Extract from ABC News
Updated
Photo:
The 7-Eleven store in West End where workers were systematically exploited. (ABC News: Patrick Williams)
The owner of a Brisbane 7-Eleven store who
systematically exploited workers has been fined more than $400,000, the
largest penalty imposed in Australia by a court after action by the Fair
Work Ombudsman.
Key points:
- 12 employees underpaid a total of $82,661
- Owner provided inspectors with false records to cover-up underpayments
- Judge found "no suitable credible expression of regret"
The store at 94 Boundary Street, West End, underpaid 12 employees, including a number of international students, a total of $82,661 between September 2013 and September 2014.
While some of the money was paid back, the store owner had requested his staff to secretly pay back thousands of dollars to him and his wife.
In handing down his decision on Monday, Federal Circuit Court Judge Michael Jarrett said the case revealed a "contemptuous disregard" of Australian workplace laws and the owner had sought to deceive the Fair Work Ombudsman.
Employees' workplace entitlements ignored
Brisbane businessman Sheng-Chieh Lo, who owns and operates the store, was penalised $68,058 and his company, Mai Pty Ltd, was fined $340,290.More than $35,000 of the underpayment remains outstanding.
Judge Jarrett issued an order that Mai Pty Ltd fully rectify the underpayment.
"Mr Lo's contempt is demonstrated by his persistent attempts to deceive the Fair Work inspectors investigating the relevant complaints and his insistence, undertaken in a secretive way, that any amounts he paid to the relevant employees to make good [Mai Pty Ltd's] defaults should be immediately paid back to him," he said.
He found Lo and his company had "systematically exploited" employees by implementing "a business model that relied upon a deliberate disregard of the employees' workplace entitlements".
Lo paid employees flat rates as low as $13 an hour and tried to conceal underpayments by creating false records and making entries into the 7-Eleven head office payroll system.
Judge Jarrett said it was "a sophisticated system of data manipulation and false record keeping" and the extent of the deception was only discovered because of the persistence of Fair Work inspectors.
False records shown to inspectors
After Lo initially provided inspectors with false records to try to cover-up underpayments, he showed inspectors selective bank records as evidence that his employees had been back-paid.7-Eleven investigation
- 7-Eleven staff work twice as long at half pay rate
- 7-Eleven business model rips off workers, former ACCC boss says
- Convenience store empire 'built on something not much different from slavery'
- Greens to refer evidence of 7-Eleven worker exploitation to Senate inquiry
- Labor urges Government to give amnesty to students forced to breach visa rules
- 7-Eleven chairman denies widespread wage rorting claims, says 'relatively few' franchisees at fault
However, when Lo provided the records to inspectors, he knew he had already arranged for the employees to pay thousands of dollars back to him and his wife.
After inspectors learnt of the conduct, Lo again tried to deceive inspectors by denying he had required employees to back-pay wages, saying it "would be wrong" to do so.
However, Lo later admitted what he had done.
Judge Jarrett said the "facts reveal a contemptuous disregard of Australian workplace laws".
Most of the employees received just over half what they were entitled to and Judge Jarrett found there had "been no suitable credible expression of regret".
"Lo continues to justify his actions without accepting responsibility for them," he said.
Judge Jarrett said the penalties would "assist in ensuring other employers in the retail sector, and particularly within 7-Eleven, are compliant with their obligations".
"Compliance activities by the Fair Work Ombudsman suggest a particularly high need for general deterrence in the retail industry and, specifically, in relation to 7-Eleven franchises, given the number of complaints received against 7-Eleven franchisees since 2010," he said.
In addition to the penalties and back-pay order, Judge Jarrett imposed an injunction restraining Lo and his company from underpaying workers and from seeking or accepting any back-payment of wages from current or future employees.
Lo's company was also ordered to display an in-store notice informing employees of entitlements and to undertake an audit of its compliance with workplace laws and report the results to the Fair Work Ombudsman.
7-Eleven head office must ensure workers paid correctly
Fair Work Ombudsman Natalie James said her office was in discussions with 7-Eleven about a robust and transparent arrangement that would satisfy it that the head office was taking the necessary steps to build a franchise operating model that ensured workers employed in its network were correctly paid into the future."Let me be very clear that we will continue to be persistent with our compliance activities, even when confronted by employers who deliberately seek to mislead us with false records and where vulnerable employees are involved, even if they themselves are too afraid to talk to us," Ms James said.
In August last year, a joint Fairfax and Four Corners investigation uncovered systemic wage underpayments of international students at 7-Eleven convenience stores across Australia.
Lo's Brisbane store was one of 20 7-Eleven outlets targeted by Fair Work inspectors for surprise night-time visits as part of a tri-state operation in September 2014.
Earlier this year, the company vowed to put the interests of underpaid franchisee staff first following criticism earlier this month for its decision to axe an independent panel assessing worker claims and, instead, adopting an in-house process.
Last month, the former head of the independent panel, Allan Fels, expressed his doubts about a new in-house payback process.
Employers and employees seeking assistance can visit www.fairwork.gov.au or contact the Fair Work Infoline on 13 13 94.
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