Adele Ferguson & Sarah Danckert, 20 November 2015

A former payroll officer at 7-Eleven and associated entity Starbucks Australia described head office as “unethical” and “unsupportive” when she tried to bring her concerns about expired visas and payroll issues to management’s attention.

Emmaline McKenna told a Senate committee in Melbourne that she left 7-Eleven in April because management ignored her concerns.

“I was told we were a processing department and not to question what we were given,” Ms McKenna said.

“They didn’t really care,” she said.

Ms McKenna, who worked at the company for six months, said the company’s financial department would have been aware of discrepancies in pay, when asked by Greens Senator Janet Rice how far up in 7-Eleven management the problem of incorrect payments was known.

She said she was not surprised at underpayment of wages given the profit margin of franchisees was very thin due to the high costs they paid to 7-Eleven in royalties and marketing.

She described the culture at head office as “carefree”.

“People don’t really care what they are doing.”

A joint Fairfax Media and Four Corners investigation found rampant wage exploitation across 7-Eleven’s stores in Australia. The investigation also found head office had been complicit in the mass underpayment of workers at its stores.

Ms McKenna said there were also payroll issues at Starbucks Australia stores and senior management were aware staff were working on expired visas.

The Withers and Barlow families own the 7-Eleven convenience store chain and purchased the licence to a 26-store Starbucks chain in Australia in 2014.

All staff at Starbucks are employed directly by 7-Eleven as the chain is not franchised in Australia. 7-Eleven workers are employed by franchisees.

Some Starbucks staff were overpaid and despite head office being aware of the issue they did nothing to stop it. She said staff should be told so they wouldn’t later be told to repay the money.

Ms McKenna said when she asked questions about the visas of some employees at Starbucks stores that had expired she was told “it’s not your job”.

Responding to comments by Ms McKenna that Starbucks had better technology in place than 7-Eleven to process payroll, Senator Deborah O’Neill said: “So you’re in the same office doing this work around payroll and in one business with 26 stores the technology exists for you to have accurate record keeping of time worked but in the same office which charges 57 per cent of the turnover of 7-Eleven that technology was not applied?”

A spokesman for 7-Eleven said two employees had been overpaid and the staff were not required to pay it back. He added Starbucks reviewed its processes in January 2015 and found no evidence that people worked on expired visas.

Earlier the Senate committee heard two-thirds of all 7-Eleven stores in Australia appear to have been underpaying workers.

The panel reviewing wage compensation claims for 7-Eleven workers has received 600 claims since September, panel member Dr David Cousins told a hearing in Melbourne on Friday.

He estimated the claims had come from workers across 400 stores, suggesting more than two-thirds of stores were underpaying workers.

“What we understand is that it’s [underpayment] widespread. We’ve had claims from every state. It is quite systemic,” Dr Cousins said.

He said the panel expected to receive “thousands of claims” but he said it would take time to build up. The panel wrote to 15,000 former and current workers inviting them to apply for compensation.

He said an issue with workers coming forward was fear of deportation. “The visa issue is important,” he said.

He also said underpaying workers was not an acceptable way to run the business.

“It was widespread and the company should have known. It was told many times.”

The senators grilled Dr Cousins about 7-Eleven’s decision to set up a new company, Independent Claims Pty Ltd, to fund the back pay of workers.

Dr Cousins was unable to say how much money 7-Eleven had put into Independent Claims.

7-Eleven head office said it would pay the claims then claw it back from franchisees.

“Just like James Hardie it will run out of money,” the chairman of the Senate inquiry Senator Sue Lines said.

A spokesman for 7-Eleven said comparing 7-Eleven’s compensation scheme to James Hardie’s botched compensation scheme was “incorrect and inflammatory”.

Extracted in full from the Sydney Morning Herald.