7-Eleven Wage Scandal: A Legal Analysis

This assignment delves into the 7-Eleven wage scandal, examining the legal issues surrounding worker exploitation, franchise model flaws, and regulatory shortcomings. It requires analysis of relevant case studies, scholarly articles, and official reports to understand the complexities of the scandal and propose potential solutions for preventing similar occurrences.

Running head: AUSTRALIAN ER SYSTEM AND THE 7-ELEVEN INQUIRY
AUSTRALIAN ER SYSTEM AND THE 7-ELEVEN INQUIRY
Name of the Student
Name of the University
Author Note

1AUSTRALIAN ER SYSTEM AND THE 7-ELEVEN INQUIRY
Table of Contents
Introduction:....................................................................................................................................2
7 Eleven Inquiry by FWO:..............................................................................................................2
The Major Findings from the Inquiry:.............................................................................................3
Gaps in Australian ER System:.......................................................................................................4
Inaccurate Records:.....................................................................................................................4
Employee Participation:...............................................................................................................5
7 Eleven Inquiry Implications for Australian ER Regulation:........................................................8
Detailed Recommendations:........................................................................................................9
Conclusion:....................................................................................................................................10
Reference:......................................................................................................................................12

2AUSTRALIAN ER SYSTEM AND THE 7-ELEVEN INQUIRY
Introduction:
The purpose of this report is to provide a brief synopsis of the Fair Work Ombudsman
system on the employment relationship in Australia. The Fair Work Ombudsman (FWO)
promotes cooperative, harmonious and productive workplace. It is an independent and statutory
agency of the Australian Government (Stewart & Owens, 2013). This independent agency helps
the employer, employees and other people or the units related to the organization to understand
and comply with the workplace law of Australia. The following paper discusses the launch of the
7 Eleven Inquiry by the FWO in Australia. The paper presents an overview of the purpose and
function of the 7 Eleven Inquiry in the Australian workplace and the major findings out of the
inquiry. While discussing the launch of the inquiry organization, the report also presents the
drawbacks of the Australian Employment Relationship system that, the 7 Eleven Inquiry finds
out regarding the role of the state and the role of the unions in terms of the organizational
workplace (Grabosky, 2013). The Employment Relationship (ER) system defines the
relationship between the employer and the employee in the organization in terms of the
workplace ethics and laws (Sparrow & Cooper, 2012). Moreover, it is the basic function of the
state and the union to monitor and execute the Fair Work Act in the workplace (Macdonald &
Charlesworth, 2013). The prime focal point of the following paper is the 7Eleven network stores
around Australia. The paper reflects the flaws in the ER system of Australia and the importance
of the 7 Eleven Inquiry in order to find out those flaws within the organization. In addition, the
paper also presents the implications of the 7 Eleven Inquiry and other inquiries in the for the
regulation of the Australian ER system.

3AUSTRALIAN ER SYSTEM AND THE 7-ELEVEN INQUIRY
7 Eleven Inquiry by FWO:
The function of the Fair Work Ombudsmen is to ensure the safety and fair right of the
employee in the employment contract with the franchisees (Stewart et al., 2014). The purpose of
conducting the 7 Eleven Inquiry by the FWO is to identify the allegations of underpaying wages
false employment records in all the franchisee network of the 7 Eleven Australia Pty Ltd
(Ombudsman, 2016). The allegations came from various sources that the employees were not
paid proper wages according to their job role and responsibilities. The allegations also include
that there were many falsification of the employment across the franchisee companies of the 7
Eleven Inquiry. To enquire the truthfulness of the allegation and find out the reasons for the
wrong and unjustified treatment of the employees in the organization, the FWO launched the 7
Eleven Inquiry Australia (Fraser, 2016).
The Major Findings from the Inquiry:
The inquiry of the FWO found out the some serious issues and instance of non-
compliance in the franchisee organizations (7-eleven-inquiry-report., 2017). These major
findings are:
 The 7 Eleven inquiry found out that there are many organizations that do not follow the
Fair work Act of 2009, that ensures the employees health, wages, weekly work hours and
other employments benefits.
 The inquiry found out the manipulations in the organization for disguising the
underpayments of the employees (Thornthwaite, 2017).
 The allegation regarding the falsification of the employment records are found to be true
by the inquiry.

