Unethical Issues in Seven-Eleven

Running head: The Role of Accounting in Society

The Role of Accounting in Society
1
Unethical Issues in Seven – Eleven
As per 7 Eleven (2018) it is an American chain of
convenience stores which is known worldwide. It is
a Japanese owned chain and is headquartered in
Irving, Texas. Seven –Eleven Japan Co. Ltd is
headquartered in Chiyoda, Tokyo and it is owned
by Seven & I Holdings Co. It has employed around
45000 employees in its stores. The company
supplies proprietary food and continues to innovate
new edible products for its time –constrained
consumers.
However, in 2015, the company was accused to use
unlawful and unfair labor practices to decrease its
labor costs in its stores located in Australia. The
young and foreign laborers who were working at the
company’s stores had been paid less than 50 % of
the minimum wage rate. This problem continued for
some time in the company and it was confronted by
every person who was employed in the company.
As a result, the chairperson of Seven –Eleven , Mr.
Russ Withers and the CEO Mr. Warren Wilmot
resigned from their designations. It was stated that
the wage rate of the laborers were intentionally
kept low to keep the costs down and the profits
increased for the benefit of the franchisers and the
parent company (Zińczuk, Cichorzewska and
Walczewski , 2013) .

The Role of Accounting in Society
2
The workers were paid for every alternate hour and
the foreign laborers were threatened to be reported
if the lodged any complaints to the higher
authorities. They were paid $ 12 per hour which
was below the minimum wage rate. Also, they were
paid wages for 20 hours a week while they worked
for around 40-60 hours a week. The payment of
low wages was also reported in 2016 in which it
was found by the Fair Work Ombudsman that the
franchisees paid full payment to the workers and
afterwards half of the payment was to be given back
to them by the workers. The reason behind this was
that the executives and the head offices were
receiving 57 % of the gross profits while the stores
received the rest 47 % of the revenue. It became
difficult for them to manage the huge staff cost
from this meager amount. It led to the exploitation
of the workers (Ogbari et al., 2016).
The stakeholders affected in this scandal are the
employees who were paid less than their working
hours. Also, the future owners of the franchisees
and the customers were affected as nobody would
like to commercially transact with the unethical
company. The parent company 7-Eleven Malaysia
Holdings Berhad which was listed on the Malaysian
Stock Exchange saw a sudden downfall in the value
of its shares .The return on the shares was also
affected due to the loss of goodwill of the company.
After the scandal was settled, the workers left the
company and the new ones were reluctant to join it.