advocacy, education, & media on corporate behaviour

7-Eleven wage scandal update: Head office, franchisees, backpay claims etc.

610 DAYS AGO | FRIDAY, 19 FEBRUARY 2016 2:49 AM | 7-Eleven | Views(7638)
Russell Withers - Owner of 7-Eleven in Senate

It’s time for an update on 7-Eleven, which has been a long time coming. I have been swamped with enquiries ever since my 4 Corners ran on 31 August 2015 and have not had a chance to write.

The Newest And Worst Pay Scam Yet
Just when we thought the franchisees had run out of scams to underpay workers, yet another scam has been revealed to me this week. The ‘Free Shift’ scam. Franchisees that own other businesses, such as IGAs’, are paying their workers the correct wage when working shifts at 7-Eleven, but requiring them to work shifts in their other businesses for free, away from prying eyes.

Individual Backpay Claims Could Exceed $500,000
Imagine working 72 - 84 hours per week, then imagine doing that consistently for 8 years or more and only receiving $700 - $800 per week, gross. Well, there are a number of workers that fit that criteria who are about to come forward with their evidence. These claims are expected to range between $300,000 and $500,000, and even beyond.

You will be blown away to know that the estimated backpay for a casual worker who is only paid $700 per week, and is working 72 hrs every week (Tue - Sun, 12 hr shifts) over an annum, should receive over $81,000 in backpay under the MA000089 award. That is just 1 year!

District Managers Owning Stores
Since the wage scam was revealed, I have had a number of workers express concerns that District Managers - who they allege were complicit in the underpayment of workers - now own 7-Eleven franchises and are likely to be involved in the underpayment of their own workers. You can be sure that I will be investigating this further.

Franchisees Prepare To Avoid Claim Payments
Reports from workers have surfaced this week that the ‘worst and wealthiest’ franchisees have begun shifting assets and setting up other companies to transition into in anticipation of large backpay claims against them. From what I have been told, these franchisees do not want 7-Eleven Head Office to know their activities, but the plan appears to be to empty the money out and fold the company when 7-Eleven seeks recovery of claim monies. Should be interesting.

Franchisee Behaviour
It’s important that I differentiate between franchisees that willfully exploit workers, and franchisees that have underpaid workers so they could survive. To be very clear, I do not condone underpayment of any kind, regardless of the circumstances. There are however, many franchisees who are also victims. I have helped some, I am helping more, and I will continue to offer my assistance to any franchisee that is genuinely trying to do the right thing.

Head Office Employees
Something that I find particularly disturbing is that to my knowledge almost all of the District Managers, Regional Managers and senior management, who turned a blind eye to the illegal wages and exploitation, or worse, are still employed. One person in particular has been the subject of multiple allegations of a serious nature from multiple sources of which the highest levels of management are aware, yet continues to work closely with current and new franchisees. Hopefully they are not far off finding what they need to take appropriate action. In the meantime, perhaps they should take that person off those duties until this is all sorted out.

Who Is Truly Responsible?
Initially you may think what I and others thought, that the franchisees are the bad guys. However as you do more research you come to realise that yes, there are quite a few bad and ‘greedy’ franchisees, but how did they all end up at 7-Eleven?

How did the franchisees all get the same idea? How did Indians, Pakistanis and Chinese franchisees all learn to operate using the exact same fraud, and why do they often point to head office when asked these questions?

It’s remarkable that the owner of 7-Eleven, Russell Withers - who told the Senate in September of 2015 “I try to visit all stores every year” - can be such a successful businessman for 38 years, and completely miss such an obvious problem to someone in his position. By the way, if Mr Withers visited 10 stores a day, it would take him 63 days per year to visit every store. Big job!

Anthony Main from Unite was protesting and writing about this exact issue back in 2008. He went as far to say this in 2010 “The truth is that if the full extent of this rip off was known it could bring down this retail giant.” He even met with the Chief Operating Officer in 2008 (who left in 2009) about these issues, but as you would be aware, 7-Eleven did not address the problems. Not to mention that I have had many franchisees tell me that both the franchisees and head office have been watching my investigation closely for over 2 years. I wrote extensively about the widespread wage fraud on my website, and to head office.

I won’t say too much more, but perhaps you may agree that there is much more to the story.

by Michael Fraser from QLD, 4216

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