7-Eleven and Fair Work Sign Landmark Deal to Combat Exploitation in the Workplace

Tuesday 24 January 2017 @ 10.06 a.m. | Industrial Law | Legal Research

As reported in a previous TimeBase article concerning the actions of 7-Eleven, it has now been revealed that the Fair Work Ombudsman (FWO) has signed a landmark deal with convenience store chain 7-Eleven to combat exploitation of workers by franchisees through measures including biometric technology and CCTV supervision.

About the Deed

The Proactive Compliance Deed (the Deed) signed with FWO is a plan that is hoped will end long-running underpayment issues in its franchises. The measures include installing and overseeing biometric shift scanning systems and the roll out of 7-Eleven owned CCTV systems at all outlets in order to allow the head office to monitor employee hours and make sure workers are paid correctly.

The deed also implements measures aimed at overcoming the challenging and unlawful practice of “cash backs” by workers to franchisees which were revealed by the FWO’s Inquiry Report into workplace non-compliance in the 7-Eleven network.

Under the Deed, 7-Eleven will have to:

  • Improve systems and record keeping. All franchisees will have to use a central payroll system that will specify minimum rates of pay for workers;
  • Employ an independent auditor to carry out three annual audits to make sure the company is complying with workplace laws; and
  • Set up an internal investigations unit to investigate underpayment of wages and claims by 7-Eleven workers.

During 2016, multiple 7-Eleven stores were found to be underpaying workers thousands of dollars, and a report from the FWO in April 2016 found many staff members were being forced to give “cash backs” due to franchisees claiming they were unable to pay government rates.

Paragraph 2.2 of the Deed makes reference to previous conduct by the Company:

From 2008 onwards, the FWO received reports from Employees and other sources alleging significant underpayment of wages at 7-Eleven Franchises. Between 2011 and the date of signing this Deed there have been a number of civil penalty cases conducted by the FWO against Franchisees in relation to underpayments and record keeping contraventions.

Comment from the FWO

Fair Work Ombudsman Natalie James said the commitments in the Deed would help prevent the unlawful practices identified in the regulator’s April 2016 Inquiry Report, increase accountability across the entire franchise network and introduce a culture of compliance from head office down:

“The measures in this deed are the most robust and comprehensive that any franchise brand has in place in Australia. The goal is to make sure franchisees pay workers correctly in the first place. As we noted in our Inquiry report, non-compliance in this network has been long term, extensive and systemic. Some franchisees have demonstrated they will go to extreme lengths to circumvent record keeping systems. The deed establishes a framework for 7-Eleven to detect, investigate and rectify underpayments within its network now and into the future. It also maintains commitments to backpay workers underpaid in the past.”

Ms James also said that she was confident the new measures will improve the treatment of workers by 7-Eleven franchisees, but conceded it would take some time for the convenience chain company culture to change. Ms James added:

"This won't happen overnight. To be frank, the proof of the pudding will not be in the eating of this year's Christmas dinner but in next year's, and 2018, and 2019."

Reaction from 7-Eleven

In a statement released by 7-Eleven's Chief Executive Angus McKay, he that the “company was doing all it could to stamp out wage fraud from its franchisee network”:

"This week [December 2016] we have taken the next major step in our reform journey. I have consistently said we want to be judged on our actions. We'll continue to report transparently on our progress as we seek to be the exemplar of a solution to a problem that is regrettably broader than our network."

7-Eleven also said it will increase the profit share and minimum profit guarantees for franchisees under its franchise agreement.

TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products.


7-Eleven and Fair Work sign deal to combat exploitation using biometrics, CCTV - abc.net.au

7-Eleven signs on with Fair Work Ombudsman to set the standard for franchising in Australia - FWO Media Release

From biometric scanners to CCTV: 7-Eleven’s “unprecedented” deed with Fair Work Ombudsman - smartcompany.com.au

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