Eleven current or former operators of 7-Eleven outlets have been the subject of legal action by the Fair Work Ombudsman (FWO) since 2009, with penalties issued now totalling well over $1 million.
The two former operators, Viplus and Vipper, operated the Adelaide Street and George Street stores, respectively, in Brisbane’s CBD during the FWO audit in September 2014. Both companies were under the directorship of Jason Yuan.
According to the FWO, workers at both stores were paid flat rates for all hours worked, except for additional cash payments of $20 per hour made for public holidays.
The FWO said this was particularly pertinent given the 24-hour nature of the 7-Eleven business, meaning that many employees were working overnight shifts and on weekends.
Two workers were also found to have been reimbursed at the wrong classification.
As a result, over a 12-month period, the two businesses had obtained financial advantage from their employees to the tune of $31,507.27.
“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,” the judge said in the Federal Circuit Court ruling.
She also noted that Mr Yuan should have known better, having a background in finance and banking, significant training and support from 7-Eleven’s head office, and having operated the two businesses for 12 years.
That was in addition to Mr Yuan receiving a prior warning about failing to meet award rates in 2013.
The judge imposed combined penalties on the two businesses of $156,402. Mr Yuan was personally fined a further $36,559, taking the total penalties to almost $193,000.
“We have no patience for business operators who fail to respect the law and ignore our advice, and the penalties handed down in this case reflect the seriousness with which such matters will be dealt,” acting ombudsman Kristen Hannah said.
“There is no excuse for continued non-compliance by a business when it has been placed on notice, and we will not hesitate to pursue serious enforcement action when this occurs.”
Ms Hannah noted that both stores are now under different ownership, and are not subject to any action by the FWO.
7-Eleven welcomed the FWO's prosecution of the former franchisees.
“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',” the company said in a statement.
“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.”
It is not the first time this year that employers who were thought to know better have felt the full force of the law for not meeting award entitlements.
A former economics professor is currently before the courts, accused of underpaying staff by $14,000 in less than four months.
And a former general counsel and experienced businessman was fined almost $100,000 this week for forcing an employee to pay back a portion of her wages.
Ms Hannah cautioned all employers to know and abide by the rules or face hefty penalties.
“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,” she said.