7-Eleven workers beaten and forced to pay back wages, Senate inquiry hears

http://www.theguardian.com/australia-news/2016/feb/05/7-eleven-workers-beaten-and-forced-to-pay-back-wages-senate-inquiry-hears

Paul Karp
Feb. 4, 2016

Franchisees are still taking 7-Eleven workers to ATMs to withdraw and pay back wages, and some have resorted to violence and intimidation to deter underpayment claims, a Senate committee has heard.

The Fels wage fairness panel investigating the 7-Eleven underpayments scandal reported to the Senate employment committee on temporary work visa holders on Friday that it had made 188 determinations that 7-Eleven was liable to pay workers a total of $4.36m. On average, workers were underpaid $23,000 each.

The panel has received 2,169 complaints of underpayment, which it expects will result in 1,500 successful claims.

But the panel’s chief, Allan Fels, warned the committee that “there’s no question there’s a problem that people aren’t coming forward in the numbers they should”. Just 60% of stores had been the subject of complaints.

That was because many workers faced “a campaign of deception, fear-mongering, intimidation and even actual physical violence”, Fels said.

Siobhan Hennessy, from Deloitte, who works for the panel, told the committee an international student was beaten by a franchisee while making an underpayment claim.

When he went to the police, he was told it was a matter between him and his employer.

Fels said franchisees exploited employees’ lack of knowledge by telling them they would need to prove underpayments in court, warned them they risked deportation and made threats against their families overseas.

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7-Eleven Pty Ltd representatives told the committee a payroll system that would pay wages directly to workers was being introduced.

The chairman of 7-Eleven Australia, Michael Smith, said the old system which allowed franchisees to receive workers’ wages from head office was “invidious” and a device that had helped the underpayment of wages in many cases.

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The interim chief executive, Robert Baily, told the committee the new system would include biometric sign-in, which he described as a “Big Brother-type practice”, to prevent employees being paid for fewer hours than they had worked.

But he said the system would not be foolproof, and it “cannot cover” the practice of paybacks. He said 7-Eleven had hired forensic payroll investigators to crack down on the practice, and had terminated two NSW franchisees’ contracts three weeks ago as a result of the investigations.

“Unfortunately there will be more,” he said. “There is quite blatant behaviour out there.”

The former chairman and current majority shareholder, Russell Withers, denied knowing in the past that wages were paid to franchisees instead of workers, and said be believed this practice was “the exception”.

Withers denied that the 7-Eleven franchisee agreement, which required franchisees to pay 55% of revenue to head office, was unviable and that franchisees were profitable only because of underpayment.

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