New laws to stop 7-Eleven type scandals

New laws to protect vulnerable workers have cleared the Senate, with tougher penalties for deliberate and systematic underpayment of workers.

It follows revelations of exploitation by some 7-Eleven franchisees.

The changes also make it illegal for employers to ask for cash back from employees, and makes franchisors liable for misbehaviour by franchisees where they are complicit or turn a blind eye to breaches.

The Fair Work Ombudsman’s powers will also be strengthened to make sure the exploitation of vulnerable workers can be effectively investigated.

The legislation passed on Monday night with amendments by Labor and will need to return to the lower house for approval.

Employment Minister Michaelia Cash said the ombudsman’s new powers were vital in tackling worker exploitation such as the 7-Eleven case.

“The strengthened penalties contained in this bill will act as a significant deterrent to unlawful practices,” she said. “They will also ensure that the small minority of unscrupulous operators think twice before ripping off workers.”

Late last year, hidden footage emerged showing employees at a Brisbane 7-Eleven being forced to hand back their pay.

It followed a Fairfax-ABC investigation that revealed some franchisees systematically underpaid international students, who were threatened with deportation if they reported it.

Senior Employment Relations Adviser from Employsure, Harry Hilliar, says, “If an employer does not keep or provide correct payslips or accurate employee records and an employee makes an underpayment claim, the onus is on the employer to prove they have paid the employee correctly. Failure to keep compliant records may incur newly increased fines in addition to exposing a business to significant back payments.”

Hilliar describes the ruling as a shake-up for the franchise sector, in which franchisors will be held responsible for underpayments by their franchisees where they knew, or should have reasonably known, of the contraventions and failed to act to prevent the practices. This will apply where a franchisor has a degree of influence or control over their business networks.

“The Bill was passed with amendments from Labour but still gives the Fair Work Ombudsman questioning powers specifically for investigations into underpayments and exploitation with ‘proper oversight’. We are interested to see how this plays out for employers and what is defined as proper oversight,” Hilliar says.

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