7-ELEVEN PAY SCANDAL THROWS COMPANY MODEL INTO QUESTION
1 September 2015, Written by Paris Faint
FOLLOWING a string of enquiries, spot checks and investigations launched by the Australian Fair Work Ombudsman over the last few years, a number of 7-Eleven retail store managers are under fire for failing to adequately pay their workers.
As a result the authorities have been led to question the company's entire franchising system in Australia and whether the model itself has opened a window for systemic underpayment of staff.
Legal proceedings launched yesterday against Blacktown store owner-operator Harmandeep Singh Sarkaria are the latest in a series of actions taken by the Ombudsman nationally.
In Sarkaria's instance it has been alleged that he failed to pay two migrant workers from Pakistan almost $50,000 between 2012 and 2014.
The court will also hear that Sarkaria doctored company timesheets resulting in the appearance that staff were paid about $25 an hour when wages often received were equivalent to only $10 an hour.
Fair Work Ombudsman Natalie James (pictured) says gross breaches of the law occurring throughout the country have raised the alarm with regards to the 7-Eleven franchising model, particularly whether employers in the system are unable, rather than unwilling, to meet their requirements.
"While we are not expert in the field of franchise models and financial viability, our inquiry has raised concerns about the 7-Eleven model," says James.
"We are exploring whether the model places significant pressure on a franchisee's ability to meet statutory obligations, predominantly through a lack of cash flow.
"In some cases, we suspect it is the reason franchisees have underpaid staff."
At this stage of the inquiry, nine franchisees have received an official letter of caution, one has been issued a compliance notice and seven have received on the spot fines.
A particularly major incident in 2009 saw the failure of five 7-Eleven stores in Melbourne, where 88 employees were underpaid a total of $112,000.
More recently in 2010, Bosen Pty Ltd was taken to court for short-changing four workers at the company's previously owned 7-Eleven stores almost $90,000 over a four-year period.
James says the long string of offences is even more disturbing considering the vulnerability of many of the affected employees.
Her investigations have uncovered several international students and other young people from non-English speaking backgrounds who have become frightened to lose their visa status at the word of their employers.
"Some [employees] 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," says James.
"There is no question that an employee in breach of visa conditions is putting themselves into a more vulnerable situation.
"Young workers and overseas workers can be at risk because they are often unaware of their rights and entitlements, and language and cultural barriers are often an issue for visa-holders as well."
The Fair Work department is seeking swift and just resolutions for all employees caught short by their bosses.
Author: Paris Faint