The Fair Work Ombudsman has secured $335,664 in penalties against a Melbourne company operating a 7-Eleven franchise, taking the total amount to $1.8 million in penalties involving 7-Eleven franchisees.
The Federal Circuit Court penalised Xia Jing Qi Pty Ltd, which operated the 7-Eleven outlet on William Street in Melbourne until March 2017, $154,225 for requiring three international students to repay part of their wages in an unlawful cashback scheme.
The company was penalised a further $145,800 for underpaying a migrant worker at an Ajisen Ramen franchise in the Melbourne Central shopping centre.
Former manager Ai Ling “Irene” Lin has also been penalised $9,590 for her involvement in the 7-Eleven convenience store breaches, and the company’s director, Jing Qi Xia, who has a Chinese background, was penalised $26,049 for her involvement in the restaurant breaches.
The three workers underpaid at the 7-Eleven store were from China and aged between 21 and 24 while employed with the company. Ms Lin, from Taiwan, was also in Australia on a student visa.
The cashback scheme
Following public exposure of 7-Eleven underpayments in 2015, the company and Ms Lin tried to disguise underpayments of three employees by requiring them to pay back thousands of dollars in wages.
Ms Lin told the three employees in late 2015 they would be paid through the payroll system but then specified a weekly sum for each of the workers to pay back via a safe drop box in the 7-Eleven store or to Ms Lin’s bank account.
After returning this portion of their wages, the employees were left with hourly rates ranging from $8.53 to $26.52, leading to various underpayments of their ordinary hourly rates, casual loading, and weekend and public holiday penalty rate entitlements.
The three employees were underpaid a total of $6,674 for various periods of work between November 2015 and October 2016. They were back-paid in August 2017.
The company was found to have also breached record-keeping laws by providing false records to Fair Work inspectors during their investigation of the 7-Eleven convenience store.
In her judgment, Judge Norah Hartnett said that the use of the cashback scheme at the 7-Eleven store was “particularly egregious”.
“[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.”
The company Xia Jing Qi Pty Ltd, which also operated an Ajisen Ramen franchise in the Melbourne CBD, underpaid a Chinese worker, here on a 462 working holiday visa, by $9,616, after being paid $11.50 per hour between May and October 2016, and then amounts equating to just $3.98 per hour in her final week of work.
Judge Hartnett said that the conduct of the company and Ms Xia was “deliberate and grave”.
“It was only in circumstances where the [Fair Work Ombudsman] had independently uncovered the truth, that the [company and Ms Xia] admitted to the underpayments.”
Acting Fair Work Ombudsman Kristen Hannah said that employers who exploit migrant workers will be discovered and met with serious legal consequences.
“The Fair Work Ombudsman will not tolerate any employers requiring any workers to pay back any of their wages. This cashback 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,” Ms Hannah said.
“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.”
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