Summary Of The 7-Eleven Inquiry: Essay On Findings, Gaps, And Analysis.

Background of the 7-Eleven Inquiry

In June 2014, the Fair Work Ombudsman (FWO) initiated an inquiry in the Australia’s leading convenience retailer- 7 Eleven-Australia Pty Ltd with respect to the allegations relating to the significant underpayment of wages and distortion of employment records that were taking place within the franchisee network 7-eleven. The investigations conducted by the FWO disclosed the nonconformity with the Fair Work Regulations 2009 (FW Regulations) and the Fair Work Act 2009 (FW Act) which further revealed about the deliberate manipulation of the records that the company underwent in order to disguise unemployment of wages.

The inquiry purported to identify whether the allegations with respect to serous non-compliance within the 7-Eleven store network was true. Under section 682(1) (c) of the FW Act, the FWO is empowered to inquire into any practice or act that may be inconsistent with the Act. The inquiry was commenced by the FWO in order to address and identify the drivers of non-compliance, and to examine the motivations of the participants of the workplace (Fair Work Ombudsman, 2016). The inquiry was commenced to determine if 7-Eleven was involved in the underpayment of wages by the franchisees and the falsification of employment records as was alleged against the 7-Eleven.

The inquiry was initiated since the intelligence and information gathered by the FWO recognized a need to examine the operating model of the 7-Eleven’s network. The inquiry aimed at assessing whether the 7-Eleven head office and the franchise-operating model were involved or contributed to unlawful behavior. It also aimed at ensuring whether the workers themselves were involved in any non-compliance, even if inadvertently or reluctantly.  In order address broader non-compliance occurring in a business, network or supply chain, the inquiry was a necessity, hence, the inquiry was commenced with a view to establish the drivers of the non-compliance and propose recommendations that aimed at maintaining sustainable compliance (Fair Work Ombudsman, 2017).

After the inquiry, it was found that the approach of 7-Eleven with respect to workplace matters, while promoting compliance, it failed to address or detect any deliberate non-compliance. There were instances where it was found that franchises created misleading and false records with a view to satisfy the auditing and payroll regime of 7-Eleven while it persisted to underpay the employees.

Further, the findings of the inquiry included the widespread exploitation of the international student visa holders who are working in the 7-Eleven stores across Australia. It was further found that there was prevalence of undocumented migrant labor, which was relevant to the plight of the international student visa workers at 7-Eleven. The issue of undocumented migrant labor is relevant to the vulnerability of the international student visa workers. The international student are required to work for 40 hours a fortnight while they are studying but they are often forced to work for 50 hours a week (Karp, 2016).

Findings of the Inquiry

There have been several instances, which establish that fact that 7-Eleven franchisees have either enticed or forced the international student workers to commit an infringement of their visa conditions by making them work for more than the stipulated hours under their visa conditions. Consequently, the additional portion of hours that the international students have been forced to work remained undocumented and they were never paid for the additional hours of work. The employers often force the international student visa to work for extra hours by threatening them that they shall report to the Department of Immigration and Border Protection (DIBP)that the employees are violating their visa conditions.

Several authors argued that the Australian employment laws do not cover undocumented workers, which implies that the undocumented visa holders shall not receive protection extended by the FW Act with respect to the minimum wage, modern awards, unfair dismissal provisions and other employment rights or even access to worker’s compensation. On the contrary, the FWO asserted that rights of the international visa holders fall within the scope of the employment law and referred to two legal citations to support its contentions. In two legal proceedings against the 7-Eleven franchises, Fair Work Ombudsman v Bisen Pty Ltd & Anor and Fair work Ombudsman v Haider Enterprises Pty Ltd (in liq) & Anor, the courts have passed order that the workers on the student visas should be paid back. This was because of the additional hours beyond the hours permitted by their visas for which the students have worked (McBride, Hebson & Holgate, 2015).  

Another significant finding reveals that there have been allegations against the 7-Eleven that it is involved with a cash-back scheme where the migrant employees are given adequate payments initially, but, eventually, they are compelled to pay certain amount of their payments back to the organization (Townsend, Wilkinson & Burgess, 2014).

Employment relations include a fairly wide-ranging list of employment related subjects which varies from the nature of work organization and the changing composition of labor force, to the structure of the national legal framework and the structure of the collective bargaining along with the functioning and role played by the relevant several governmental agencies and representative organizations. In other words, the concept of employment relationship refers to the governance of the employment relationship (Australia.gov.au., 2017). A more appropriate statement surrounding the concept of employment relationship could be the involvement of the institutions in governing the employment relationship, the organizations and the people that administers them and the rule making procedure that is involved together with their social and economic outcomes.

