News & Insights

Scandal-plagued franchise, 7-Eleven, has found itself in trouble again after the Fair Work Ombudsman found a Melbourne CBD outlet guilty of underpaying employees.

Xia Jing Qi Pty Ltd, the owner and store manager received a $334,664 fine from the Ombudsman after it uncovered the exploitation of three international students. The students were underpaid thousands of dollars during the 2015-2016 financial year through a “cash-back” scheme that has seen other 7-Eleven franchisees heavily penalised in recent years.

Jing Qi Xia, a company director, told staff their wage was $15 an hour. Their wages were electronically transferred before the students had to return the portion of their wage that was above and beyond the $15.

Occasionally, the money would be funnelled through a bank account by the store manager, Ai Ling Lin, who transferred it to Ms Xia. Once the “cash back” was complete, employees were paid as little as $8.53 an hour for their work.

The Federal Circuit Court penalised Ms Xia and Ms Lin for violations including:

• failing to pay minimum hourly rates;
• failing to pay casual loadings;
• failing to pay weekend and public holiday penalty rates; and,
• providing false and misleading pay records.

Xia Jing Qi Pty Ltd was fined $154,225 for the breaches while Ms Lin was fined $9,590.

An additional $145,000 fine was handed down to the company for paying an employee $11.50 an hour at an Ajisen Ramen franchise restaurant they also owned and operated in Melbourne. In some instances, the employee received just $3.98 an hour.

Ms Xia was fined $26,049 for her involvement with the underpayment at both franchise outlets.

Kristen Hannah, Acting Ombudsman, said “The Fair Work Ombudsman will not tolerate any employers requiring any workers to pay back any of their wages.

“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. We will continue to take enforcement action when businesses undercut migrant workers.”

All employees were back-paid in 2017.

For more information or to discuss a potential issue of underpayment in your franchise, please contact us.