In June 2014 the Fair Work Ombudsman (FWO) commenced an Inquiry into allegations that significant underpayment of wages and falsification of employment records were occurring across much of the franchisee network of Australia’s leading convenience retailer, 7-Eleven Australia Pty Ltd (7-Eleven) [ACN 005 299 427].

The Inquiry sought to test these allegations through coordinated site inspections, and subsequent record keeping analysis, of a sample of 20 7-Eleven stores. The Inquiry also undertook a number of in-depth investigations of 7-Eleven stores that were the subject of requests for assistance from employees.

These investigations disclosed concerning levels of non-compliance with the Fair Work Act 2009 (FW Act) and Fair Work Regulations 2009 (FW Regulations), including instances of deliberate manipulation of records to disguise underpayment of wages.

To identify and address the drivers of non-compliance, the Inquiry examined the actions and considered the motivations of workplace participants. It sought to better understand the respective roles of 7-Eleven, its franchisees and their employees in the network’s operating model and culture. In particular, the Inquiry sought to determine if 7-Eleven had a role in the alleged falsification of employment records and underpayment of wages by franchisees.

The Inquiry found 7-Eleven’s approach to workplace matters, while ostensibly promoting compliance, did not adequately detect or address deliberate non-compliance and as a consequence compounded it. In particular, instances where franchisees created false and misleading records to satisfy 7-Eleven’s auditing and payroll regime while continuing to underpay employees.