Last week 7-Eleven announced that it would be winding up an independent panel tasked with dealing with underpaid workers, and move future compensation assessments in-house.
In dismissing the panel, chaired by former ACCC boss Allan Fels, 7-Eleven said its future internal assessments would be overseen by the Fair Work Ombudsman.
It also offered to compensate the FWO for any additional costs, which immediately raised red flags over credibility issues.
The FWO hit back in a statement, saying “the suggestion that we would accept funding from 7-Eleven to oversee its activities in this space is both unacceptable and ludicrous”.
7-Eleven’s decision to dismiss the panel chaired by the respected economist and lawyer has the potential to add to the company’s list of problems, which led the CEO and chairman, 7-Eleven’s billionaire owner Russ Withers, to resign last year.
Fels accused the convenience store giant of trying to discredit and undermine the panel, Business Insider reported, and said many of the underpaid workers had faced intimidation to deter them from filing underpayment claims against their employer.
He also said the head office was complicit in aiding franchisees in destroying documentation and says the new standard of evidence 7-Eleven wanted to prove claims is “impossible”.
Fels said 7-Eleven’s liability could be as high was $100 million, Business Insider reported. Fels panel had assessed around 350 claims at an average of around $38,000, costing 7-Eleven around $11 million.
The FWO said it was waiting for details on how the new internal panel would work.
The employment watchdog also said a number of 7-Eleven franchises were currently under investigation and it anticipated further legal action.
“There is also a real prospect that we will take legal action against more 7-Eleven operators,” Fair Work Ombudsman Natalie James said in a statement.
The FWO has taken eight 7-Eleven franchisees to court since 2009 and stung one store with a record $214,200 for the underpayment of two migrant employees and falsifying records.
7-Eleven needed to root out and deal with systemic non-compliance, the employment watchdog said in its statement.
“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,” James said.
The Fair Work Ombudsman made the following recommendations to 7-Eleven last month:
Accept that it has moral and ethical responsibility to ensure its stores meet community and social expectations for equal, safe and fair work opportunities for all employees,
Implements effective governance arrangements that ensure compliance with all federal workplace laws,
Review its operating model to ensure regular review of the financial viability and legal exposure of franchise agreements and engage an external, independent party to self-audit its compliance.
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The Australian government’s employment watchdog has labelled an offer by 7-Eleven to pay it for overseeing the convenience store giant’s new panel dealing with underpaid workers as “unacceptable and ludicrous”.