7-Eleven kills independent wage panel

Billionaire Russ Withers' scandal-ridden 7-Eleven chain has dumped its independent compensation panel after it refused to accept terms that would "emasculate" the independence of the panel and also threaten workers.

A furious Allan Fels, who headed the panel and is a former chairman of the Australian Competition and Consumer Commission, described the new proposed panel as "bogus" and a "triumph" for dodgy franchisees.

This is no longer an independent process. It is being done by self-interested people with the aim of minimising the payout. 

Allan Fels

"I am appalled at the situation and alarmed at the likely poor outcome for underpaid workers," Prof Fels said.

Still waiting: Sam Pendem says he is yet to receive his back pay.

Contrary to the company's press release, Prof Fels said the panel did not agree to a "transition" to an internal unit within 7-Eleven that will now process and decide the claims.

"This is no longer an independent process. It is being done by self-interested people with the aim of minimising the payout," Prof Fels said.

Thousands of claims have yet to be processed by the panel that was set up in the wake of a major wage fraud scandal involving international students on working visas, some of whom were paid less than $5 per hour.

7-Eleven founder: Russ Withers and former GM operations Natalie Dalbo. Photo: Wayne Taylor

The independent panel was set up last September in response to a joint Fairfax Media and Four Corners investigation that uncovered systemic rorting of workers and falsification of payroll records.

The dismantling of the Fels panel follows increasing tensions between head office and the panel, which reached fever pitch after the appointment of a new chief executive, Angus McKay. Head office and the panel met on Tuesday to discuss a new set of proposals outlined by Mr McKay.

Part of the original panel agreement was that 7-Eleven would have no staff involvement in the panel or the panel's assessments and all panel assessments could not be contested by head office.

Furious: Professor Allan Fels is angry at the panel changes. Photo: Alex Ellinghausen

"Already 7-Eleven has in recent times under its new CEO broken its commitment to accept panel decisions without question," Prof Fels said.

"There were quite a few other proposals that also would have emasculated the panel's independence and this is unacceptable to the panel and we advised 7-Eleven of this. Clearly the action by 7-Eleven would destroy trust by claimants and deter claims from being made and even pursued."

Prof Fels said he did not believe they were serious.

"7-Eleven also proposed an impossible standard of proof from now. Originally the standard was what the panel assisted by Deloitte thought was reasonable in the circumstances of very bad and dishonest record keeping by franchisees abetted by 7-Eleven," Prof Fels said.

"Now a court standard was proposed with Deloitte being asked to report to 7-Eleven as well as the panel. Besides being a complete repudiation of 7-Eleven commitments - obviously a public relations exercise partly intended to ward off a Senate inquiry - the outcome is a triumph for franchisees."

In a disturbing twist, 7-Eleven - which was savagely criticised in two separate reports by a Senate inquiry and Fair Work - said it would "fund" the regulator if the regulator wanted to take an oversight role in the new process.

The panel, led by Prof Fels and the highly regarded David Cousins in conjunction with a team forensic accountants, has already processed hundreds of claims that have so far delivered more than $12 million in back pay to current and former staff.

The final payout was expected to be close to $100 million, making it the largest pay-back claim in Australia's corporate history.

The panel believes that about 20,000 employees worked for 7-Eleven franchisees in the past decade and most were underpaid by about half.

7-Eleven said it will instead introduce an internal "secretariat" that will use "enhanced investigative protocols and evidentiary standards".

The Fels Panel will cease deliberations from this Friday.

A press release from head office says a new panel will operate inside 7-Eleven and any recommendations will be made to 7-Eleven and each recommendation must be validated.

Fairfax Media can reveal that tensions came to a head earlier this month in relation to one of the biggest wage fraud claims the panel has approved for payment.

Maurice Blackburn principal Giri Sivaraman, who has been acting pro bono for former 7-Eleven workers lodging claims to the panel, said he and his team had used evidentiary standards aligned with those used in Fair Work court cases.

"Any suggestion we have acted otherwise is appalling and we refute that," Mr Sivaraman said. "This notion that there's some sort of scam is preposterous. The scam was being run by 7-Eleven franchisees, and head office has allowed it to happen for years."

Former 7-Eleven worker Sam Pendem who was robbed twice in 18 hours while working at 7-Eleven for $10 per hour, has lodged a claim with the panel and is concerned about the change.

"I have not got any money yet. I am very concerned," Mr Pendem, who worked at four stores on the Gold Coast over four years, said.