7-Eleven has been sprung short-changing workers potentially millions of dollars in back pay by changing the way compensation payouts are being calculated.
Fairfax Media can reveal that since 7-Eleven sacked a compensation panel headed by Allan Fels and replaced it with an internal system in collaboration with Deloitte, it has been using the ultra low cash rate to calculate interest on worker repayments.
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One worker, Prakash Kumar, who was underpaid hundreds of thousands of dollars at a number of 7-Eleven stores has been offered a payout under the new scheme that is $100,000 less than the amount law firm Maurice Blackburn had calculated.
Documents obtained by Fairfax Media show that the discrepancies relate to a decision by the new panel to adopt a lower interest rate that is not in accordance with the standard practice of using the Federal Court Rate, which is the official cash rate plus 4 per cent.
![7-Eleven has been under pressure for more than a year.](/web/20161110122234im_/http://www.smh.com.au/content/dam/images/g/j/b/k/s/1/image.related.articleLeadwide.620x349.gsgzid.png/1478427846433.jpg)
The decision by 7-Eleven to pay interest to its exploited workers using the ultra low cash rate of 1.5 per cent stands in contrast with its own business practice to charge franchisees interest on the loans they use to buy stock at the Westpac Indicator Rate – which can run up to 7 per cent.
'No relevance'
A 7-Eleven spokesman declined to "enter a discussion about our commercial arrangements" because "commercial lending rates bear no relevance to the WRP [Wage Repayment Program]Â questions you've raised".
7-Eleven has so far repaid $44.7 million in back pay after its network of franchisees spent years fostering non-compliance with workplace laws. Of that, $28 million has been repaid to more than 700 workers with the interest calculated for those workers' based on the ultra low cash rate.
Maurice Blackburn, which is representing more than 80 underpaid workers, says it looks like the new panel has also changed the way penalty rates have been calculated.
![Maurice Blackburn employment principal Giri Sivaraman says the decision should be reversed.](/web/20161110122234im_/http://www.smh.com.au/content/dam/images/g/o/u/t/y/7/image.related.articleLeadNarrow.300x0.gsgzid.png/1478427846433.jpg)
Maurice Blackburn's Giri Sivaraman, said it is clear they are using lower interest to calculate the repayments.
"Our clients are victims of wage theft again," he said.
No faith
Mr Kumar, who was one of the first workers to come forward and expose the 7-Eleven wage fraud scandal in August 2015, told Fairfax Media he felt helpless and desperate.
"No one else could have done it better than sir Allen Fels and the day they sacked him we already knew 7-Eleven have no intention of back paying the underpaid wages fairly," he said from Nepal, where he is visiting his dying father.
Our clients are victims of wage theft again
Maurice Blackburn's Giri Sivaraman
Mr Kumar, said he had made the claim through Maurice Blackburn almost a year ago and after a "long, tiring wait" the panel approved a significantly smaller amount. "If I had to define the 7-Eleven Australia's operators, I would tag them as fearless corporate thugs," he said.
Another former 7-Eleven worker, Raj Desai, was made an offer by the panel of $60,986, which was $16,000 less than the amount Maurice Blackburn had calculated and lodged.
The discrepancy appears to be due to a lower interest rate being used and a change in the way penalty rates are being calculated.
Sole earner
Mr Desai worked at two 7-Eleven stores between 2011 and 2013. He would work mostly 2pm until 8am shifts in busy areas.
"It was stressful," he said. "People would come into the shop drunk, I didn't get meal breaks and if a customer stole something, I had to pay."
He said he desperately needs the money because he is the sole bread winner and sends money home to his sick mother in India.
"I have had 11 months of suffering to get paid and when I finally get an offer, it is a different figure," he said. Â
7-Eleven declined to comment on individual cases.
Careful development
The company also did not specifically address questions as to why it had changed the way it was calculating payments.
"The methodology has been carefully developed in collaboration with Deloitte, utilising their expertise in developing restitution programs, and determined in good faith to place legitimate claimant interests at its centre," a 7-Eleven spokesman said.
"The wage review program provides a no-cost, accessible, streamlined and confidential avenue for claimants to seek reimbursement as an alternative to a court process," he added.
7-Eleven believes using the cash rate is appropriate and fair "in all the circumstances".
"Applying the RBA cash rate of interest to back-paid wages ensures that claimants receive the full monetary value of their entitlements, restoring them to where they would be had they been correctly paid by their employer at the time," the spokesman said.
Ombudsman informed
7-Eleven said it had shared details of the changes to its repayment program with the Fair Work Ombudsman prior to commencing the in-house panel. Â
Professor Fels was sacked from the 7-Eleven panel six months ago after refusing to accept terms that would "emasculate" the independence of the panel.
At the time Professor Fels said the panel was no longer an independent process. "It is being done by self-interested people with the aim of minimising the payout," he said.
The Turnbull Government recently appointed Professor Fels to head a new taskforce to look at migrant workers, including the new 7-Eleven compensation scheme.
Professor Fels said under his panel, the Federal Court Rate was used to calculate interest repayments, instead of 7-Eleven's decision to move to the Reserve Bank official cash rate, which is currently 1.5 per cent.
Letter of complaint
7-Eleven's decision to adopt a lower interest rate has prompted Maurice Blackburn, on behalf of the Shop, Distributive & Allied Employees' Association, to write to 7-Eleven accusing it of misleading or deceptive conduct.
The letter says "by failing to advise claimants who had submitted claims to the Panel that the rate of interest to be applied to their claim by the WRP would be different to, and less then, the rate consistently applied by the Panel".
The letter says in May 2016, 7-Eleven boss Angus McKay made representations, published in Fairfax Media, "the company (7-Eleven) brought the panel in house to expedite claims and was not about minimising the amount paid out to staff".
"We demand that 7-Eleven reverse those determinations, which have not been accepted, where interest has been calculated at the Reserve Bank cash rate.
"All future determinations of claims submitted to the Panel should also be determined at the higher, original rate of interest. We request confirmation of the above from 7-Eleven by close of business, Friday, 4 November 2016."
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