Last week the Office of the Fair Work Ombudsman (FWO) announced that, between September 2015 and February 2020, 7-Eleven, which is a franchise company with over 700 stores in NSW, Victoria, Queensland, Western Australia and the ACT, has paid around $173.3 million dollars in backpay to around 4043 employees.
This large sum of money (averaging around $43,000.00 per employee) was paid by the Franchisor company to workers for underpaid wages, interest and superannuation.
We have previously reported on the 7-Eleven wage abuse scandal, which led to the government making amendments to the Fair Work Act (Cth) 2009 designed to provide better protection to vulnerable workers and increasing fines that could be imposed on unscrupulous employers who engage in systematic exploitation of vulnerable workers (such as young workers, overseas students or recent migrants who either do not know their rights or do not feel powerful enough to assert their rights).
What did the investigation into the 7-Eleven exploitation expose?
An investigation by the Fair Work Ombudsman exposed unscrupulous practices by a number of 7-Eleven Stores (Franchisees) including paying much less than Award rates and failing to record actual hours of work. The FWO found that a number of Franchisees had falsified records to hide the underpayments. There were even cases where Franchisees had recorded the hours worked by staff correctly and paid them the correct rate of pay “on the books”, but then forced the staff to pay back a portion of their wages to the Franchisee.
At the time these practices were exposed, considerable criticism was directed to the Franchisor company, with many people asserting that the business model it used made it impossible for Franchisees to make a profit without ripping off their staff.
The Chief Executive of the Franchisor company, Angus McKay, recently announced that the Franchisor would not be asking the Franchisees to contribute to the $173.3 million dollars it paid to employees, however, this does not mean that the Franchisees got off scott free. The FWO has reported that, in 11 separate court cases brought against Franchisees, fines of around $1.8million were imposed.
7-Eleven is not the only organisation that has been found to have engaged in wage theft. In recent years cases involving high profile restaurant empires, and large supermarkets have hit the news. Currently, South Australia’s own Drake Supermarkets is facing a class action by store managers who allege that the salaries they were paid did not properly compensate them for the long hours they were required to work.
A fair day's pay for a fair day's work
At Andersons we are pleased to see that courts are imposing significant fines on unscrupulous employers who try to profit at the expense of those workers who make their business successful- see this blog. Furthermore, we believe that public sentiment is turning strongly against such exploitation. A fair day's pay for a fair day's work is a principle that ordinary working Australians hold dear.
In this writer’s view, no one would begrudge a business person succeeding and becoming wealthy AS LONG AS they pay their staff their full legal entitlements. Any person who becomes wealthy or successful as a result of ripping off their staff deserves to be treated harshly by the legal system.
If you are an employee and believe you have been underpaid or if you are an employer and wish to ensure that you are paying your staff their full legal entitlements please do not hesitate to contact Andersons’ Workplace Law Team.