Exploitation of International Student Visa Holders

In regards to the gaps in the Australian ER system that has been found with respect to the role of the unions and the state, the following issues identified:

According to the visa conditions of the international students in Australia, the students are required to comply with certain regulations while they are studying. The students are required to work for 40 hours a week where the 7-Eleven is compelling them to work for 50 hours a week. Thus, the organization is committing a violation of the conditions of the student visa with respect to their stipulate time limit for work. The employers have claimed that the students do not have a time limit to work during their vacations but under such circumstances, employers are obligated to pay additional money to the migrant students for working overtime. However, the 7-eleven have been alleged for not providing the migrant students with the additional money for working overtime. Besides, as discussed earlier the organization is also involved in wage-scam policy. For instance, the pay records of the organization states that those employee who actually works for 40 hours per week and receive $12 per hour were recorded as students working for 20 hours and are receiving $24 per hour. This may refer to the wage fraud policy. The employees are paid initially and then they are forced to pay back some amount of their money to the company.

The FWA Australia has stipulated standard of rules relating to the working hours of the employees. The employment relation statutes in Queensland, Victoria, NSW has set the working hours of the student at 40 hours per week. &-eleven organization is compelling the students to work for additional hours and is not even paying them for the additional hours of work. Moreover the international migrant students are threatened to work for 50 hours per week otherwise the employers would report to the Immigration Department that the students have been violating their visa conditions. This pressure is creating mental stress upon the students who are not only working hard but are also being underpaid. This establishes the fact that the organization is failing to provide a positive work environment to its employees and forcing them rather threatening them to work for additional hours without being paid. These employment practices lead to an infringement of the employment relationship in Australia.

According to the Human Rights Act, employers are required to conduct employment practice that safeguards the basic human rights of the employees conferred upon them by the Human Rights Act. The employees must be provided with an environment where the employees feel free to discuss about the issues and expects the employers to address and resolve the same. however, in case of the &-Eleven organization, the employers are intimidating the student visa holders to work for additional hours without being paid and they work for additional hours under the fear that the employers would report to the Immigration and Border Department about the violation of their visa requirements related to their work permit. This establishes a gap in the organization’s policy with respect to the compliance with the Fair work Act of the country and the Human Rights Act.

Cash-Back Scheme Allegations

According to the Minimum Wage Act applicable in the country fixes the minimum wage rates with respect to certain form of employments. According to the Fair Work Ombudsman, the minimum wage rate applicable in NSW, Victoria and Queensland have been increased by 3.3% which is an increases by $18.29 an hour. Even if the employees agree to work at lower wage rate than the stipulated rate, the employers are not entitled to reduce the wage rate and make the employees work under the same wage rate. Nevertheless, in the 7-Eleven, the employers have not only been reducing the wage rate of the employees but also threatening and forcing them to work for the additional hours without paying theme for overtime works.

Moreover, the employers are paying $10 an hour wage rate to the employees who are international migrant workers of the organization. The organization has been alleged to have been involved in the wage scam policy where they manipulate the pay records of the employees and force them to breach their visa conditions where the employee who are studying are permitted to work for 40 hours a week and they are forced to work for 50 hours a week with no pay.

Employment relation is concerned with the relationship between the employer and the employee and encompasses the employment related activities within the workplace. As per the Fair Act Australia, the employers are obligated to act in compliance with the FWA and ensure that the employees are paid for the amount of work they do and in case of work done by the employees done overtime, they are entitled to an additional pay for the same. the employers and the employees are required to act in compliance with the FWA.

The inquiry conducted by the FWO regarding the allegations relating to the underpayment of wages and fabrication of employment records across the 7-Eleven Australia Pty Ltd. The major findings of the inquiry included instances of nonconformity with the Fair work Act 2009 (FW Act), manipulation of records with a view to disguise the underpayments and the wage defraud policies that resulted in the underpayment and exploitation of the employees, especially the international migrant students.

The significant impact of the inquiry suggested that enhanced government arrangements should be made which must include financial and business straining of the franchisees and review of the operating model. It further suggested that with respect to the manipulation with the pay records and the working hours of the employees, biometric tie recording along with CCTV should be introduced for the employees and the franchisees that would enable effective monitoring of the working hours of the employees and would ensure compliance with the laws of the workplace.

Gaps in the Australian ER System

The organizations should engage external party to conduct audit compliance with the laws of the workplace, which would prevent biasness and misconduct within the workplace. Further, to ensure that the employees do not remain unpaid, every workplace must establish a ‘guarantee’ reserve fund in order to cover the underpayments, which the franchisees fail to rectify.

