REMEDIES FOR MIGRANT WORKER EXPLOITATION IN AUSTRALIA: LESSONS FROM THE 7-ELEVEN WAGE REPAYMENT PROGRAM.

Author:Berg, Laurie
 
FREE EXCERPT

CONTENTS I Introduction II A History of Fair Work Act Contraventions by 7-Eleven Franchises III 7-Eleven's Establishment of Worker Remedial Mechanisms IV 7-Eleven Employees' Historically Limited Access to Employment Remedies A Unions B Courts C The FWO 1 Unpaid Entitlements Recovered by the FWO from 7-Eleven Franchisees 2 Litigation Brought by the FWO against 7-Eleven Franchisees V Features of the 7-Eleven WRP that Enabled Employees to Obtain Redress: How Were Shortcomings of Existing Processes Overcome? A Mitigation of Employees' Immigration Fears B Mitigation of Fears of Loss of Employment or Retaliation and Disloyalty Concerns C Sidestepping the Potential Jurisdictional Bar to Pursuing a Claim in Court D Amelioration of Evidentiary Obstacles E Provision of Information and Assistance with Claims F Demonstration Effect of Swift, Successful Claims G Circumvention of Employer Insolvency and Accessorial Liability Challenges VI Generalisability of Lessons Learned from the Success of the WRP VII Conclusion I Introduction

Mohamed Rashid Ullat Thodi came to Geelong from India in 2007 to undertake a double degree in architecture and construction management. (1) After applying for 40 positions without success, and facing high living expenses and university fees, he accepted a job at a 7-Eleven store. (2) He was initially engaged as an unpaid 'trainee, and for two months he worked four to five shifts a week cleaning toilets, windows and air conditioning vents, stacking shelves and mopping floors without pay. (3) Eventually he began to earn $10 per hour, working approximately 50 hours each week, although his payslip recorded only 20 hours at the award wage rate. (4) His employer explained that this arrangement was designed to benefit him by disguising the fact that he was exceeding the 40-hour-per-fortnight work restriction on his student visa. When, a year later, he requested a pay rise to $11 per hour he was summarily dismissed. (5) As Ullat Thodi later recalled to a Senate inquiry into exploitation of temporary migrant workers:

[T]hey will tell you: 'We are like a family. We'll give you a job and help you out. Work more hours than the 20-hour limit.' ... I have been told, 'Don't go and speak about your pay to anybody, because if you do you'll be in trouble because they will find out you are working more than 20 hours, then you will be deported.' (6) Ullat Thodi is one of thousands of international students who, over many years, were systemically underpaid by 7-Eleven franchisees across Australia. Amidst extensive media exposure and the public scrutiny of the Senate inquiry, (7) 7-Eleven quickly became the crucible for public concerns about the exploitation of temporary migrant labour. In particular, it drew pointed attention to the exploitation of international students, which has been well documented within scholarly literature in Australia. (8)

While the scale and systemic nature of the exploitation by 7-Eleven were shocking to many, there are two striking dimensions to the story which have received far less scholarly or media attention. First, in the many years over which thousands of 7-Eleven employees were underpaid, exceptionally few had attempted to recover their unpaid wages through the Fair Work Ombudsman ('FWO'), unions or courts. (9) Second, and even more remarkably, in the wake of the exposure of the exploitative practices, thousands of current and former 7-Eleven employees subsequently filed claims through the 7-Eleven wage repayment program ('WRP').

This became the largest wage repayment in Australian history. Established and funded by 7-Eleven's head office, the WRP was tasked with determining and paying out any franchise employee's claim for unpaid wages and entitlements. Within two years, it had paid out over $150 million to 3,667 current and former employees. (10) This is extraordinary compared with the previous conduct of underpaid 7-Eleven workers, and because international students and other temporary migrants in Australia very rarely seek to recover their unpaid wages. (11)

To address this broader phenomenon, this article seeks to understand why so many thousands of international students working at 7-Eleven did not or could not recover their unpaid wages through the FWO and existing remedial processes in Australia. We then unpack the features of the WRP that enabled thousands of vulnerable employees to achieve such vastly different outcomes. Although scholars have undertaken detailed analyses of structural factors contributing to exploitation of temporary migrants in Australia, (12) there has been limited data available on temporary migrants' access to remedies for unpaid wages and entitlements. This is likely attributable to the challenges in obtaining data on the magnitude of exploitation and number of potential claims on the one hand, and the number of claims made and their outcomes on the other. The 7-Eleven case study therefore presents a unique opportunity to evaluate the barriers impeding temporary migrants' access to existing remedial mechanisms and the conditions that may ameliorate them.

