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The Major Findings from the Inquiry

Discuss about the Accessorial Liability of Board Members.

The purpose of this report is to provide a brief synopsis of the Fair Work Ombudsman system on the employment relationship in Australia. The Fair Work Ombudsman (FWO) promotes cooperative, harmonious and productive workplace. It is an independent and statutory agency of the Australian Government (Stewart & Owens, 2013). This independent agency helps the employer, employees and other people or the units related to the organization to understand and comply with the workplace law of Australia. The following paper discusses the launch of the 7 Eleven Inquiry by the FWO in Australia. The paper presents an overview of the purpose and function of the 7 Eleven Inquiry in the Australian workplace and the major findings out of the inquiry. While discussing the launch of the inquiry organization, the report also presents the drawbacks of the Australian Employment Relationship system that, the 7 Eleven Inquiry finds out regarding the role of the state and the role of the unions in terms of the organizational workplace (Grabosky, 2013). The Employment Relationship (ER) system defines the relationship between the employer and the employee in the organization in terms of the workplace ethics and laws (Sparrow & Cooper, 2012). Moreover, it is the basic function of the state and the union to monitor and execute the Fair Work Act in the workplace (Macdonald & Charlesworth, 2013). The prime focal point of the following paper is the 7Eleven network stores around Australia. The paper reflects the flaws in the ER system of Australia and the importance of the 7 Eleven Inquiry in order to find out those flaws within the organization. In addition, the paper also presents the implications of the 7 Eleven Inquiry and other inquiries in the for the regulation of the Australian ER system.

The function of the Fair Work Ombudsmen is to ensure the safety and fair right of the employee in the employment contract with the franchisees (Stewart et al., 2014). The purpose of conducting the 7 Eleven Inquiry by the FWO is to identify the allegations of underpaying wages false employment records in all the franchisee network of the 7 Eleven Australia Pty Ltd (Ombudsman, 2016). The allegations came from various sources that the employees were not paid proper wages according to their job role and responsibilities. The allegations also include that there were many falsification of the employment across the franchisee companies of the 7 Eleven Inquiry. To enquire the truthfulness of the allegation and find out the reasons for the wrong and unjustified treatment of the employees in the organization, the FWO launched the 7 Eleven Inquiry Australia (Fraser, 2016).

Gaps in Australian ER System

The inquiry of the FWO found out the some serious issues and instance of non-compliance in the franchisee organizations (7-eleven-inquiry-report., 2017). These major findings are:

  • The 7 Eleven inquiry found out that there are many organizations that do not follow the Fair work Act of 2009, that ensures the employees health, wages, weekly work hours and other employments benefits.
  • The inquiry found out the manipulations in the organization for disguising the underpayments of the employees (Thornthwaite, 2017).
  • The allegation regarding the falsification of the employment records are found to be true by the inquiry.
  • The findings show that there are many employees in the franchisees who are afraid to speak up about their problems regarding the underpayments.
  • It was found that the franchisees forces the employees to cash back from their wages. To ensure the cash back the franchisees took the employees to the ATM and forced them to pay certain portion of withdrawal money.
  • The franchisees did not follow and maintain the labor law and did not provide the necessary benefits to the employees.
  • The franchisees were also involved into the unfair dismissal of the employees.

There were some serious gaps in the Australian Employment Relationship (ER) system that the 7 Eleven Inquiry raised to identify those gaps. The gaps were the result of the negligence of the state in intervening the employment relationship in order to ensure the achievement of social and economic objectives for the entire nation (Alter, 2013).  The role of the union is equally vital for the employment relationship system in terms of securing the wages, health and safety of the employees, working conditions of the employees and the welfare of the people in employment (Pekarek & Gahan, 2016). Bothe the state and the union are responsible for ensuring and maintaining employment policies and the laws regarding the wellbeing of the employees. However, the state as well as the union failed miserably in meeting their primary task and as the result, the employees of the franchisees had to suffer. Apart from the management of the organization, it was the duty and responsibilities of the state and the union to maintain a healthy employment relationship with the employees (Hardy, 2016). The following section covers the gaps in the employment relationship system in the franchisees of 7 Eleven Inquiry in Australia.

The inquiry investigates in 20 stores and found out the gaps in the ER system (Wright, 2016). Brief overviews of some case studies are presented to provide the evidence based arguments on the findings (7-eleven-inquiry-report., 2017).

In most of the stores, the inquiry found insignificant and inaccurate records for disguising the underpayments of the employees. It is found in the most of  the stores that the employees were forced to work for additional hours and they were not paid accordingly to the work hours (7-eleven-inquiry-report., 2017). It was clear and evident that the Fair Work Act (2009) was not followed properly in the organizations (Macdonald & Charlesworth, 2013). This is definitely the gap in the employment relationship system that both the state and the union can be considered responsible for not monitoring the process.

In this regard, a case study is presented to clearly depict the actual situation and provide the evidence of the argument. On visiting few stores by the inquiry inspector, he found out that the records are not accurate as per the real working hours by the employees. In addition, were underpaid (Briton, 2015). The following numeric tables provide the data on the working hours and the underpayments (7-eleven-inquiry-report., 2017).