4AUSTRALIAN ER SYSTEM AND THE 7-ELEVEN INQUIRY
 The findings show that there are many employees in the franchisees who are afraid to
speak up about their problems regarding the underpayments.
 It was found that the franchisees forces the employees to cash back from their wages. To
ensure the cash back the franchisees took the employees to the ATM and forced them to
pay certain portion of withdrawal money.
 The franchisees did not follow and maintain the labor law and did not provide the
necessary benefits to the employees.
 The franchisees were also involved into the unfair dismissal of the employees.
Gaps in Australian ER System:
There were some serious gaps in the Australian Employment Relationship (ER) system
that the 7 Eleven Inquiry raised to identify those gaps. The gaps were the result of the negligence
of the state in intervening the employment relationship in order to ensure the achievement of
social and economic objectives for the entire nation (Alter, 2013). The role of the union is
equally vital for the employment relationship system in terms of securing the wages, health and
safety of the employees, working conditions of the employees and the welfare of the people in
employment (Pekarek & Gahan, 2016). Bothe the state and the union are responsible for
ensuring and maintaining employment policies and the laws regarding the wellbeing of the
employees. However, the state as well as the union failed miserably in meeting their primary task
and as the result, the employees of the franchisees had to suffer. Apart from the management of
the organization, it was the duty and responsibilities of the state and the union to maintain a
healthy employment relationship with the employees (Hardy, 2016). The following section
covers the gaps in the employment relationship system in the franchisees of 7 Eleven Inquiry in
Australia.

5AUSTRALIAN ER SYSTEM AND THE 7-ELEVEN INQUIRY
The inquiry investigates in 20 stores and found out the gaps in the ER system (Wright,
2016). Brief overviews of some case studies are presented to provide the evidence based
arguments on the findings (7-eleven-inquiry-report., 2017).
Inaccurate Records:
In most of the stores, the inquiry found insignificant and inaccurate records for disguising
the underpayments of the employees. It is found in the most of the stores that the employees
were forced to work for additional hours and they were not paid accordingly to the work hours
(7-eleven-inquiry-report., 2017). It was clear and evident that the Fair Work Act (2009) was not
followed properly in the organizations (Macdonald & Charlesworth, 2013). This is definitely the
gap in the employment relationship system that both the state and the union can be considered
responsible for not monitoring the process.
In this regard, a case study is presented to clearly depict the actual situation and provide
the evidence of the argument. On visiting few stores by the inquiry inspector, he found out that
the records are not accurate as per the real working hours by the employees. In addition, were
underpaid (Briton, 2015). The following numeric tables provide the data on the working hours
and the underpayments (7-eleven-inquiry-report., 2017).
Reality Records
Rate of Pay $15 $23.15
Hours of Work 20 hours 12.96 hours
Gross Pay $300 $300.02
Table 1: Example of disguised payroll hours
Reality Records

6AUSTRALIAN ER SYSTEM AND THE 7-ELEVEN INQUIRY
Base Rate of Pay $15 $22.77
Penalty Rate of Pay $15 $27.09
Hours of Work 34 hours 12.88 hours at base rate
8 hours at penalty rate
Gross Pay $510 $510
Table 2: Example of Increasing Penalty Rate
Employee Participation:
Another gaps that was found during the inquiry of the 7 Eleven, was the lack of employee
participation for the interview. The employees were found to be scared to speak up about their
problems of underpayments (Briton, 2015). It is the primary duty of the union to assure the
employees to speak up about their problems. Hence, it is indeed the drawbacks of the union for
being incapable of providing proper security and comfort to the employees to share their
problems in the workplace. This defines the gaps in the employment relationship system.
The case study regarding this matter shows that some of the employees changes their
statements during the inquiry (Terry-Armstrong, 2016). For example, one employee when was
asked initially stated that he works for 8 hours a day and that he was paid $35 per hour, whereas
another two employees said they were paid $18 and $14 per hour respectively for the same
working hours (7-eleven-inquiry-report., 2017). This diverse statement clearly shows the
evidence of the gaps within the employment relationship and that the employees are afraid to
share their problems.
Apart from these two major drawbacks, other gaps are found among the various
evidence in the franchisee stores. The evidence of the drawbacks are given in the table below:

7AUSTRALIAN ER SYSTEM AND THE 7-ELEVEN INQUIRY
Evidence Details
Cash Payments records
The cash payments records of the employees were
found misprinted. The misprints were done
intentionally to disguise and hide the actual data to
show the cause for the underpayments
(Thornthwaite, 2017).
Misuse of the Work Ethics and regulations
The misuse of the work employment ethics and the
regulations had been seen by the inquiry. By
misusing the employment ethics and regulations the
employees were mislead and forces to draw
underpayments.
CCTV Footage
Though CCTV footage were not available in every
stores, it has been used as the good and proper
evidence for presenting the happenings in the
stores. The footage showed the instances of the
actual working hours of the employees and the
payments process, though not clear, but was
adequate for using as the evidence.
Register of the Employee log-ins
Every franchisee is meant to have a register for the
employees record their actual work timing. The
store must have unique employee code for each
employee. However, it was found that many stores
did not have a particular log-in register and unique
employee code. Moreover, the stores having the
register found showing reluctance in changing the

