The 7-Eleven wage repayment scheme has so far repaid over $110 million in unpaid wages.
However former wage repayment chairman Professor Allan Fels has raised concerns about minimal fines.
The current payout has eclipsed penalties under existing laws and raised questions about a new law that the Federal Government has proposed, the Sydney Morning Herald reported.
Fels said the fines imposed under the existing laws would be minimal in comparison to the 7-Eleven payouts.
“The far stronger deterrent effect for others is if they know they have to make up the underpayments in full—in this case $110 million plus, compared to if they just have to pay a fine,” he said.
“The Fair Work Act system just imposes fines and very limited compensation on the individuals whose cases are considered. But the court system works quite badly for systematic underpayment of thousands of people.”
A year on from when 7-Eleven first began accepting claims via its Wage Repayment Program, across the 2832 claims that were lodged by workers underpaid by the franchise system, an average of $39,089 has been paid out per person.
A spokesperson for 7-Eleven told Retailbiz sister publication C&I Week: “When underpayments in our franchised store network were uncovered, we said we would put it right, and reform the business, which is exactly what we have been doing.”
Speaking to C&I Week in 2016 7-Eleven CEO Angus McKay said: “7-Eleven took the Wage Repayment Program process in-house in order to deliver a robust and efficient process that puts money in the hands of aggrieved franchisee staff as quickly as possible.”
Over 15,000 past and current franchisee employees were contacted many times to submit a claim and the claims have been seen to at a steady pace.
“We have implemented a range of reforms across our business, including centralising payroll, biometric time and attendance systems in stores, investing in a significant increase in field-level investigation and compliance activity, and increasing Franchisees’ profit share and minimum profit guarantees under our franchise agreement,” the spokesperson said.
“We voluntarily agreed an industry-leading Proactive Compliance Deed with the Fair Work Ombudsman, and have proposed a range of policy reforms based on our experience to help raise the standard across the franchising industry.
“While some doubted our resolve at the time, we said judge us on our actions—$110 million in repaid wages through our voluntary Wage Repayment Program clearly demonstrates our commitment to remediating the past and reforming our business.”
The Federal Government’s proposed Fair Work Amendment if passed will result in an increase to civil penalties and hold companies responsible for knowing the contraventions of their franchisees.
This story originally appeared on Convenience & Impulse Retailing.
Want the latest retail news delivered straight to your inbox? Click here to sign up to the retailbiz newsletter.