Reality

Records

Rate of Pay

$15

$23.15

Hours of Work

20 hours

12.96 hours

Gross Pay

$300

$300.02

Employee Participation

Table 1: Example of disguised payroll hours

Reality

Records

Base Rate of Pay

$15

$22.77

Penalty Rate of Pay

$15

$27.09

Hours of Work

34 hours

12.88 hours at base rate

8 hours at penalty rate

Gross Pay

$510

$510

Table 2: Example of Increasing Penalty Rate

Another gaps that was found during the inquiry of the 7 Eleven, was the lack of employee participation for the interview. The employees were found to be scared to speak up about their problems of underpayments (Briton, 2015). It is the primary duty of the union to assure the employees to speak up about their problems. Hence, it is indeed the drawbacks of the union for being incapable of providing proper security and comfort to the employees to share their problems in the workplace. This defines the gaps in the employment relationship system.

The case study regarding this matter shows that some of the employees changes their statements during the inquiry (Terry-Armstrong, 2016). For example, one employee when was asked initially stated that he works for 8 hours a day and that he was paid $35 per hour, whereas another two employees said they were paid $18 and $14 per hour respectively for the same working hours (7-eleven-inquiry-report., 2017). This diverse statement clearly shows the evidence of the gaps within the employment relationship and that the employees are afraid to share their problems.

Apart from these two major drawbacks, other gaps are found among the various evidence in the franchisee stores. The evidence of the drawbacks are given in the table below:

Evidence

Details

Cash Payments records

The cash payments records of the employees were found misprinted. The misprints were done intentionally to disguise and hide the actual data to show the cause for the underpayments (Thornthwaite, 2017).

Misuse of the Work Ethics and regulations

The misuse of the work employment ethics and the regulations had been seen by the inquiry. By misusing the employment ethics and regulations the employees were mislead and forces to draw underpayments. 

CCTV Footage                                               

Though CCTV footage were not available in every stores, it has been used as the good and proper evidence for presenting the happenings in the stores. The footage showed the instances of the actual working hours of the employees and the payments process, though not clear, but was adequate for using as the evidence. 

Register of the Employee log-ins

Every franchisee is meant to have a register for the employees record their actual work timing. The store must have unique employee code for each employee. However, it was found that many stores did not have a particular log-in register and unique employee code. Moreover, the stores having the register found showing reluctance in changing the register according to the change of the time shift.

Communication

The inquiry shows that there is the lack of communication between the employee union and the employees. Inadequate communication had made the employees uncomfortable in sharing their problems and they also made the union unaware of the underpayments of the employees (Lu, Samaratunge & Härtel, 2012).

All the evidence above shows the gaps in the employment relationship in terms of performing the responsibilities of the state and the union (Wright, 2016). The major gaps that are evident from the inquiry are the lack of proper communication with the employees and the monitoring of the union as well as the state on the process of the payments and the work regulations.

From the major findings of the 7 Eleven Inquiry the non compliances are evident in the 7 Eleven network franchisee stores. In addition, numerous changes are required for reducing the opportunities to underpay the employees. The investigation by the 7 Eleven Inquiry implies that the labor laws in the workplace needs major reform (Sivaraman & Turner, 2016). To ensure the compliances in the stores, there are some implications for the ER regulations in Australia. The recommendations are collected from various journals, newspaper and academic articles and the reports on the 7 Eleven Inquiry. The recommendations target the 7 Eleven, the FWO and the other regulatory frameworks. The frameworks provide the remedies and opportunities to the non-compliances happening within the workplace with the employees in the franchisee stores (Employment Law Matters., 2017). The recommendations are:

  • Promoting sustainable culture to comply with the ER system across 7 Eleven network.
  • Enhancing the effectiveness of the FWO for bringing into account the persons and entities responsible for the exploitations of the vulnerable workers, working on the temporary working visas.
  • Requiring the franchisees to comply with the requirements of the payroll service.
  • Arranging biometric attendance in order to maintain proper and accurate records of the working hours of the employees.
  • Requiring the franchisees to maintain their own record of proper and actual working hours.
  • Reviewing franchise arrangements, specifically around the control level.
  • Rearranging the structure of the governance for reducing the opportunities for the conservations of the workplace laws (MacCallum, 2016).
  • Requiring the structural change in order to ensure the compliances around the workplace (Regan, 2016).
  • Considering the franchisee agreement regarding the termination of the same.
  • Making awareness of the powers and roles of the ER regulations including FWO and other employment related issues such as health and safety.
  • Weekly regular visit of the union in the franchisees to ensure the smooth and proper workflow.
  • Conducting awareness programs in a monthly basis to make sure all the employees know about their work ethics, and work right.

The following portion of the report suggests the detailed recommendations of the 7 Eleven Inquiry for the ER system as well the 7 Eleven stores across Australia.

Entering into the compliance partnership with FWO, whereas the 7 Eleven Inquiry will publicly accept its ethical and moral responsibilities in regard to the standards of conduct to comply with all the individuals involved in the enterprise, that:

Abiding by the law in relation to all the employees in all the stores

Meeting the Australian social and community expectations for providing equal, safe and fair work opportunities for all the employees in every store.

