7-11 chairman Michael Smith at Media House studioPhoto:Pat Scala/AFR/MelbourneTuesday the 31st of October 2017 **EMBARGOED FOR BOSS MAGAZINE**Credit: Pat Scala Professor Allan Fels, Chair of the National Mental Health Commission, addresses the National Press Club of in Canberra on Wednesday 25 July 2017. fedpol Photo: Alex Ellinghausen
When 7-Eleven chairman Michael Smith bragged about the lengths the franchise giant had taken to compensate thousands of underpaid foreign workers, he failed to impress underpaid workers Manish and Anshu Mehra.
7-Eleven’s wage repayment program rejected the couple’s $300,000-plus compensation claims on the basis of the “direct family relationship to the franchisees alleged to have been facilitating the underpayment”.
The letter, sent to them in August, was referring to the fact that the franchisee was a relative.
They claim they were paid well under the award rate in cash.
“This determination does not limit other avenues available to you, such as contacting the Fair Work Ombudsman or 7???Eleven’s internal investigation unit to discuss further options,” the letter said.
Manish and Anshu, who moved from India to in 2006, are now taking their brother-in-law to court. This week, they filed a statement of claim in the Federal Circuit Court in Melbourne against franchisee Lahkwinder Singh and LD Income Trust and Ell Dee Income Trust, of which Singh is a director.
The case, being run by Maurice Blackburn and bankrolled by the couple’s union, the SDA, alleges Manish is owed $248,384 in lost wages and super, penalties and annual leave between 2010 until he was made redundant in March 2016.
The statement of claim alleges Manish worked shifts of up to 12 hours at between $10 and $12 an hour in cash, which is well below the award rate.
Anshu is seeking $89,963 in lost wages, super and annual leave load loading between 2011 and January 2016, when she was made redundant.
Phone calls and questions were sent to Lahkwinder Singh, but he was unavailable to comment.
7-Eleven became embroiled in a wage fraud scandal in August 2015 when a joint Fairfax Media investigation uncovered rampant wage fraud across hundreds of stores.
Thanks to a whistleblower who released a cache of documents that proved systemic underpayment and a cover-up, 7-Eleven had little choice but to move swiftly.
In an attempt to restore credibility, the convenience store giant hired Allan Fels to head a compensation scheme (then months later sacked him in an effort to control costs and do the compensation in-house). Manish and Ashnu lodged their claims with the Fels panel then moved across to the in-house panel.
“All we wanted was a fair go,” Manish said. “We were happy when the Fels panel said we could apply, but once 7-Eleven took over, what could we expect?”
Smith said at the time that the motivation to move the panel in-house, with the help of Deloitte, was “you cannot outsource morality”.
Manish questioned the decision of the panel and the 15 months it took to process the claim. He said the delay cost him and his wife tens of thousands of dollars in underpayment claims they couldn’t include due to the statute of limitations.
A spokesman for 7-Eleven declined to comment on the case and therefore couldn’t explain why it took so long to process.
When asked if 7-Eleven had a policy on compensation for relatives, he said the panel was designed to be as “easily accessible as possible” to avoid discouraging potential claimants from lodging a claim.
“All claims were assessed on their merits, he said.
“Where family relationships were revealed, the claim continued to be assessed on its merits as well as the personal circumstances involved – for example, strength of family relationship, living and working arrangements etc.”
Smith told AFR’s Boss magazine in December that more than $150 million had been repaid to thousands of workers. He discussed the scandal and the complex ties involved between claimants and those they were claiming against.
“We paid people who were staying in the home of the franchisee,” he said. He went on to say: “We had sons making claims against fathers.”
Wage fraud can be complex. It is commonplace for franchisees to employ family members and extended family members, including sons and daughters, in-laws and cousins. Some exploit that relationship. It’s an issue that isn’t unique to 7-Eleven.
The latest franchise group to become embroiled in a scandal is Retail Food Group, which runs iconic brands including Donut King, Gloria Jeans, Brumby’s and Crust Gourmet Pizza.
The company stands accused of screwing its franchisees and some franchisees in turn have admitted to using family members to work in their stores for little or no money to stay solvent. Other franchise groups including Caltex and Domino’s franchisees have also been caught exploiting workers, including family members.
It prompted Fels, who chairs the migrant workers taskforce, to note that franchisees and their families working long hours for little or no pay was becoming an issue.
“Historically in , we accepted up to a degree the fact that in a franchise arrangement families had to work hard with long hours, but of late this is getting out of hand.”
Manish says when his brother-in-law came to his house and asked to help him out, he agreed.
“They had sponsored us to migrate to and live in their house for a year so I had an obligation,” he said.
When he started working for his brother-in-law in 2010 as a console operator at a 7-Eleven store in Epping North, Victoria, he says he had no idea about awards and penalty rates. “I trusted him.”
Then after a while he realised he was working more and more hours. He started to complain, which resulted in arguments and eventually a family split. He said he also told a district manager at 7-Eleven in 2014.
“The sad thing is nobody was listening, not even 7-Eleven … We gave our souls to the stores. We worked like slaves and no one cared. 7-Eleven didn’t care,” he said.
Earlier this year, 7-Eleven changed its compensation scheme, with many complaining the bar has been set so high it will be difficult to make a successful claim.
Thousands of workers have been compensated, but cases like the Mehra’s raise serious questions about how genuine it really is.