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NEW TURN IN 7-ELEVEN PR DISASTER AFFECTS ALL AUSTRALIAN FRANCHISORS

by Jason Gehrke,
last updated 24/05/2016

in this article:

The 7-Eleven employment scandal in Australia continues to have repercussions for the whole franchise sector there. Jason Gehrke of the Franchise Advisory Centre provides an update.

A week after convenience retail chain 7-Eleven fired the independent panel it hired to resolve outstanding wages owed to workers defrauded by its franchisees, the company now finds itself at the centre of a new Coalition election policy aimed at preventing worker exploitation.

7-Eleven continues to generate damaging headlines from its handling of widespread wage fraud exposed last year, and which a Senate inquiry has since found involved up to two-thirds of the network’s 600-plus franchisees who systematically paid staff only around half of the wages to which they were entitled.

The Coalition policy announcement by Employment Minister Michaelia Cash is an election pledge to provide extra investigative powers and a $20 million funding boost to the Fair Work Ombudsman, plus a ten-fold increase in fines for wage underpayment, the creation of a special Migrant Worker Task Force, and new laws for franchisors to be held accountable for wage abuses by their franchisees.

The prospect of franchisors being made legally responsible for wage underpayments by franchisees represents a sinister development for the franchise sector which could create potential liabilities for franchisors that in extreme cases, could outweigh the benefits of franchising.

The Coalition announcement follows comments by Opposition Leader Bill Shorten last week that the 7-Eleven scandal was “exploitation on an industrial scale” and that the Labor Party was reviewing legislation that would hold the franchisor liable for systemic wage abuse.

Last week 7-Eleven sacked the independent panel it hired last year to assess pay claims from defrauded workers, sparking a media stoush between the company and panel chair and former ACCC chairman Allan Fels, and his deputy, David Cousins.

In a media statement, 7-Eleven said that the Fels Wage Panel had agreed to cease operation, with all future wage claims to be assessed in-house, however Allan Fels vigorously denied there was any agreement to cease operation, and in media reports claimed that 7-Eleven was taking the process in-house to minimise pay-outs and in response to pressure from the very franchisees who had underpaid their workers to begin with.

Underpaid workers, who had been promised anonymity by the Panel now fear retribution from the franchisees who abused them if their details are leaked by 7-Eleven, with some workers claiming that they continue to be threatened and in some cases, beaten, by their former employers, according to a media report. 

Read more 1  Coalition targets 7-Eleven in new policy package

Read more 2   7-Eleven victims 'scared' about panel changes

 

 

 

 

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