7-Eleven will establish an independent panel to receive and examine claims including underpayment of staff by franchisees and franchise agreement terms.
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.
A joint Fairfax-Four Corners investigation has found up to two-thirds of the company’s stores could be ripping off 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 that 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,” he 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.
This morning Fair Work released details of another Melbourne 7-Eleven shop owner who has admitted to cooking the books and ripping off workers to the tune of $30,000.
Kumar Sandarakumar, who runs a store in Melbourne’s CBD, told the Fair Work Ombudsman he learned how to manipulate the payroll system from a fellow franchisee at a 7-Eleven conference.
Over 12 months to late 2014, 12 workers were short-changed more than $30,000 with one underpaid $7981.
He admitted to producing false records by manipulating the data he entered into the 7-Eleven head office payroll system.
One employee worked for 20 hours in one pay period but only seven hours were logged on the system.
Student workers have been reluctant to speak up because they are breaching their visa conditions by working more than 40 hours a fortnight.
“Some have told us they are scared that if they complain about being underpaid, their employer will report them to the Department of Immigration and Border Protection,” Fair Work Ombudsman Natalie James said in a statement.
Sandarakumar has agreed to pay all outstanding worker entitlements as an alternative to court action.
