7-Eleven Scandal: 'Widespread Compliance Issues' Across Network, Fair Work Ombudsman Says

09/04/2016 9:37 AM AEST | Updated 15/07/2016 12:51 PM AEST
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The 7-Eleven logo is displayed at a convenience store, operated by Seven & i Holdings Co., in Kawasaki City, Kanagawa Prefecture, Japan, on Tuesday, April 5, 2016. Seven & i is scheduled to report earnings on April 7. Photographer: Akio Kon/Bloomberg via Getty Images

The industrial watchdog has slammed 7-Eleven franchisees for "deliberately falsifying" records amid reports the convenience store giant could have to pay up to $100 million in unpaid wages to thousands of past and present employees.

The Fair Work Ombudsman on Saturday released a damning report into the 7-Eleven franchise network of more than 600 outlets across Australia following allegations of systemic non-compliance with federal workplace laws.

The inquiry was sparked after revelations in the media of widespread worker exploitation including falsifying rosters and doctoring of payroll records.

"Since 2008, the Fair Work Ombudsman has received regular reports alleging widespread compliance issues across the 7-Eleven network," the watchdog said.

"Requests for assistance received from employees over a number of years have suggested a troubling pattern of allegations around falsification of records used to disguise the underpayment of wages.

"The full extent of information that 7-Eleven received about problems within its network is unknown."

Fairfax Media reports that the company could have to fork out up to $100 million in backpay to more than 2,000 former and current employees, and that the scandal could be biggest case of wage fraud in Australian company history.

Three hundred workers have already been paid a total of $10 million in compensation equivalent to an average payout of $38,000 per worker, according to Fairfax.

7-Eleven chairman and billionaire Russ Withers resigned from the board of the convenience store chain last year in the wake of the scandal.

The Fair Work Ombudsman said its inquiry uncovered "a number of franchisees have been deliberately falsifying records to disguise the underpayment of wages".

It said the rorting often involved international students who were unwilling to report being underpaid because they feared having their visas revoked.

The watchdog hit out at the 7-Eleven head office for appearing to have failed to improve its payroll system.

"Our inquiry suggests that the payroll section of the store review process did not sufficiently interrogate store practices, or records, to uncover signs of non-compliance where a franchisee sought to hide it," it said.

"7-Eleven had a reasonable basis on which to inquire and to act.

"Head office controlled the settings of the system in which the franchisee employers operated."

The inquiry's recommendations included the convenience store giant entering into a compliance partnership with the Fair Work Ombudsman, boosting compliance with federal workplace laws and reviewing its operating model.

A full copy of the report can be viewed here.

A 7-Eleven spokesman told 9news.com.au that it was unhelpful to speculate about how much the company would have to pay out in wage claims.

"(It) is nothing more than unfounded guesswork and adds nothing to the process of remediation. 7-Eleven stands by its commitment that approved claims will be paid," he said.

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