Former 7-Eleven franchisee hit with $168k fine

A former 7-Eleven operator has been hit with $168,000 in penalties for short-changing workers and falsifying records to hide the underpayments.

The orders imposed by the Federal Circuit Court were the result of litigation by the Fair Work Ombudsman (FWO) and followed admissions by Brisbane man Jim Chien-Ching Chang that his company had underpaid eight staff a combined $19,937.

Chang, the former franchisee of the store at 80 Vulture Street, West End, has been ordered to pay $28,000 and his company JS Top Pty Ltd to pay $140,000.  Chang and his company sold the 7-Eleven franchise in late 2016 and the franchise is now operated by an entity unrelated to these contraventions.

Court imposed penalties against 7-Eleven operators have now topped $1 million in litigations from Fair Work.

Chang admitted his company had paid flat hourly rates as low as $13 an hour, resulting in significant underpayment of the minimum hourly rate, casual loadings and penalty rates for shift and weekend work that employees were owed under the General Retail Award 2010.

One employee was underpaid $13,962 between July 2013 and August 2014, while the others were underpaid amounts ranging from $203 to $1835 for shorter periods of work.

Chang also made false and misleading entries into the 7-Eleven payroll system and provided false records to the FWO.

In his penalty judgment, Judge Michael Jarrett found that Chang knew the relevant Award that applied but had “… established a business model that relied upon a deliberate disregard of the employees’ workplace entitlements and a course of conduct designed to conceal that deliberate disregard”.

Judge Jarrett found no evidence that the company’s contraventions were motivated by poor cash flow saying: “rather, it seems, the company’s profit has been enhanced by the underpayments concerned”.

All underpayments have now been rectified.

The store was one of 20 7-Eleven outlets targeted for surprise night-time visits by the FWO as part of a tri-State operation in September, 2014.

FWO Natalie James said the substantial penalties imposed send a clear message that exploiting overseas workers is serious conduct that will not be tolerated.

“Businesses should be in no doubt that lawful obligations to pay minimum wage rates, keep appropriate employment records and issue pay slips apply to all employers in Australia and they are not negotiable,” she said.

“We are pleased that the Court has seen fit to penalise such blatant conduct and hope that this serves as a warning that such behaviour will be penalised.”

Clayton Ford, 7-Eleven GM corporate affairs told Inside Franchise Business, “7-Eleven welcomes the FWO’s actions pursuing these wage underpayment claims dating back to 2013-14, and the Court’s acknowledgement of the significant reform measures we have taken.”

“The franchisee concerned is no longer part of our store network.

“We have introduced comprehensive reforms to ensure our franchised store network operates at the highest standards we expect, and will take action where those standards are not being met,” he added.

7-Eleven entered into a Proactive Compliance Deed with the FWO late last year.