The store chain 7-Eleven was witness to the largest case of wage abuse in the history of the corporation. Four Corners and Fairfax media has exposed the issue on international forum and it revealed the dark side of the labour market of Australia (Afr.com, 2017). This case of economic exploitation carries along with it the threat to the Australian Taxation Office. Wage fraud accounting to million dollars in a year has thrown a dark light on the labour force of Australia.
The effectiveness of Fair Work as a regulator is being questioned and enquiry is being made into the issue of wage abuse. The structure of the regulator is being monitored closely and its powers and budget is being increased so that it’s surveillance process is improved. They are making an enquiry regarding the fact whether the head office or franchise is responsible for the fraudulent act (Sivaraman & Turner, 2016). The reviews that were made dated back to previous September and revealed payroll compliance issues. A grim reality was brought out in a review that revealed that pay summary showed evidence of payment to a small number of four people by the franchise. For engaging in fraudulent acts, they should pay their employees back was the verdict.
Eleven was distraught at the breach of trust and was worried about the dismal act of the franchises. The repercussions on the employees were great and the prestige of the franchises was at stake. It would result in the loss of trust of people towards these employees. Appropriate action was promised by the head office however, the efforts were not good enough. The results of the underpayment of wages have not been viewed strictly by the head office and lack of stringent action on their part has forced the problem to continue (Fraser, 2016). A notice specifying breach should have been charged on the franchise in order to prevent any such thing in future. 7 Eleven should have reported about this illegal behaviour to the police or to the regulator instead of taking things lightly. The overall reputation of the company would be at stake and proper steps taken could save the name and reputation of the company. They have been secretly covering this issue adding to the problem.
Eleven has a huge amount of earnings and it earns more revenue as compared to other companies. In accordance to the franchise agreement, the main office earns around 57 percent of net profit and the rest of the profit goes to the franchisee. The head office is responsible for payment of the rent, equipment supply, fittings as well as for the services that are related to the back office. The franchise is responsible for payment of running costs that includes that of the staff wages. The average earnings of 7 Eleven franchise will be between $300,000-$1.7 million (Terry-Armstrong, 2016). This will depend on the location and size of the franchise. A final income of $40,000 is earned by them after payment to the employees. After the payment of interest, it would be found that the earning would be even less than that. After the payment of all these dues, there will hardly be any room left for payment of the freight salaries.
The head office should have been more careful before selecting a franchise. The head office should not be moved by vague statistics but rather carry out thorough research before getting into any agreement (Spector, 2017). Press clippings with positive feedback is not always reliable and their accolades may be of hardly any merit. A great deal of research on the part of the head office and proper steps taken in the right direction will add more credibility to the company.
Afr.com. (2017). 7-Eleven: Wage abuse claims puts scrutiny on Fair Work response. Financial Review.
Fraser, M. (2016). Investigating 7-Eleven: Who are the real bad guys?. Griffith Journal of Law & Human Dignity, 4(2).
Sivaraman, G., & Turner, P. (2016). The 7-Eleven wages scandal: The need for law reform. Precedent (Sydney, NSW), (135), 53.
Spector, M. (2017). Constructing social problems. Routledge.
Terry-Armstrong, N. (2016). 7-Eleven: A case study of a flawed franchise model. Busidate, 24(2), 8.