The inquiry further required that besides the 7-Eleven every other organization within Australia must act in compliance with the Fair work Ombudsman as the compliance requirements is not confined to the 7-Eleven but to other organizations as well. The Fair Work Ombudsman ensures that the organizations carry out their ethical and moral obligations and provide the employees with a positive work environment. Further, the compliance with the Fair Work Ombudsman results in ensuring a fair and equal opportunities for all the employees of the organization. Furthermore, the business organizations are able to establish strong employment relations if they act in compliance with the Fair Work Ombudsman of the country.

The compliance of all the organization with the Fair work Act with respect to the fair benefits and equal rights to be provided to the employees is applicable to all organizations operating within Australia and is not restricted to 7-Eleven only. Effective compliance with the legislations and ensuring employment relations between the employers and the employees would also enable the organizations to make sure that the employees are subjected to the fair working time and fair payment (Townsend, Wilkinson & Burgess, 2014). The organizations must not force the employees, especially, the international student migrants, from acting overtime and if they work overtime, the organization must ensure that the employees are paid or the additional hours of work. This would encourage the international employees to work in an effective manner within the Australia and would also enable the organization to maintain a healthy and fair employment relations with the employees.

Another significant aspect of marinating an effective employment relation is the terms and conditions that are agreed between the employers and the employees. In case of any dispute arising between the employers and the employees, instead of ignoring the needs and issues of the employees, the employers should pay more attention to the employees and implement effective ways to address such issues and resolve the issue. This would help the organization to maintain a good relationship between the employer and the employee.

The employees have a representative body that raises concerns on behalf of the employees. The inquiry suggests the fact that every organization should develop a staff consultative forum where the representatives of the employees across the network shall be presented. The representatives shall convey the relevant concerns of the employees before the employer and with an effective collective bargaining, the organization the employees shall be entitled to the proper benefits, values, rights which would strengthen the relationship between the employer and the employee (Karp, 2016) .

Conclusion

From the above discussion, it can be inferred that the inquiry in the 7-Eleven has revealed non-compliance of the organization with the federal legislation related to workplace. The inquiry established the fact that the organizations have been involved in the underpayment of the international migrant employees who are often forced to work for extra hours, in contravention of their visa conditions. The organizations have been exploiting the migrant employees by making them work for 50 hours a week where they were supposed to work for 40 hours a week.

Therefore, the aim of the inquiry is to ensure that every organization in Australia, should act in compliance with the Fair Work Ombudsman with a view to maintain effective employment relation.

Reference list

Fair Work Ombudsman. (2016). Welcome to the Fair Work Ombudsman website. [online] Available at: https://www.fairwork.gov.au/about-us/news-and-media-releases/2016-media-releases/april-2016/20160409-7-eleven-presser [Accessed 7 Sep. 2017].

Fair Work Ombudsman. (2017). Fair Work Ombudsman. Retrieved 7 September 2017, from https://www.fairwork.gov.au/how-we-will-help/templates-and-guides/fact-sheets/minimum-workplace-entitlements/minimum-wages

Fair Work Ombudsman. (2017). Fair Work Ombudsman. Retrieved 7 September 2017, from https://www.fairwork.gov.au/how-we-will-help/templates-and-guides/best-practice-guides/consultation-and-cooperation-in-the-workplace

Karp, P. (2016). 7-Eleven workers beaten and forced to pay back wages, Senate inquiry hears. the Guardian. Retrieved 6 September 2017, from https://www.theguardian.com/australia-news/2016/feb/05/7-eleven-workers-beaten-and-forced-to-pay-back-wages-senate-inquiry-hears

McBride, A., Hebson, G., & Holgate, J. (2015). Intersectionality: are we taking enough notice in the field of work and employment relations?. Work, employment and society, 29(2), 331-341.

Townsend, K., Wilkinson, A., & Burgess, J. (2014). Routes to partial success: Collaborative employment relations and employee engagement. The International Journal of Human Resource Management, 25(6), 915-930.

Australia.gov.au. (2017). Australia.gov.au. Retrieved 7 September 2017, from https://www.australia.gov.au/information-and-services/jobs-and-workplace/whs-workplace-health-and-safety

Border.gov.au. (2017). Border.gov.au. Retrieved 6 September 2017, from https://www.border.gov.au/Trav/Stud/More/Work-conditions-for-Student-visa-holders.

Fair Work Ombudsman v Bisen Pty Ltd & Anor

Fair work Ombudsman v Haider Enterprises Pty Ltd (in liq) & Anor