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7-Eleven pays heavily for non-compliance

All businesses, no matter what their size, need to understand Australian workplace laws and observe compliance obligations.

Workforce Guardian - Australia's leading online employment relations service for employers

As the world's largest operator, franchisor and licensor of convenience stores, 7-Eleven is both a global brand and a business system that's recognised for excellence.

As it says on the company's website, "When you buy a 7-Eleven franchise you buy two things. Firstly a brand name that's recognised around the world and secondly a business system that works, one that provides more support than most other franchise networks."

So it was shocking to see 7-Eleven in the news last week for all the wrong reasons.  The operators of a 7-Eleven franchise in Victoria were ordered to pay penalties of $150,000 for a number of breaches to employment laws relating to underpayment and record keeping. The operators were also ordered to pay the workers almost $90,000 owed in wages.

Ignorance is no excuse for non-compliance

The employer's conduct was described as a "systematic and significant exploitation of highly vulnerable workers". And while the breaches may have come about due to ignorance of Australian employment law, the magistrate noted that this was no excuse for non-compliance. Correct entitlements for employees must be paid and that all employers, regardless of business size, must ascertain and comply with minimum entitlements.

The exploitation affected young international students, aged 18 to 26. They were paid flat hourly rates of between $9 and $12 when they were entitled to be paid much more for many of their shifts which included casual, weekend and public holiday penalties. Some of the students were also illegally required to undertake several weeks of unpaid on-the-job training before starting their paid employment at 7-Eleven.

With the franchisee receiving IR training and regular updates from the 7-Eleven head office, the magistrate found that the breaches were not a result of "naive ignorance". By ignoring training and regular updates from 7-Eleven, the franchisee "must have been wilfully blind to the well known legal obligations of every small business operator".

Indeed an investigation by the Fair Work Ombudsman found the operators had deliberately falsified information to 7-Eleven head office about the number of hours worked and the students' rates of pay. Failure to keep time and wages records and the employer's destruction of the records it had kept, further highlighted the franchisee's blatant disregard of their employer obligations.

Compliance should not be seen as the bastion of large employers

As the magistrate pointed out,"Compliance should not be seen as the bastion of the large employers with human resources staff and advisory consultants (accountants, consultants, lawyers) behind them". Indeed, HR and employment relations compliance is for every business.

This case reinforces the need for all businesses, no matter what their size, to understand Australian workplace laws and observe compliance obligations. The consequences for inaction or ignorance are heavy penalties and fines.

The Fair Work Act 2009 with its Modern Awards and 10 National Employment Standards establish a raft of rules for employer and employee engagement. It doesn't matter whether you're employing people in the largest corporation or the smallest family-run business. When you employ people, you have to comply with Australia's workplace laws.

Indeed fines for non-compliance are just as big for smaller companies as they are for larger companies.  While many smaller operators are unlikely to have the same HR resources in-house as their larger counterparts, they can leverage the specially designed and cost effective online employment relations compliance service from Workforce Guardian. It's like having your own team of HR consultants - but without the usual overheads.

In the same way that a business turns to their accountant rather than the Australian Tax Office for help with business advice and tax minimisation strategies, those same businesses need to turn to an expert service for help with HR and employment relations issues - and not go alone with the Fair Work Ombudsman.

Running a business and managing people is never easy. If ever there was a time for a business to subscribe to Workforce Guardian for compliance with the Modern Awards and National Employment Standards, it's now. 

Simplifying HR in business 24x7, Workforce Guardian provides a comprehensive range of practical HR tools including dynamically generated employment agreements, online employment files, HR processes, policies and documents.

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Disclaimer

This article is intended to provide commentary and general information. It should not be relied upon as legal advice. Formal legal advice may be necessary in particular transactions or on matters of interest arising from this article. Workforce Guardian Pty Ltd (http://www.workforceguardian.com.au/) is not responsible for the results of any actions taken on the basis of information in this article, nor for any error or omission in this article.

 

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