limit opportunities for their systems to be exploited, making it harder for franchisees not to comply with the law. At various points 7-Eleven has taken action, however it is the view of this Inquiry that it could have done more, and acted earlier. While we acknowledge the real and significant steps taken by 7-Eleven to begin to rectify the situation, there is still much to do. Creating a culture of compliance from the top down will require a sustained and committed effort throughout the organisation, and resource allocation over a long period of time. Sustained change in behaviour is most likely to be achieved if driven by the franchisor. Deliberate contravening behaviour, particularly around false record keeping, appears to be ingrained within aspects of the network. If some 7-Eleven franchisees have built into their business model the underpayment of employees, particularly vulnerable workers, this culture will be difficult to address notwithstanding 7-Eleven’s recent efforts to implement record keeping systems which greatly enhance record compliance. The reported outbreak of demands to employees to pay back wages illustrates the lengths some franchisees will go to and the degree of leverage they have over employees. Difficulties in obtaining corroborative evidence of threats or coercion relating to this behaviour highlight the limits of what a regulator can achieve in terms of enforcement and rectification outcomes. It may be that chronic underpayments and associated behaviour will not be entirely eradicated as long as these operators continue to be part of the 7-Eleven network. Any business encountering deliberate and longstanding non-compliance of the nature observed in the 7-Eleven network will face challenges in overcoming entrenched behaviours, especially in a large and complex business. Sustainable compliance will only be achieved through persistent, resourced and ongoing accountability measures that root out and ensure serious consequences for stores that continue to engage in this behaviour. The balance of risk and rewards for non-compliance should be considered by both 7-Eleven and Government. The consequences of this type of behaviour must be more serious than the benefits that flow from underpaying employees if we are to impact behaviour. Financial penalties that are significantly lower than the savings to be made from underpaying wages have minimal deterrence impact. The real threat to a franchisee of losing their business due to breaches of the franchise agreement is a strong deterrent.
limit opportunities for their systems to be exploited, making it harder for franchisees not to comply with the law. At various points 7-Eleven has taken action, however it is the view of this Inquiry that it could have done more, and acted earlier. While we acknowledge the real and significant steps taken by 7-Eleven to begin to rectify the situation, there is still much to do. Creating a culture of compliance from the top down will require a sustained and committed effort throughout the organisation, and resource allocation over a long period of time. Sustained change in behaviour is most likely to be achieved if driven by the franchisor. Deliberate contravening behaviour, particularly around false record keeping, appears to be ingrained within aspects of the network. If some 7-Eleven franchisees have built into their business model the underpayment of employees, particularly vulnerable workers, this culture will be difficult to address notwithstanding 7-Eleven’s recent efforts to implement record keeping systems which greatly enhance record compliance. The reported outbreak of demands to employees to pay back wages illustrates the lengths some franchisees will go to and the degree of leverage they have over employees. Difficulties in obtaining corroborative evidence of threats or coercion relating to this behaviour highlight the limits of what a regulator can achieve in terms of enforcement and rectification outcomes. It may be that chronic underpayments and associated behaviour will not be entirely eradicated as long as these operators continue to be part of the 7-Eleven network. Any business encountering deliberate and longstanding non-compliance of the nature observed in the 7-Eleven network will face challenges in overcoming entrenched behaviours, especially in a large and complex business. Sustainable compliance will only be achieved through persistent, resourced and ongoing accountability measures that root out and ensure serious consequences for stores that continue to engage in this behaviour. The balance of risk and rewards for non-compliance should be considered by both 7-Eleven and Government. The consequences of this type of behaviour must be more serious than the benefits that flow from underpaying employees if we are to impact behaviour. Financial penalties that are significantly lower than the savings to be made from underpaying wages have minimal deterrence impact. The real threat to a franchisee of losing their business due to breaches of the franchise agreement is a strong deterrent.
fair_work_ombudsman_report_into_7-eleven.docx