7-Eleven’s wage fraud should be your wake up call

Kristin Harris

Kristin Harris

GM Strategic Partnerships

October 06, 2015

7-Eleven’s wage fraud should be your wake up call

Kristin Harris, GM Strategic Partnerships
October 06, 2015

Now that 7-Eleven Australia has a newly appointed chairman, it’s going to be interesting to see what checks and balances Michael Smith will bring onboard in the wake of the fallout from the ABC’s Four Corners explosive revelations.

Michael Smith took over the role of chairman on 30 September following the resignation of Russell Withers. Withers stepped down with CEO Warren Wilmot and general manager of operations Natalie Dalbo. This came weeks after a joint investigation by Fairfax Media and the ABC’s Four Corners program found the company was paying its workers half the minimum wage. The underpayments were both systematic and widespread.

Huge costs

While 7-Eleven now faces hefty legal challenges, and significant fines, the convenience store chain will face further scrutiny from the Fair Work Ombudsman.

To fix the immediate problem, Smith has said that the company would be changing its business model to ensure workers are treated fairly.

In addition, Professor Allan Fels has been appointed to run an independent panel to identify underpaid workers and repay their missing wages.

However, this won’t be easy. As many as 5000 workers across the company’s 620 store network may be affected. And as the practice of doctoring timesheets and staff rosters to disguise the real number of hours’ staff worked in stores is so widespread, the only way to prove the underpayments is to manually compare CCTV footage of the stores with payroll documents. In many stores, the footage only lasts for a month.

Just the tip of the iceberg

As Smith tries to get 7-Eleven’s house in order, he has declared that his company’s problems are just the tip of the iceberg.  He believes the problem of wage fraud and the exploitation of young and foreign workers in Australia is endemic. Tellingly, even his own daughter has been cheated. In an article published in The Sydney Morning Herald, Smith revealed, “My youngest daughter told me the other day three of her last four jobs didn’t pay her full wages.”

So while 7-Eleven focusses on reparations, all employers should use this particular case as a wake-up call.

“We need a systematic solution to it.”

As the 7-Eleven case is played out all too publically – under the intense glare of the media spotlight – failure to adhere to Fair Work Act requirements means more than just steep penalties.

The damage to the 7-Eleven brand may take a considerable amount of time and money to repair. In addition, there’s the impact on morale, not to the performance and productivity of other staff and franchisees.

As professor Fels, pointed out, 7-Eleven’s problem needs a systematic solution.

Leave nothing to chance

If wage fraud is so widespread, you can expect to see increased powers and steeper penalties from the FWO in an effort to stamp it out.

As we mentioned last year in our post on Fair Work Audits, the message from the Fair Work Ombudsman is loud and clear: No matter what your line of business, no matter your company size, comply with employment regulations or pay heavy penalties.

As a business owner or manager, you need to be fully aware of and 100% compliant with your obligations to employees under your industry awards and the Fair Work Act. This includes their correct rate of pay, penalty rates and any overtime rates, plus statutory leave provisions.

You also need to prove it. Record keeping and documentation is vital, particularly if you ever have to defend an underpayment claim, or come under the scrutiny of an FW audit.

Automate it

These days, using cloud-based software like Deputy you can avoid inadvertently underpaying your staff. By connecting shift scheduling with timekeeping and payroll, you leave absolutely no room for human error.

As an employer, if you can learn anything positive from the 7-Eleven wage fraud saga, it’s the need to be fully aware of your obligations to your staff.

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Kristin Harris
is GM Strategic Partnerships, advising and working with Deputy’s customers and partners.

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