7-Eleven repays $173 million to underpaid workers
Convenience store chain 7-Eleven has paid back more than 4000 workers $173 million after many store owners ripped off staff with cash wages as low as $10 an hour for gruelling shifts.
The Fair Work Ombudsman, which investigated the chain and its franchisees amid revelations from The Sydney Morning Herald, The Age and Four Corners of continued problems, found several franchisees were deliberately paying staff below legal wages and falsifying records to cover it up.
Underpayment was rife in 7-Eleven convenience stores.Credit:Wolter Peeters
Common tactics by store operators included staff, who were often migrant workers, being asked to repay up to half their wages to their bosses and being made to work gruelling shifts for far more hours than they were paid.
7-Eleven head office had an approach to industrial law that "while seemingly promoting compliance, didn't adequately detect or address" the issue, the ombudsman said in a statement.
No penalties were issued against 7-Eleven Stores Pty Ltd, the franchisor behind the chain, which is ultimately owned by billionaire Russ Withers and his family and that of his late sister, Beverley Barlow.
No allegations of underpayment were made directly against the head office, which was not the legal employer of the underpaid workers.
Industrial laws have since been changed to make it easier for regulators to pursue franchisors over problems within their store networks.
7-Eleven initially set up a repayment program headed by consumer advocate Professor Allan Fels in 2015, who was pushed out in mid-2016.
"Everything I heard from 7-Eleven for months was aimed at cutting the cost to them of the process, by setting really high standards and making it difficult to get claims through," Professor Fels said at the time. He was contacted for comment.
He had estimated about 20,000 workers would be eligible for repayment. The company denied Professor Fels had been replaced for that reason as it moved the process in-house.
The Fair Work Ombudsman had launched several investigations into 7-Eleven stores before The Age, The Sydney Morning Herald and the ABC uncovered the extend of the wage issues in 2015. The regulator signed a deed of compliance in 2016 that committed the company to improve its processes and undergo three pay audits, the last of which was in 2019. A final report was issued by the ombudsman on Friday.
7-Eleven Australia chief executive Angus McKay welcomed the report, which noted the chain had spent $10 million on improved systems like punch clocks to record shift times.
"With ongoing support from staff across our network, we are incredibly pleased with the progress we have continued to make," Mr McKay said in a statement. "I said we would be accountable for our actions and take ownership of our remediation journey. I truly believe we have done just that and will continue to do so."
Sandra Parker, the ombudsman, said she wanted 7-Eleven to go into another compliance agreement to ensure the company remains accountable.
"Franchisors can now be held responsible for their franchisees’ conduct and may be subject to enforcement action, court proceedings and penalties if their franchisees have breached the law," Ms Parker said.
Eleven 7-Eleven franchisees were sued by the regulator over pay issues, with a cumulative total of $1.8 million in penalties awarded against them, equivalent to about 1 per cent of the underpayments nationally.
Nick Bonyhady is industrial relations reporter for The Sydney Morning Herald and The Age, based between Sydney and Parliament House in Canberra.