Australia to stiffen underpayment fines after 7-Eleven scandal

SYDNEY: Australia unveiled plans on Thursday for a ten-fold hike in fines for employers who underpay staff after 7-Eleven convenience store franchisees were accused of ripping off migrant workers, in what some experts believe is a widespread practice.

The government also said it would boost funding for the Fair Work Ombudsman by A$20 million (US$14.4 million), boost the regulator's evidence gathering powers and set up a taskforce to help migrant workers.

The hike in proposed penalties is a measure of the outrage sparked by a 2015 Australian Broadcasting Corp report which accused Australia's 7-Eleven Stores Pty Ltd of letting franchisees threaten workers with deportation if they complained of being paid as little as half the minimum wage.

It also suggests an attempt by the conservative government of Prime Minister Malcolm Turnbull to appeal to voters concerned by his Liberal Party's tough stance on asylum seekers ahead of July 2 elections. A day earlier, Immigration Minister Peter Dutton sparked criticism by warning that "illiterate and innumerate" refugees would steal Australian jobs.

Fines for underpaying workers are currently A$10,800 for an individual and A$54,000 for a company, amounts "seen as an acceptable cost of doing business", a policy document released by the government said.

7-Eleven was not immediately available for comment.

Allan Fels, the former competition regulator, was the preferred choice to lead the new migrant worker taskforce, the policy document said.

Fels was hired by 7-Eleven to run an independent inquiry into underpayment but earlier this month said he had been fired after resisting what he called a threat to his independence.

In a series of tweets on Thursday, Fels said he had been "very worried about the fate of the underpaid 7-Eleven workers given the company's decision to dismiss us". 

The government's proposed measures were a "wake-up call to those businesses who are systematically underpaying workers", he added.

In an interview with The Australian newspaper last week, he said: "There are heaps of others doing it. It's obvious." 

Fels has estimated most of the 20,000 7-Eleven franchise employees over the past decade were underpaid by about 50%.

Fels was not immediately available to comment on Thursday.

The Australian 7-Eleven franchisor is owned by Japan's Seven & i Holdings Co and licensed by US-based 7-Eleven Inc, which is facing accusations of unfair treatment of its franchisees in North America. - Reuters