7-Eleven workers from 400 stores across Australia, around two-thirds of the franchise’s network, have submitted claims of underpayment to the Independent Franchisee Review and Staff Claims Panel, Dr David Cousins AM told a Senate inquiry in Melbourne on Friday.
The panel has so far received 600 claims, with thousands more expected according to Cousins, after 15,000 former and current 7-Eleven employees were invited to apply for compensation.
Cousins told the hearing he thought fear of deportation was preventing more workers from coming forward, but that the number would build up with time. In a submission made to the inquiry in September, associate professor Jo0-Cheong Tham supported Cousins’ concern, saying the criminal offences attached to temporary migrant worker visa breaches are draconian and unfair.
In its submission, the Franchise Council of Australia (FCA) also drew attention to the inadequacy of protections currently offered to international workers saying, “an amnesty may work, but that ignores other reasons why workers may willingly stay silent and also does not address (and possibly encourages) the provision of false information in visa applications”.
Franchise Council of Australia makes recommendations
7-Eleven’s typical franchise model was emphasised again at the hearing, this time by the FCA’s submission to the inquiry.
“There are approximately 1180 business format franchise systems in Australia, with an estimated 79,000 outlets employing more than 460,000 people with an estimated $144 billion annual turnover,” the FCA said.
“7-Eleven’s approach of a comprehensive day to day business model including the payment of all invoices on behalf of the franchisee, provision of a payroll service, and a financial model that operates on a split gross profit, is not typical of a franchise network.
“Most franchises are structured to celebrate and support the independent nature of the individual franchisees with the business owner operating the business within the support network of product, deals, training and profile provided by the franchisor.”
The FCA said it did not wish to intervene in relation to the specific matters of 7-Eleven’s response to the instances of employee abuse presented to the Senate Standing Committee on Education and Employment, but did state that it seems the evidence largely relates to the specific instances of abuse rather than policy issues.
“Given the unusual nature of the 7-Eleven model, we are keen to ensure that any regulatory responses recommended by the Committee are appropriate, and do not impede or prejudice the broader franchise sector or impose unnecessary compliance costs,” the FCA said.
Among the FCA’s 10 recommendations were calls to provide more resources and greater information gathering powers to regulators such as the Fair Work Ombudsman, while also taking the onus of establishing guilt away from regulators by making employers prove their innocence.
The FCA suggested changes to the Franchising Code of Conduct in order to allow franchisors to terminate franchisees immediately if there is a serious breach of workplace legislation. Inability to terminate franchisees in these cases “impedes their [franchisors] ability to assist the regulator with enforcement activities”.
However, the FCA said it did not think changes to the Fair Work Act’s underlying provisions were necessary except to increase fines and penalties against individual employers, and particularly directors and officers of employers.
Wage issues uncovered at associated Starbucks Australia chain
The hearing heard 7-Eleven’s Starbucks chain also had wage issues, with a former employee saying concerns about over-payment and visa conditions were ignored by the company’s head office.
The licence for 26 Starbucks stores was purchased in 2014 by the Withers and Barlow families, who own the 7-Eleven chain. Staff employed by the Starbucks Australia chain are payed directly by 7-Eleven, as opposed to 7-Eleven workers who are payed by franchisees.
The 7-Eleven head office played down the claims, saying they overstated the scale of payroll issues at the Starbucks Australia chain.