The head of the independent panel set up to investigate wage fraud claims at 7-Eleven says he fears “lawless behaviour” will return to the convenience chain after it announced it will close the panel and set up its own internal team.
On Wednesday 7-Eleven confirmed it will close the Fels Wage Fairness Panel on Friday and launch its own internal independent unit. The panel was established in September 2015 after allegations of wage fraud were first uncovered following a joint investigation by Fairfax Media and the ABC’s Four Corners program.
Professor Allan Fels, who was appointed in September 2015 to head the panel alongside Professor David Cousins, told the ABC’s 7.30 Report he believes the embattled convenience chain has axed the panel in order to “minimise the payouts”.
Mr Fels said around 400 workers had so far received reimbursements, totalling around $12 million, however, there were still around 2000 claims yet to be processed.
“They told me by phone today [Wednesday]. I sat there and listened in silence,” Professor Fels said of his dismissal.
“I don’t agree with what they’re doing,” he said. “They didn’t want an independent panel. They’re doing it themselves. The first problem is they’re not independent. Their wish is to minimise the payout.”
“There are about 20,000 employees over the period we’re looking at, the last seven to 10 years, and most of them have not come forward. Most of them were underpaid. Everyone knows most of them were underpaid. So, a huge number were intimidated from coming forward by fear of franchisee retaliation and many of them are slightly uninformed foreigners who can easily be scared,” Professor Fels told the ABC.
“The concerns by [7-Eleven] in the last two – three months have been emerging as the bill went up. See, there were hardly any payments for the first three or four months. Now, there’s quite a big bill to pay.”
Professor Fels said the workers are now “terrified of franchisee retaliation”.
“They still don’t get it. I have been saying to them repeatedly that the culture has to change there. This is a huge win by the way for the franchisees. They’ve been wanting to minimise the payouts because the bill is going to go to them in part. They’re going to be encouraged now to continue the intimidation and also now I fear that lawless behaviour will return to 7-Eleven because they still don’t get it.”
7-Eleven said the secretariat will be staffed by qualified forensics accountants and liaise with the Fair Work Ombudsman. In assessing claims, the secretariat will provide 7-Eleven with a recommendation, the basis of validation and the quantum of each claim to be paid.
The company has stated that it will regularly publish the outcomes of the claims process on its website and provide the Fair Work Ombudsman with complete access to the process, investigative and determination data as well as the whistle-blower service already established to protect claimants from intimidation.
7-Eleven said it is prepared to fund additional resources for the Fair Work Ombudsman should that be required for the Ombudsman to take an active oversight role.
“It is important to state unequivocally that the process for claims will continue and 7-Eleven will pay all legitimate claims by franchisee employees for the past underpayment of wages,” 7-Eleven chairman, Michael Smith said.
“We will ensure claimant confidentiality and the independence of the proposed internal unit that will be responsible to the chief executive officer, be separated from all operational aspects and staff within the business and staffed by appropriately qualified individuals and backed by a secretariat,” Mr Smith said.
“The panel has provided 7-Eleven with an opportunity to gather in-house capabilities and implement new systems and processes that position us to take responsibility and accountability for this aspect of our business.
“It is incumbent upon 7-Eleven to take responsibility for this process. Ethical corporate standards cannot and should not be outsourced. We are happy to be held to the standards we have set for and expect of ourselves.”
Newly appointed 7-Eleven CEO, Angus McKay, said the internal team will be dedicated to the claims process full time.
“It is my expectation that as a result more claimants will be paid more quickly,” Mr McKay said.
“7-Eleven’s first priority remains to make sure those who have been disadvantaged as a result of wage underpayment practices by franchisees are paid what they are legitimately entitled to and as quickly as possible.”
7-Eleven said it encourages anyone who believes they have a claim to make contact the secretariat on 1800 619 802.
Fair Work Ombudsman weighs in
In a statement released on Thursday, the Fair Work Ombudsman said it acknowledged there may be concerns by some 7-Eleven employees, particularly visa-holders, about coming forward to an internal 7-Eleven process now the Fels Wages Panel has been abolished.
“We look forward to hearing the detail of how the critical work of the Fels Panel will be continued under the new arrangements announced by 7-Eleven yesterday,” the Fair Work Ombudsman stated.
“As an independent, statutory regulator funded by the taxpayer to ensure compliance with Commonwealth workplace laws, the suggestion that we would accept funding from 7-Eleven to oversee its activities in this space is both unacceptable and ludicrous.
“In fact, the Fair Work Ombudsman confirms it has active, ongoing investigations into a number of 7-Eleven franchisees.
“There is also a real prospect that we will take legal action against more 7-Eleven operators.”
Since July 2009 the Ombudsman has placed eight matters before the courts involving 7-Eleven franchisees, one of which resulted in a penalty of more than $214,000.
“The Fair Work Ombudsman remains of the view that 7-Eleven must accept it has moral and ethical responsibility for ensuring that all workers across its franchise network are paid their minimum lawful entitlements and take urgent steps to build a culture of compliance with workplace laws within the organisation.
“We expect that any arrangement with us would take the form of a robust and transparent compliance partnership which reassures the community and satisfies us that the 7-Eleven network is committing to genuine steps to ensure sustainable compliance with workplace laws.
“7-Eleven must root out and deal with systemic non-compliance.”