Operator of 7-Eleven outlet and restaurant penalised for underpayments

The Fair Work Ombudsman has secured $335,664 in penalties against a Melbourne company and two individuals for underpaying Chinese workers at a 7-Eleven franchise and a Japanese restaurant in Melbourne’s CBD.

The Federal Circuit Court penalised Xia Jing Qi Pty Ltd, which operated the 7-Eleven outlet until March 2017, $154,225 for requiring three international students to repay part of their wages in an unlawful cashback scheme. It was penalised a further $145,800 for underpaying a migrant worker at an Ajisen Ramen franchise in the Melbourne Central shopping centre.

Former manager Ai Ling “Irene” Lin has also been penalised $9,590 for her involvement in the 7-Eleven convenience store breaches, and the company’s director Jing Qi Xia, who has a Chinese background, penalised $26,049 for her involvement in the restaurant breaches.

The three workers underpaid at the 7-Eleven store were from China and aged between 21 and 24 while employed with the company.  Following public exposure of 7-Eleven underpayments in 2015, the company and Lin tried to disguise underpayments of three employees by requiring them to pay back thousands of dollars in wages.

Lin told the three employees in late 2015 they would be paid through the payroll system but then specified a weekly sum for each of the workers to pay back via a safe drop box in the 7-Eleven store or to her bank account.

After returning this portion of their wages, the employees were left with hourly rates ranging from $8.53 to $26.52, leading to various underpayments of their ordinary hourly rates, casual loading, and weekend and public holiday penalty rate entitlements, totaling $6,674 between November 2015 and October 2016. They were back-paid in August 2017.

The worker underpaid at the Ajisen Ramen restaurant was also from China and in Australia on a 462 working holiday visa. She was underpaid $9,616, after being paid $11.50 per hour between May and October 2016 and then amounts equating to just $3.98 per hour in her final week of work, significantly below the minimum hourly rate, casual loading and penalty rates she was entitled to.  The worker was back-paid in August 2017.

In her judgment, Judge Norah Hartnett said the use of the cash back scheme at the 7-Eleven store was “particularly egregious”. “[I]t involved a deception of 7-Eleven head office and circumvented attempts by head office to stamp out the underpayment of employees by 7-Eleven franchisees,” Judge Hartnett said.

“The Court recognises that conduct such as implementing a system requiring employees to repay wages they are owed, and making, keeping and producing false records to disguise employees’ true employment situation, is reprehensible conduct and denies to all employees the minimum wage standards that they, in Australia, should expect and are entitled to.”

In relation to the Ajisen Ramen breaches, Judge Hartnett said the conduct of the company and Xia was “deliberate and grave”.

Acting Fair Work Ombudsman Kristen Hannah said that employers who exploit migrant workers will be discovered and met with serious legal consequences.

“This cash back scheme was particularly deplorable as it undercut migrant workers, who can be vulnerable due to language and cultural barriers, or are reluctant to speak up. All workers in Australia have the same rights at work, regardless of citizenship,” Hannah said. “We have an agreement with the Department of Home Affairs where visa holders can contact us for help without fear of their visa being cancelled.”

The Court also found that Xia Jing Qi Pty Ltd breached record-keeping laws by providing false records to Fair Work inspectors during its investigation of the 7-Eleven convenience store.

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