7 eleven's bad call allegations of underpayment and false records

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VISA

COMPL IANCE

ID A P R E D N OVERWORK ED

7-Eleven's Bad Call Allegations of Underpayment and False Records

Overview Background Information

Why Is 7-Eleven Under Investigation by the Fair Work Ombudsman?

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Background Information

UNDERPAID

VISA COMPLIANCE

Myriad problems with labor practices at the popular franchise 7-Eleven have been identified and are being widely publicized throughout Australia.

One raid of 20 stores in September 2014 revealed that payroll may have been doctored and workers were being underpaid at the majority of 7-Eleven stores.

It is said that as many as 60 percent of the stores investigated in the September raid were suspected of violating Fair Work Laws. That raid was just one of three investigations over a period of six years that allegedly identified more than 80 stores that were not paying their staff enough.

In light of the mounting evidence of troubling practices, the Fair Work Ombudsman has launched a comprehensive investigation into the franchisees, and is asking what the franchisor is doing to contribute to the problem as well as what steps the franchisor could take to help end further abuses.

Franchisees and all owners and operators of business organizations need to understand what their obligations are under both immigration and fair work laws.

Just paying above minimum award rates is not enough to avoid the potential for action, including an investigation by the Fair Work Ombudsman.

Why Is 7-Eleven Under Investigation by the Fair Work Ombudsman?

7-Eleven has been accused of systematic underpayments of staff members.

Individual franchises have already been fined, including a 7-Eleven retail store in Queensland that underpaid a worker from overseas by as much as $21,298.

In light of widespread evidence of underpayments, the head office of the franchisor was called to a public hearing in Melbourne presided over by a Senate Committee probing company exploitation of workers. The purpose of the hearing was to gain insight into how Australia's work visa program was functioning.

Senior management for the franchise chain promised at the Senate Committee's public hearing that the underpaid staff will be fully compensated. However, systematic violations of immigration and labor laws may have been occurring at 7-Elevens for decades.

Just a few possible violations included workers being forced to work in breach of the terms of their visas; franchises charging workers as much as $70,000 for visa sponsorships; employees being fired for speaking out about abuses; and workers on student visas being forced to work more than the 20-hours per week their visas permit.

Why Is 7-Eleven Under Investigation by the Fair Work Ombudsman?

Some franchisees were fabricating data on the hours their staff worked to cover up these and other problems, including the underpayment of employees. While 7-Eleven has attempted to blame the problems on “rogue� franchisees, a spokesperson for the Fair Work Ombudsman indicated that the investigation was not only looking to hold franchisees accountable but was also looking into whether the head office was complicit in the fraud.

The 7-Eleven franchise agreement entitles the head office to receive 57 percent of gross profit earned by 7-Eleven Stores, with franchisees keeping the rest and paying most operating expenses including staff expenditures. Since 7-Eleven is open 24 hours a day every day, the minimum cost of having a single worker on each shift would total $230,000 annually. To pay the franchise fee and still make a profit, stores face enormous financial pressure – which has arguably been an incentive to cutting costs on employee compensation and violating immigration and record-keeping laws to do it.

Why Is 7-Eleven Under Investigation by the Fair Work Ombudsman?

While parent companies or franchisors may not be responsible for the actions taken by franchisees under current law (even when they impose financial pressure on businesses), this could change if a private member's bill passes.

Greens MP and an industrial relations spokesman have proposed a bill that aims to introduce a system in which underpaid workers of a franchise could pursue a claim against the head office.

This would make franchisors accountable if wages aren't paid, and would help employees who currently have to try to collect unpaid wages from the franchisees who employ them- leaving them vulnerable to retaliation.

If passed, the private member's bill could help prevent situations like the one in which 7-Eleven franchises systematically abused workers, because head offices would have more incentive to prevent violations.

became ill. If that employer no longer exists, you may lodge the form with Comcare, itself.

Why Is 7-Eleven Under Investigation by the Fair Work Ombudsman?

Even under current rules, individual franchisees and other business owners should know and follow the laws to avoid investigations, bad publicity, and large fines.

Paying above the award and keeping staff happy may not be enough. The award applies to all employees within its scope, even those who are paid above the award, and it includes provisions that go beyond minimum pay obligations.

Employers must follow the rules established in award provisions related to staff leave, changing rosters, staff breaks, pay rates on weekends and outside normal business hours, notice to workers, and overtime, among other things. Serious consequences, including claims for back pay, can be triggered for not making sure employees get what they are entitled to.

Get the Help From Us Owen Hodge Lawyers helps employers, including franchisees, to make sure they are following the rules so they don't become vulnerable to legal action. Call today at 02 8315 4034 or contact us via ohl@owenhodge.com.au to learn how we can help you meet your company's obligations to workers under the law.

02 8315 4034 ohl@owenhodge.com.au