Ombudsman: 7-Eleven should have acted earlier

7-elevenThe Fair Work Ombudsman has released a report on the findings of its inquiry into the 7-Eleven franchise chain.

The Ombudsman found that a number of franchisees have been deliberately falsifying records to hide the underpayment and that the company did not adequately detect or address non-compliance.

“A number of employees reported having approached 7-Eleven with concerns before our inquiry, but felt head office was disinterested in their grievances. Worse, some felt 7-Eleven was aware of high non-compliance throughout its network, but was either disinterested or ignored their concerns,” said Ombudsman Natalie James.

“What is clear is that since our auditing in 2009, 7-Eleven had information that some stores within its network had engaged in deliberate attempts to underpay workers,” James said.

“Recent changes to the 7-Eleven model and planned changes to the payroll system are welcome, however it is the view of the inquiry that 7-Eleven could have acted earlier and done more.”

The inquiry found that there appears to be a general acceptance of a “going rate” for working at 7-Eleven – a rate well below the lawful minimum wage, and breaking that cycle of acceptance is a key challenge for 7-Eleven.

“It also appears to be considered standard practice that long hours are worked, training is unpaid and leave is not taken. Employees are resigned to this being ‘the way it is’ if they want to work at 7-Eleven. There is also an understanding that visa-holders can work hours in excess of what is allowable, and this will not be reported – in fact, it will be disguised by the franchisee,” a statement said.

The inquiry was told most of the chain’s employees were males from non-English speaking backgrounds on international student visas.

James said she was “sick and tired” of seeing visa holders being paid between $10 and $12 an hour.

“We have minimum pay rates in Australia, they apply to everyone, and they are not negotiable,” she said.

The Ombudsman has recommended 7-Eleven enter a compliance partnership “accepting that it has a moral and ethical responsibility to ensure its stores meet community and social expectations.”

The chain should also review its operating model, set up a staff consultative forum and implement effective governance arrangements that ensure compliance, she said.

7-Eleven has welcomed the report and said it would work to make changes in line with the recommendations.

Chief executive, Angus McKay, said the company would soon roll out biometric and compulsory centralised payroll systems in hopes of eradicating false record problems.

“7-Eleven is leaving no stone unturned in the pursuit of lasting solutions,” he said.

Chairman, Michael Smith, said he and McKay were continuing negotiations with the Ombudsman to conclude the finer details of a compliance partnership taking into account the principles in the report.

Since 2009, the Ombudsman has placed eight matters before the courts and recovered $625,000 for underpaid employees.

James said the inquiry, which looked at 20 stores in NSW, Queensland and Victoria, experienced a widespread lack of co-operation.

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