The terms of compliance partnership needs to include the form of the Proactive Compliance Deed, in order to receive the sustainable compliances. These terms are:

Taking important steps to develop the employment practice in the franchisee stores by the implementation of sustainable, permanganate and fundamental changes in the franchisee model for ensuring the laws in terms of the workplace relations. This also includes te instruments in the Fair Work Act 2009 and other related instruments, that are entirely abided by for all the employees in the franchisee stores of the 7 Eleven network.

Acknowledging the administrative process and the franchisee model that includes the requirements of the internal audits and the payroll system. The system must have instances that contribute to the environment of the vulnerable employees to exploitation inclusive of the way of underpayments.

Conclusion:

It can be concluded from the above discourse that the 7 Eleven Inquiry was initiated for identifying the gaps and the drawbacks in the Employment Relationship system in Australia. The Inquiry was conducted across the 7 Eleven network franchisees in Australia. The result of the inquiry showed that there is some major non-compliance in the ER system within the franchisees. The gap shows the negligence and irresponsibility of the state as well as the union of the employees. The major issues that emerge from the inquiry findings are the forceful employment for the additional work hours. The inquiry also focuses on the issue of underpayments and the falsification of the records regarding the extra working hours and the underpayments. The report presents the evidence on the findings of the inquiry from various sources such as newspaper, academic journals and reports based on the 7 Eleven Inquiry. The report further points out the major drawbacks in the ER system that required the inquiry of the 7 Eleven in its franchisee network. The report also discusses the implications for the ER system by the 7 Eleven Inquiry to reduce and eliminate the potential opportunities for the conservations of th underpayments and the falsification of the data. The recommendation suggests some minor and major changes in the structure of the franchisees and the proper implementation of the FWO within the same. However, it is evident from the report that the state and the union play vital role in maintaining the proper ER system and it is also the right and duty of the employees to share their problems with the higher authority to avail the rights of employment.

Reference:

7-eleven-inquiry-report. (2017). Retrieved 30 August 2017, from https://7-eleven-inquiry-report.pdf

Alter, S. (2013). Work system theory: overview of core concepts, extensions, and challenges for the future. Journal of the Association for Information Systems, 14(2), 72.

Briton, B. (2015). 7-Eleven scandal: The tip of a low-wage iceberg. Guardian (Sydney), (1705), 1.

Fraser, M. (2016). Investigating 7-Eleven: Who are the real bad guys?. Griffith Journal of Law & Human Dignity, 4(2).

Grabosky, P. (2013). Beyond Responsive Regulation: The expanding role of non?state actors in the regulatory process. Regulation & Governance, 7(1), 114-123.

Hardy, T. (2016). Who Should Be Held Liable for Workplace Contraventions and on What Basis?. Australian Journal of Labour Law, 29(1), 78-109.

Lu, Y., Samaratunge, R., & Härtel, C. E. (2012). The relationship between acculturation strategy and job satisfaction for professional Chinese immigrants in the Australian workplace. International Journal of Intercultural Relations, 36(5), 669-681.

MacCallum, W. (2016). Accessorial liability of board members. Governance Directions, 68(3), 164.

Macdonald, F., & Charlesworth, S. (2013). Equal pay under the Fair Work Act 2009 (Cth): mainstreamed or marginalised. UNSWLJ, 36, 563.

Ombudsman, F. W. (2016). A report of the Fair Work Ombudsman’s inquiry into 7-Eleven. Canberra: Commonwealth of Australian.

Pekarek, A., & Gahan, P. (2016). Unions and collective bargaining in Australia in 2015. Journal of Industrial Relations, 58(3), 356-371.

Regan, L. (2016). Time for change at 7-Eleven. Proctor, The, 36(5), 36.

Sivaraman, G., & Turner, P. (2016). The 7-Eleven wages scandal: The need for law reform. Precedent (Sydney, NSW), (135), 53.

Sparrow, P., & Cooper, C. L. (2012). The employment relationship: Key challenges for HR. Routledge.

Stewart, A. J., Bray, M., Macneil, J., & Oxenbridge, S. (2014). 'Promoting cooperative and productive workplace relations': exploring the Fair Work Commission's new role.

Stewart, A., & Owens, R. J. (2013). Experience Or Exploitation?: The Nature, Prevalence and Regulation of Unpaid Work Experience, Internships and Trial Periods in Australia. Adelaide: University of Adelaide.

Terry-Armstrong, N. (2016). 7-Eleven: A case study of a flawed franchise model. Busidate, 24(2), 8.

Thornthwaite, L. (2017). Australia's wage theft crisis. Advocate: Newsletter of the National Tertiary Education Union, 24(1), 28.

What can we learn from the Inquiry of 7-Eleven’s approach to workplace matters? - Employment Law Matters. (2017). Employment Law Matters. Retrieved 30 August 2017, from https://employmentlawmatters.com/dismissals/can-learn-inquiry-7-elevens-approach-workplace-matters/#.Waa5ccgjHIX

Wright, C. F. (2016). Australian industrial relations in 2015. Journal of Industrial Relations, 58(3), 297-307.

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