The Fair Work Ombudsman (FWO) has today publically announced that it has commenced legal proceedings against a number of additional 7-Eleven stores after discovering further instances of the franchises substantially underpaying their employees arising from a targeted campaign of “surprise” night time audits.

A lesson not learned

Through this targeted campaign the FWO found that a number of additional 7-Eleven Franchises were paying their employees a flat rate of pay, sometimes as low as $17.74 per hour, while not providing penalty rates for weekends, public holidays or overtime representing a total underpayment exceeding $30,000.

The FWO shows no signs of slowing down in its relentless campaign against employee underpayments and poor record keeping, and the 7-Eleven matter has resulted in increased scrutiny of these issues across all industries.

What is the risk?

An underpayment is unlawful, no matter how small the difference. In the matters referred the underpayments ranged from $100 – $500, yet the businesses in question face penalties of up to $51,000 per breach in addition to the value of the underpayment. In addition to this any senior manager of the business which has been knowingly involved in the contravention are themselves looking at fines of over $10,000.

Underpaying employees is not something worth attempting to get away with – the costs are simply too high, both in terms of money, and brand reputation.

While 7-Eleven is currently the subject of a FWO national inquiry into underpayments and poor record keeping, this investigation and resulting implications will not be limited to limited to 7-Eleven franchises and we expect to see similar scrutiny and review across other franchise groups and other similar business. In this respect we should expect that the FWO’s public promotion of their regime of “surprise night-time visits as part of an operation” is a sign of things to come in 2016.

What do I need to do?

Businesses should ensure they are aware of their employee record keeping obligations, by familiarising themselves with what needs to be recorded and for the length of time it needs to be kept.

Businesses should also be prepared for a potential FWO audit by knowing how to react if they are the subject of such an audit, including the “surprise” night-time visits employed by the FWO to catch the latest 7-Eleven stores. You should be aware of the powers of the FWO to enter company premises and request documents or interviews with employees, including your obligation to provide such access in the circumstances.

Don’t let your business be next week’s headline.

For more information on FWO audits and record keeping obligations, clients should contact the HR Assured team.  If you’d like more information about the benefits of becoming an HR Assured client contact us today for an informal chat.