7-Eleven admits to grossly underpaying workers to cut operating costs
A ground-breaking investigation into the operation of 7-Eleven stores has revealed an endemic culture of exploiting employees and paying them as little as half the award hourly rate of $24.50 in an effort to cut costs.
The investigation revealed employers had doctored payroll records and threated international student workers with deportation to cover up these gross injustices. The company has since announced an "independent review'' of wages and offered to buy out their franchisees.
7-Eleven stores have been on the Fair Work Ombudsman’s radar since 2009 with a range of investigations into the underpayment of wages taking place.
However it was overnight spot checks conducted by the Fair Work Ombudsman to 7-Eleven stores in Brisbane, Sydney and Melbourne last year that provided the impetus for the revelations which have emerged in recent days.
A Melbourne 7-Eleven storeowner has formally admitted to underpaying staff by tens of thousands of dollars and doctoring employment records. The majority of employees had been paid for fewer hours than they worked.
An employee who worked 20 hours in one pay period was only paid for seven hours work. Another who worked 14 hours was only paid for eight.
Calculations by the Fair Work Ombudsman have revealed that 12 of the store’s 15 employees were underpaid more than $30,000 in the 12 months to October last year.
The largest individual underpayment was $7981.
The storeowner has signed an Enforceable Undertaking (EU) with the Fair Work Ombudsman as an alternative to litigation. The EU has seen the storeowner reimburse all employees and put processes in place to ensure compliance with workplace laws in future.
Fairfax Media has reported similar instances of employees being grossly underpaid at a range of 7-Eleven stores across the country.
Fair Work Ombudsman Natalie James said these findings are a timely reminder to 7-Eleven business operators of the need to ensure they take the time to understand and comply with the laws applicable to their workplace.
Ms James said she is very concerned about the contraventions being identified at the majority of 7-Eleven stores being investigated. So far, nine 7-Eleven franchisees have received a Letter of Caution, one has been issued a Compliance Notice and seven have received on-the-spot fines.
“We are concerned to see repeated cases of underpayments being facilitated through the falsification of pay information to head office occurring in the 7-Eleven network. Patterns of behaviour such as this do make us curious as to the role of Head Office,” she said.
“When franchisee businesses are not succeeding and that is impacting on the way they are treating their staff, it makes good business sense that 7-Eleven would try to understand why.
“Successful franchisees must mean successful franchisors. At this stage, we’re not convinced that the processes in place for the franchisees of 7-Eleven is facilitating compliance with workplace laws.”
Ms James said every employee in Australia is entitled to receive their minimum terms and conditions under the Fair Work Act.
“Employers cannot undercut minimum wages, even if their employees do offer to accept lower rates, and when we find that this has occurred, [the Fair Work Ombudsman] will require any outstanding wages to be back-paid,” she said.