In case you missed it there has been a media blitz regarding the alleged underpayment of wages for numerous 7-Eleven stores throughout Australia. There was a joint investigation between Fairfax Media and the ABC Four Corners program which revealed that many stores paid their Employees only half their correct rate of pay and allegedly forced their Employees to work double hours.
An internal review of 225 stores by 7-Eleven head office found that a whopping 69% of stores had Payroll compliance issues. Head office have promised to investigate the allegations of underpayment of wages after the Fairfax Media and ABC Four Corners joint investigation went public with their investigation findings.
There has been outcry from Unions and the general public at large in response to the allegations of underpayment. Particularly because of the high number of ‘vulnerable Employees’ that 7-Eleven hire, namely Employees on student visas. It remains to be seen if 7-Eleven can recover after the possible penalties the stores may face for breaches of the Fair Work Act 2009 (Cth) (FW Act) and the backlash from the public in response to the allegations.
Many of the Employees of 7-Eleven stores are on international student visas which restrict the amount of hours visa holders may work. It has been alleged from the 7-Eleven investigation that any Employees who threaten to make a complaint about only half of their hours being paid is being advised by their Employer that they are in breach of their visa conditions and may face deportation if such a complaint is made.
A whistleblower was reported as saying that following a Fair Work Ombudsman investigation into about 20 7-Eleven stores last year as a part of an audit, that head office put processes in place to ‘make it look like it was serious about addressing the problem’.
It remains to be seen the extent of the impact that this report will have on the reputation of 7-Eleven stores. Currently the penalty for a breach of the FW Act is up to $54,000 for a Company per breach or up to $10,800 for a Director or individual per breach. This may be crippling for any of the franchisees that may have engaged in the conduct alleged through the Fairfax Media and ABC Four Corners joint investigation.
The 7-Eleven wages debacle should serve as a caution to any Employers that may not be aware of their obligations for the correct rate of pay or franchisee’s that may be following the ‘advice’ of their head office in any dubious employment practices.
As an Employer, it is essential that you are aware of your obligations under the FW Act including being aware of the Award that applies to your Employees and their correct rate of pay, penalty rates and overtime rates. Failure to ensure you adhere to your obligations under the FW Act may not only expose you financially to the steep penalties but may potentially damage the reputation of your business by way of the media.
Steps that Employers may take to ensure they remain educated about and compliant with their obligations as an Employer include:
- Conducting an audit to identify any payroll discrepancies;
- Performing yearly reviews to ensure they remain compliant with the relevant minimum wages and conditions; and
- Seeking professional assistance if they are unsure of their obligations.
If you are unsure of your obligations in relation to whether you are paying the correct rate of pay to your employees NB Lawyers offer a consultation to all Employers.