Penalties against 7-Eleven franchisees top $1 million

By Jeff Salton on July 26th, 2017

Paying workers a flat rate of $13 an hour and trying to hide it from the Fair Work Ombudsman has cost a former 7-Eleven franchisee a lot more than he was initially ‘saving’.

After having to pay back workers their entitlements ($19,937), the former Brisbane 7-Eleven operator has now been hit with $168,000 in penalties for short-changing workers and falsifying records to conceal the underpayments.

The orders imposed by the Federal Circuit Court were the result of litigation by the Fair Work Ombudsman (FWO). Brisbane man Jim Chien-Ching Chang admitted that his company had paid staff flat hourly rates as low as $13 an hour, resulting in significant underpayment of the minimum hourly rate, casual loadings and penalty rates for shift and weekend work that employees were owed under the General Retail Award 2010.

One employee was underpaid $13,962 between July 2013 and August 2014, while the others were underpaid amounts ranging from $203 to $1835 for shorter periods of work. All underpayments have now been rectified.

Mr Chang also made false and misleading entries into the 7-Eleven payroll system and provided false records to the FWO.

As the former franchisee of the Vulture Street, West End store, Mr Chang has been ordered to pay $28,000 and his company JS Top Pty Ltd to pay $140,000. (Mr Chang and his company sold the 7-Eleven franchise in late 2016 and the franchise is now operated by an entity unrelated to these contraventions.)

Late night tri-State ‘sting’

Mr Chang’s store was one of 20 7-Eleven outlets targeted for surprise night-time visits by the FWO as part of a tri-State operation in September 2014.
Court-imposed penalties against 7-Eleven operators have now topped $1 million in litigations initiated by the FWO.

In penalising Mr Chang, Judge Michael Jarrett found that the former franchisee knew the relevant Award that applied but had: “… established a business model that relied upon a deliberate disregard of the employees’ workplace entitlements and a course of conduct designed to conceal that deliberate disregard”.

Judge Jarrett found no evidence that the company’s contraventions were motivated by poor cash flow saying: “rather, it seems, the company’s profit has been enhanced by the underpayments concerned”.

The FWO has taken legal action against nine 7-Eleven operators since 2009. Three operators are still before the courts.

Fair Work Ombudsman Natalie James said the substantial penalties imposed send a clear message that exploiting overseas workers is serious conduct that will not be tolerated.

“The deliberate nature of the underpayments and the lengths that Mr Chang went to in order to hide his conduct from us and from the 7-Eleven head office is of grave concern. Mr Chang was fully aware of his lawful obligations and chose to manipulate the system in order to undercut the entitlements of vulnerable workers.

“We are pleased that the Court has seen fit to penalise such blatant conduct and hope that this serves as a warning that such behaviour will be penalised,” Ms James said.

Don’t be surprised!

Know what your workers are entitled to and pay them accordingly, seems to be the message from the FWO. One of the quickest and easiest ways to do this is by ordering your copy of The Wages Guide today.

The Wages Guide provides a snapshot of current wages legislation in Australia and is a useful guide for anyone in business who needs to pay wages. It clearly explains the obligations you have to your employees when it comes to wages. In it, you’ll find:

  • a detailed explanation of your legal obligations regarding wages;
  • how to determine which wage entitlements apply to your employees; and
  • 4 essential document templates to help you manage wages in your workplace

In The Wages Guide you’ll also get:

  • your wage obligations explained in clear, easy-to-understand terms;
  • 2 easy-to-follow flowcharts that will help you determine:
    – exactly what minimum wage applies to your employees;
    – whether they are entitled to overtime, penalties or shift allowances;
  • a simple 3-step guide to help you calculate an annualised salary;
  • 6 vital requirements that must be met when making an Award Flexibility Agreement;
  • the 6 most commonly asked questions about wages – answered;
  • how to determine if you can relocate an employee; and
  • much, much more…

In any employment relationship in Australia, workers can expect to be paid fairly for the service they provide. The Wages Guide will help you understand your minimum wage requirements to ensure you avoid costly legal action and achieve the best outcome for your workers and your business.

Get your copy today!

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