8AUSTRALIAN ER SYSTEM AND THE 7-ELEVEN INQUIRY
register according to the change of the time shift.
Communication
The inquiry shows that there is the lack of
communication between the employee union and
the employees. Inadequate communication had
made the employees uncomfortable in sharing their
problems and they also made the union unaware of
the underpayments of the employees (Lu,
Samaratunge & Härtel, 2012).
All the evidence above shows the gaps in the employment relationship in terms of
performing the responsibilities of the state and the union (Wright, 2016). The major gaps that are
evident from the inquiry are the lack of proper communication with the employees and the
monitoring of the union as well as the state on the process of the payments and the work
regulations.
7 Eleven Inquiry Implications for Australian ER Regulation:
From the major findings of the 7 Eleven Inquiry the non compliances are evident in the 7
Eleven network franchisee stores. In addition, numerous changes are required for reducing the
opportunities to underpay the employees. The investigation by the 7 Eleven Inquiry implies that
the labor laws in the workplace needs major reform (Sivaraman & Turner, 2016). To ensure the
compliances in the stores, there are some implications for the ER regulations in Australia. The
recommendations are collected from various journals, newspaper and academic articles and the
reports on the 7 Eleven Inquiry. The recommendations target the 7 Eleven, the FWO and the
other regulatory frameworks. The frameworks provide the remedies and opportunities to the non-

9AUSTRALIAN ER SYSTEM AND THE 7-ELEVEN INQUIRY
compliances happening within the workplace with the employees in the franchisee stores
(Employment Law Matters., 2017). The recommendations are:
 Promoting sustainable culture to comply with the ER system across 7 Eleven network.
 Enhancing the effectiveness of the FWO for bringing into account the persons and
entities responsible for the exploitations of the vulnerable workers, working on the
temporary working visas.
 Requiring the franchisees to comply with the requirements of the payroll service.
 Arranging biometric attendance in order to maintain proper and accurate records of the
working hours of the employees.
 Requiring the franchisees to maintain their own record of proper and actual working
hours.
 Reviewing franchise arrangements, specifically around the control level.
 Rearranging the structure of the governance for reducing the opportunities for the
conservations of the workplace laws (MacCallum, 2016).
 Requiring the structural change in order to ensure the compliances around the workplace
(Regan, 2016).
 Considering the franchisee agreement regarding the termination of the same.
 Making awareness of the powers and roles of the ER regulations including FWO and
other employment related issues such as health and safety.
 Weekly regular visit of the union in the franchisees to ensure the smooth and proper
workflow.
 Conducting awareness programs in a monthly basis to make sure all the employees know
about their work ethics, and work right.

10AUSTRALIAN ER SYSTEM AND THE 7-ELEVEN INQUIRY
Detailed Recommendations:
The following portion of the report suggests the detailed recommendations of the 7
Eleven Inquiry for the ER system as well the 7 Eleven stores across Australia.
1) Entering into the compliance partnership with FWO, whereas the 7 Eleven Inquiry will
publicly accept its ethical and moral responsibilities in regard to the standards of conduct to
comply with all the individuals involved in the enterprise, that:
a) Abiding by the law in relation to all the employees in all the stores
b) Meeting the Australian social and community expectations for providing equal, safe and
fair work opportunities for all the employees in every store.
2) The terms of compliance partnership needs to include the form of the Proactive Compliance
Deed, in order to receive the sustainable compliances. These terms are:
a) Taking important steps to develop the employment practice in the franchisee stores by the
implementation of sustainable, permanganate and fundamental changes in the franchisee
model for ensuring the laws in terms of the workplace relations. This also includes te
instruments in the Fair Work Act 2009 and other related instruments, that are entirely
abided by for all the employees in the franchisee stores of the 7 Eleven network.
b) Acknowledging the administrative process and the franchisee model that includes the
requirements of the internal audits and the payroll system. The system must have
instances that contribute to the environment of the vulnerable employees to exploitation
inclusive of the way of underpayments.

11AUSTRALIAN ER SYSTEM AND THE 7-ELEVEN INQUIRY
Conclusion:
It can be concluded from the above discourse that the 7 Eleven Inquiry was initiated for
identifying the gaps and the drawbacks in the Employment Relationship system in Australia. The
Inquiry was conducted across the 7 Eleven network franchisees in Australia. The result of the
inquiry showed that there is some major non-compliance in the ER system within the
franchisees. The gap shows the negligence and irresponsibility of the state as well as the union of
the employees. The major issues that emerge from the inquiry findings are the forceful
employment for the additional work hours. The inquiry also focuses on the issue of
underpayments and the falsification of the records regarding the extra working hours and the
underpayments. The report presents the evidence on the findings of the inquiry from various
sources such as newspaper, academic journals and reports based on the 7 Eleven Inquiry. The
report further points out the major drawbacks in the ER system that required the inquiry of the 7
Eleven in its franchisee network. The report also discusses the implications for the ER system by
the 7 Eleven Inquiry to reduce and eliminate the potential opportunities for the conservations of
th underpayments and the falsification of the data. The recommendation suggests some minor
and major changes in the structure of the franchisees and the proper implementation of the FWO
within the same. However, it is evident from the report that the state and the union play vital role
in maintaining the proper ER system and it is also the right and duty of the employees to share
their problems with the higher authority to avail the rights of employment.

12AUSTRALIAN ER SYSTEM AND THE 7-ELEVEN INQUIRY
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Alter, S. (2013). Work system theory: overview of core concepts, extensions, and challenges for
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