$335,000 in penalties for former 7-Eleven franchisee in Melbourne

By Nick Hall | 18 Jan 2019 View comments

The former operators of a 7-Eleven franchise in Melbourne have paid out a total of $335,664 in penalties following a report into employee underpayment from the Fair Work Ombudsman (FWO).

The Federal Circuit Court administered penalties to Xia Jing Pty Ltd, which operated the William Street franchise outlet until March 2017 worth $154,225 for requiring three international students to repay part of their wages in an unlawful payback scheme.

Additionally, the company also suffered penalties to the tune of $145,800 for underpayment of a migrant worker at an Ajisen Ramen franchise located in the Melbourne Central shopping centre.

The latest round of penalties comes at a time when 7-Eleven is cleaning up its image, following a 2015 investigation that saw the brand face public scrutiny.

Former manager Ai Ling “Irene” Lin, who was penalised $9590 for her involvement told the court that after the 2015 reports, she, along with the company attempted to disguise the underpayment by forcing three workers to pay back thousands of dollars in wages.

Lin, a Taiwanese national who was in Australia on a student visa informed the three Chinese workers that they would be paid through the payroll system, however would then be required to pay back a weekly sum, either to a drop-box in the 7-Eleven outlet or directly to Lin’s bank account.

The confusion caused by the makeshift payback scheme resulted in fluctuations of hourly rates from as little as $8.53 to as high as $26.52, translating to various underpayments of casual loading, hourly rates and public holiday and weekend entitlements.

An investigation by the FWO found that between November 2015 and October 2016, the three employees were underpaid a total of $6674, which was back-paid in August 2017.

The company’s director, Jing Qi Xia was also penalised $26,049 for her involvement in the restaurant breaches

In the case of the Ajisen Ramen restaurant worker however, a total underpayment of $9616 was identified, stemming from a hourly rate of $11.50 between May and October 2016 and amounts equating to just $3.98 per hour in her final week of work.

The worker was also back-paid in August 2017.

Judge Norah Hartnett said the implementation of the unlawful payback scheme was a calculated attempt to mislead investigators, and occurred without the knowledge of the franchisor.

“[I]t involved a deception of 7-Eleven head office and circumvented attempts by head office to stamp out the underpayment of employees by 7-Eleven franchisees,” Judge Hartnett said.

“The Court recognises that conduct such as implementing a system requiring employees to repay wages they are owed, and making, keeping and producing false records to disguise employees’ true employment situation, is reprehensible conduct and denies to all employees the minimum wage standards that they, in Australia, should expect and are entitled to.”

Kristen Hannah, acting Fair Work Ombudsman said that employers who attempt to cover up exploitation of workers, particularly migrant workers will be discovered and face serious legal consequences.

“The Fair Work Ombudsman will not tolerate any employers requiring any workers to pay back any of their wages. This cash back scheme was particularly deplorable as it undercut migrant workers, who can be vulnerable due to language and cultural barriers, or are reluctant to speak up.”

“All workers in Australia have the same rights at work, regardless of citizenship. We will continue to take enforcement action when businesses undercut migrant workers. We have an agreement with the Department of Home Affairs where visa holders can contact us for help without fear of their visa being cancelled,” Hannah said.