7-Eleven ex-franchisee fined $193,000

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Inside Franchise Business: former7-Eleven franchisees finedA former Brisbane 7-Eleven operator has been fined about $193,000 for short-changing workers and failing to keep proper pay records.

Jason Yuan, who operated two 7-Eleven stores in the Brisbane CBD in 2013 and 2014, was said to have underpaid 21 staff a total of $31,507, and he also failed to keep records of cash payments made to staff on public holidays.

The Federal Court penalised Yuan $36,559 and the two companies in which he was a director, Viplus Pty Ltd, $88,140 and Vipper Pty Ltd, $68,262. Viplus Pty Ltd operated the store in Adelaide Street until July 2017, while Vipper Pty Ltd operated the store in George Street until May 2017.

The fine follows a lengthy investigation by the Fair Work Ombudsman, which has taken legal action against 11 7-Eleven operators since 2009.

During the investigation, inspectors found the workers at both stores were paid flat rates for all hours worked, save for public holidays where they received an additional $20 per hour in cash.

According to a statement from the Ombudsman, given the 24-hour, seven-day nature of the businesses, this resulted in significant underpayments of Saturday and public holiday penalty rates, overtime rates and shift work rates stipulated by the General Retail Industry Award 2010.

Two workers at the Adelaide Street store were also found to have been paid at the incorrect classification.

Individual underpayments ranged from $98.36 to $5080.16, which have all now been rectified.

The respondents were also penalised for failing to meet record-keeping and payslip requirements, including by failing to include information in respect of cash payments made to some of the employees.

In her judgment, Judge Mercuri noted that the underpayments were “substantial”, particularly given the low-skilled nature of the work and the vulnerability of the workers due to their age and, in some cases, their visa status.

“Given that many of the employees of both Viplus and Vipper were in Australia on various visas, with many being young workers, the impact of the underpayments was significant for each of the affected employees,” Mercuri said.

In determining the penalties, Mercuri also pointed out that Yuan had been running the stores for over 12 years, had a background in finance, banking and project management and had access to significant training and support from the 7‑Eleven head office.

Acting Fair Work Ombudsman Kristen Hannah businesses should be aware that serious breaches of workplace laws have increased ten-fold and can now attract penalties of up to $630,000 per contravention for companies and $126,000 for an individual.

The franchisor has put its support behind the invesigation and legal action against these former franchisees.

In a statement 7-Eleven said "We welcome the judge’s acknowledgement that these former franchisees received “significant training and support from the 7-Eleven head office, including in relation to the obligations imposed by Australian workplace laws.”   

"7-Eleven Australia has zero tolerance for wage fraud, has implemented the most comprehensive reforms in the sector to eradicate it, and will continue acting in the strongest available ways against it."

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