7-Eleven will establish an independent panel to receive and examine claims including underpayment of staff by franchisees and franchise agreement terms, following an joint Fairfax-Four Corners investigation.
7-Eleven has confirmed the panel will be chaired by an “eminent and qualified Australian” and has been established in response to allegations that underpaying workers across the 7-Eleven store network is systemic.
The joint investigation by Fairfax and Four Corners has revealed that up to two thirds of the company’s stores could be underpaying workers across the country.
“The key factor here is that the panel will receive, review, and process any claim of underpayment, and authorise repayment where this is appropriate,” said 7-Eleven CEO, Warren Wilmot.
Former chairman of the ACCC, Allan Fels, told the ABC 7-Eleven franchisees need to underpay employees to be profitable.
“My impression, my strong impression, is that the only way a franchisee can make a go of it in most cases is by underpaying workers,” he said.
Wilmot denied this claim.
“The viability of the 7-Eleven system is in no way, never has been and never will be, dependent on franchisees underpaying their staff,” Wilmot said.
“This doesn’t let off the hook any franchisees doing the wrong thing, because we will pursue them to repay any money owed to former or present staff.”
Wilmot said the company has reached out to the Fair Work Ombudsman (FWO) inviting it to assist in establishing the terms of reference of the independent panel.
“This is in addition to our continuing co-operation with FWO to weed out franchisees in our network, who are not doing the right thing by their staff, and further tightening our audit and monitoring systems and processes in collaboration with FWO.
“While we dispute there is insufficient financial viability in a system that delivers on average net profit of $165,000 per store, and year on year growth of more than nine per cent, the company has committed that any existing franchisee, who no longer wants to participate in the system, 7-Eleven Stores Pty Ltd will refund the franchise fee paid, and help to sell any store where a goodwill payment has been made,” he said.
“What has happened, has happened on our watch, and we are a company with a proud heritage and a strong reputation, we cannot allow the few to taint the achievements of the many.”
Yesterday, the Fair Work Ombudsman announced that it had commenced legal proceedings against a 7-Eleven store in Sydney which allegedly underpaid two migrant employees almost $50,000 and created erroneous records for the workers.
Following the Fairfax-Four Corners investigation, the owner of a 7-Eleven store in Melbourne has since come forward and admitted deliberately short-changing its staff by tens of thousands of dollars and doctoring its employment records to cut costs.
The store owner has also revealed that he learned how to manipulate the payroll system from another franchisee at a 7-Eleven conference.
Operator of the store, Kumar Sandarakumar, confirmed he deliberately breached federal workplace laws in the face of increasing financial pressure.
Sandarakumar knowingly short-changed most of his employees by paying them for fewer hours than they actually worked. For example, 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. Additionally, Sandarakumar admitted to producing false and misleading records by manipulating the data he entered into the 7-Eleven head office payroll system – something he says he learned from another store owner at a 7-Eleven conference.