s Podcast for the complete conversation, including the salary case study walkthrough.
Jim’s Group has grown from a $24 investment in 1982 to more than 5,700 franchisees across 50+ divisions in Australia, New Zealand, Canada and the UK. If you’re thinking about running your own business with the support of an established network, enquire about a Jim’s franchise or call 131 546.