7-Eleven Accused of Paying to Cover-Up Wage Theft

It has been reported that a joint parliamentary inquiry into franchising operations is about to hear explosive allegations that convenience store juggernaut 7-Eleven bribed people not to give evidence.

The accusations come from a group of 7-Eleven franchise operators who say the head office of 7-Eleven paid them to quit their franchises and not testify at the inquiry.

It’s the latest in a string of scandals to hit 7-Eleven after the Fair Work Ombudsman found evidence that 7-Eleven stores across Australia have been systematically underpaying workers.

The operators of a Brisbane 7-Eleven store were forced to pay almost $200,000 in fines after being found guilty of short-changing overseas workers and creating false records to cover up their long history of wage theft.

Exploitation and underpayment

In one case, international students in their mid twenties from India were underpaid almost $6,000 for work in 2014.

They were paid flat hourly rates as low as $14.14 an hour – well under award rates – and were underpaid for overtime, casual loadings and penalty rates on weekends and public holidays.

An investigation into pizza giant Dominos also uncovered widespread underpayment of wages and superannuation, deliberate underpayment of penalties and the illegal sale of sponsorships of migrants for as much as $150,000. The company says it has since returned $5.4 million to its employees.

Caltex also hit the headlines earlier this year when an audit of its stores by the Fair Work Ombudsman found that more than three-quarters were unfairly exploiting workers.

Calls for change

Such findings have prompted calls for changes in the law to make companies more accountable for wage theft, and its hoped the present inquiry, which has already conducted hearings in Brisbane, will make recommendations for change and, perhaps more importantly, that those proposals will be acted upon by government.

7-Eleven franchisees say the fact head office requires them to purchase products from them above regular wholesale prices and then sell the items at prices that are only a little higher is a recipe for failure.

One Domino’s franchisee believes that company’s model is flawed, stating:

“Since September 2014, the cost of food, labour, rent and fixed costs are on the rise, whilst the prices of pizzas are on decline; we can now buy pizza at the 1990s prices. At the same time, Domino’s profit is doubling. Hence, we have clients winning by purchasing cheap food, Domino’s profit skyrocketing. So, nobody is left to pay for this but the franchisees”.

With more than a thousand franchise businesses operating in Australia, the industry body, The Franchising Council of Australia, has characterised the scandals as a case of a few bad apples.

Making wage theft a criminal offence

Recognising the extent and impact of underpaying workers, Victorian Unions has initiated a campaign to make ‘wage theft’ a criminal offence.

The Victorian Trades Hall Council and its Young Workers Centre are pushing the government to enact legislation which would prescribe a maximum penalty of 10 years’ imprisonment for the deliberate underpayment of workers, after a report by the Fair Work Ombudsman found that nearly half of the restaurants, catering businesses, cafes and fast food outlets surveyed had at least one wage contravention.

The findings are backed up by figures from Industry Super Australia, which suggest that a whopping one-third of eligible workers in Australia are not being paid their full superannuation entitlements.

Hospitality, cleaning and retail industries tend to be the most unfairly exploited, although in recent years the agriculture sector has also come under fire for treating workers poorly, especially overseas visitors who need to fulfil regional working requirements to extend their Visas.

Help for exploited workers

Fair Work has released an app called ‘Record My Hours’, which is designed to help employees keep track of the hours they work.

The organisation has made much of its published information available languages other than English, to enable foreign workers to understand their entitlements and the complaints mechanisms available to them.