Some 7-Eleven workers are made to withdraw part of their wages from ATMs to give back to their bosses, company executives have admitted to a Senate inquiry.
As well, an independent investigator found franchise owners had physically intimidated some employees wanting to complain – including a case of “beating” – about what has been labelled a “racket”.
Addressing revelations of widespread underpayment, 7-Eleven’s new chairman admitted the practice of “cash-backs” was still happening in some franchises.
“Unfortunately underpayment is happening in the form of cash-back which seeks to subvert enhanced record-keeping protocols,” Michael Smith told a hearing of the Senate inquiry into temporary work visas on Friday.
Mr Smith used his appearance in Canberra to apologise for underpayments, which have resulted in the company being subject to intense media scrutiny.
“As the new chairman of this company I think it is important for me to say that I am sorry,” he said in an opening statement.
“The directors and the company accept without complaint the consequences of what has happened, if for no other reason than people have been hurt.”
Former Australian Competition and Consumer Commission chief Allan Fels, who is overseeing a compensation scheme, warned there were still threats of physical intimidation by franchisees.
His colleague, Siobhan Hennessy, described one case they were told about on Thursday in which a foreign student was beaten after making a claim.
“It’s unbelievable,” she told senators.
The Fels Wage Fairness Panel has also heard evidence of a “cash-back racket“, with workers being sent text messages about paying back a portion of their wage.
“Some of the claimants have been told to go round the back so that the money drop won’t be caught on CCTV,” Ms Hennessy said.
In another incident one employee was made to withdraw part of his wage to give it to a fellow worker who wasn’t on the books.
The panel told the committee more than 2000 workers had made initial contact with about 1000 claims received so far.
Of those, 188 determinations had been made, costing $4.36 million.
As of Friday morning a total of $2.82 million had been paid to 117 workers.
Professor Fels said 60 per cent of 7-Eleven stores were subject to claims.
Interim CEO Robert Bailey said new payroll systems, that included measures such as biometric signing in and out, would be ready from next week.
“It will be linked to quite sophisticated, unfortunately almost big brother-ish type confirmation that those who are said to be on the roster are actually there,” he said.
Fair Work Ombudsman Natalie James was encouraged to see the company putting in measures such as electronic time-keeping.
But she still refuses to shop at 7-Eleven.
Former chairman Russell Withers, who is the company’s majority shareholder, told the hearing Prime Minister Malcolm Turnbull had no financial interest in his company.
Mr Turnbull has shares in two international investment funds that invest in Japanese conglomerate Seven & I Holdings, Fairfax Media claimed on Friday.
Seven & I’s major subsidiary is Seven-Eleven Japan, which is the parent company of 7-Eleven in the United States, with, in turn, licenses the billionaire Withers and Barlow family.
“I read (about Mr Turnbull) in the media just as you did,” he told a Senate inquiry hearing in Canberra on Friday in response to a question from Labor senator Sue Lines.
“I know nothing of it. The prime minister has certainly no interest in my company.”