The Fair Work Ombudsman has released a report on the findings of its inquiry into the 7-Eleven franchise network.
The inquiry, prompted by allegations of systemic non-compliance with federal workplace laws, found that a number of franchisees have been deliberately falsifying records to disguise the underpayment of wages.
The Fair Work Ombudsman and its preceding agencies have been investigating the 7-Eleven franchise since 2008. In that time, the Ombudsman has placed eight matters before the courts, recovered $625,000 for underpaid workers, issued 20 letters of caution, 14 infringement notices (on-the-spot fines) and three compliance notices.
The statement outlined that a number of employees had approached 7-Eleven head office with concerns, yet believed that head office knew about the violations and chose to ignore them, or were disinterested in their claims. The report stated that “7-Eleven gets a percentage of each store’s gross profit, so there is a direct financial benefit to the franchisor when the stores are successful. Wages impact on store net profits, so systemic and substantial non-compliance with minimum wages has created a false account of store viability”.
According to the report, the level of control that 7-Eleven has over franchisees gives them little scope to impact their profitability within the franchise model, leading to a ‘general acceptance’ of a ‘going rate’ for employees below the lawful minimum wage.
7-Eleven told the inquiry that its franchisees are predominately from non-English speaking backgrounds, while employees at its stores are typically male international student-visa holders. The Fair Work Ombudsman stated that it was receiving more requests from visa holders than ever before.
“Frankly, I’m sick and tired of seeing matters come before us where people are being paid $10 and $12 an hour, well below the minimum wage,” Fair Work Ombudsman Natalie James said. “We have minimum pay rates in Australia, They apply to everyone and they are not negotiable.
“Employers cannot undercut minimum wages, even if their employees offer to accept lower rates – and they must keep accurate time-and-wages records at all times. It is not acceptable for an employer to take advantage of any worker, especially overseas workers who speak limited English and have limited understanding of their workplace rights.”
The Ombudsman recognises that while 7-Eleven has taken steps towards rectifying the situation, much remains to be done. The report refers to the need for top-down reform of compliance and increased accountability measures.
The Fair Work Ombudsman urged 7-Eleven to enter a compliance agreement with the Ombudsman, implement effective governance arrangements, review its operating model and set up a staff-consultative forum from across the network that is separate from the franchisees.