The Federal Circuit Court has ordered the penalty after the Fair Work Ombudsman has released the result of the investigation and after the franchisee Jim Chien-Ching Chang has admitted that his company had underpaid eight staff a combined $19,937.
Chang, the former franchisee of the store at 80 Vulture Street, West End, has been ordered to pay $28,000 and his company JS Top Pty Ltd to pay $140,000. He and his company sold the 7-Eleven franchise in late 2016 and the franchise is now operated by an entity unrelated to these contraventions. Court imposed penalties against 7-Eleven operators have now topped $1 million in litigations initiated by the Fair Work Ombudsman.
Chang admitted his company had paid flat hourly rates as low as $13 an hour, resulting in significant underpayment of the minimum hourly rate, casual loadings and penalty rates for shift and weekend work that employees were owed under the General Retail Award 2010.
One employee was underpaid $13,962 between July, 2013 and August, 2014, while the others were underpaid amounts ranging from $203 to $1835 for shorter periods of work. Chang also made false and misleading entries into the 7-Eleven payroll system and provided false records to the Fair Work Ombudsman.
In his penalty judgment, judge Michael Jarrett found Chang knew the relevant award that applied but had “established a business model that relied upon a deliberate disregard of the employees’ workplace entitlements and a course of conduct designed to conceal that deliberate disregard.”
Judge Jarrett found no evidence that the company’s contraventions were motivated by poor cash flow saying “rather, it seems, the company’s profit has been enhanced by the underpayments concerned.”
All underpayments have now been rectified. The store was one of the 20 outlets of 7-Eleven targeted for surprise night-time visits by the Fair Work Ombudsman as part of a tri-State operation in September, 2014.
The Fair Work Ombudsman has taken legal action against nine 7-Eleven operators since 2009 with litigations involving three operators still before the courts. Ombudsman Natalie James said the substantial penalties imposed send a clear message that exploiting overseas workers is serious conduct that will not be tolerated.
“Businesses should be in no doubt that lawful obligations to pay minimum wage rates, keep appropriate employment records and issue pay slips apply to all employers in Australia and they are not negotiable,” James said.
“The deliberate nature of the underpayments and the lengths that Chang went to in order to hide his conduct from us and from the 7-Eleven head office is of grave concern. Chang was fully aware of his lawful obligations and chose to manipulate the system in order to undercut the entitlements of vulnerable workers.
“We are pleased that the Court has seen fit to penalise such blatant conduct and hope that this serves as a warning that such behaviour will be penalised.”
7-Eleven entered into a Proactive Compliance Deed with the Fair Work Ombudsman late last year. Under the terms of the Deed, the convenience store giant has committed to a range of measures designed to ensure all its workers receive their lawful entitlements through strong accountability for all operators across its franchise network and supervision by the Fair Work Ombudsman. The Deed is aimed at addressing the non-compliance issues identified by the the Government’s Inquiry Report into workplace non-compliance in the 7-Eleven network.