This article arises out of a broader empirical study on temporary migrant workers' access to justice in Australia, drawing on a range of data sources ('National Temporary Migrant Work Survey'). (13) Field research was conducted between 20 January 2016 and 17 February 2017 in Sydney, Melbourne, Brisbane, Adelaide and Canberra. This included six focus groups with 26 temporary migrants (including former 7-Eleven employees) (14) and 36 interviews with a range of stakeholders including government agencies, 7-Eleven management, legal service-providers, advocates, unions and three former 7-Eleven employees. (15) The National Temporary Migrant Work Survey yielded 4,322 responses from individuals who have worked on a temporary visa in Australia. (16) The study also draws upon case data and information supplied by the FWO, the Department of Immigration and Border Protection ('DIBP'), 7-Eleven head office and Michael Fraser, (17) as well as 7-Eleven workers' testimony before the Senate inquiry and relevant case law.

Understanding the experiences of 7-Eleven employees and the company's remedial response is especially timely and significant as some of Australia's largest franchises confront similar exploitative practices in their businesses. (18)

It will also provide much-needed illumination of these issues for government and other actors seeking to better respond to widespread noncompliance with the Fair Work Act 2009 (Cth) ('FW Act') in relation to temporary migrants.

II A History of Fair Work Act Contraventions by 7-Eleven Franchises

Exploitation of international students is hardly unique to 7-Eleven and has been explored in empirical research. As far back as 2005, one major study found that 58% of working international students interviewed were earning less than the legal minimum wage. (19) A 2015 survey of international university students found that 60% earned less than the federal minimum wage of $17.29 an hour. (20) Another detailed empirical study concluded that a higher proportion of students working in the food services industry may experience underpayments than those in other industries. (21) These results accord with a recent survey, the National Temporary Migrant Work Survey, conducted by the authors into temporary migrants' work conditions and access to employment remedies across Australia. We found pervasive and serious underpayment with half of the 2,528 international student survey participants (55%) reporting that they were paid $15 or less per hour in their lowest paid job in Australia, (22) and one third (28%) reporting that they were paid $12 or less per hour. (23) Over four in five respondents (86%) believed that many, most or all international students were paid less than the minimum wage. (24)

Although not exceptional, the mistreatment of international students working in 7-Eleven stores, uncovered in late August 2015, was striking, in part, because of the sensational nature of the media coverage. (25) Furthermore, far from isolated incidents, the exploitative and fraudulent practices, including systemic underpayment (26) and falsification of pay records, (27) appeared to be widespread across the 626 franchisee-run stores nationwide. In addition, international students predominated in this workforce: FWO's survey of 20 franchise stores found that 84% of employees encountered by the regulator were international students. (28) Although the centralised payroll service of 7-Eleven Stores Pty Ltd ('7-Eleven' or 'head office') ostensibly conformed to award wages, there were at least four standard underpayment practices across the franchisee network that had apparently been designed to escape detection. (29)

First, as experienced by Ullat Thodi, there was a common practice of nonpayment for weeks or even months on the basis that an employee was a 'trainee'. (30) This sometimes involved extended periods of arduous work. (31) One employee was paid $325 for 691 hours of work as a 'trainee', or 47 cents per hour. (32) This practice appears to be common among international students generally, with 42% of those who responded to the National Temporary Migrant Work Survey reporting that they had been asked to do unpaid work as 'training'.

In the second widespread practice, dubbed the 'half pay scam, franchisees only recorded half the hours worked by the employee in the central payroll system, resulting in an effective pay rate of half of the award or less for double the number of hours. (33) Alongside this practice, many employees received pay slips showing only half their hours worked, and others never received pay slips at all. (34)

Third, in the 'cash back scam', franchisees paid employees correctly through the payroll system but then required them to return a portion of their wages in cash. (35) This arose in Fair Work Ombudsman v Mai Pty Ltd, where the franchisee paid back some of...

To continue reading

REQUEST YOUR TRIAL