The government is drafting legislation to target 7-Eleven's wage fraud. Credit:Darrian Traynor The government's new legislation will include new offence provisions to target head office and parent companies which fail to deal with exploitation by their franchisees. In a strongly worded statement to Fairfax Media, Employment Minister Michaelia Cash said "the 7-Eleven scandal revealed not only a business model that encouraged systemic underpayment of workers, but also a widespread practice of franchisees paying their employees the lawful rate, but then coercing them to pay back a certain proportion of their wages to the employer in cash." She said the 7-Eleven scandal reinforced the need for the parliament to work together and implement the Coalition's measures to deliver meaningful penalties and strong deterrents for those employers who would seek to exploit their workforce. Despite it being 12 months since Fairfax Media first exposed systemic wage fraud, the financial plight of franchisees and a head office cover up of worker exploitation, underpayment of workers is still believed to be rampant within the company and a new sinister scam dubbed the cash back scam, where workers are paid in full but have to hand back half their pay in cash to the franchisee, has emerged.

Illustration: Ron Tandberg The media investigation revealed 7-Eleven staff were being paid as little as $5 an hour often in gruelling 60 hour working weeks. Since the investigation 7-Eleven has repaid $26 million in back pay to 680 workers. Thousands of underpayment claims are still being processed in what is the biggest back pay claim in Australia's history. Minister Cash is understood to have met with Professor Fels in Parliament House this week to discuss the underpayment of workers at 7-Eleven franchises as well as broader issues relating to worker exploitation.

Professor Fels was spectacularly sacked from 7-Eleven's independent wage fairness panel earlier this year after refusing to agree to new terms that he believed would make the compensation scheme "bogus". Under the new proposals, a new Migrant Worker Taskforce will be established inside Fair Work to be headed by professor Fels. As the legislation heads to Parliament, Ms James urged 7-Eleven to work with the ombudsman's office. "While 7-Eleven has not yet entered into a compliance partnership with us, 7-Eleven head office understands such an arrangement will give us, and the broader community, greater confidence that its commitment to compliance is both sincere and real," Ms James said.

In a statement, 7-Eleven said it had received the first draft of the compliance deed in April. "Discussions between 7-Eleven and the FWO are well advanced and 7-Eleven looks forward to concluding the partnership as soon as possible," a spokesman for 7-Eleven said. In regards to its activities repaying workers and stamping out wage fraud, the company spokesman said: "We are doing everything within our power but of course the effort will be ongoing." "We are continuously improving and increasing our detection, prevention, investigation and risk management capabilities to ensure compliance and the best possible workplace standards across the network," the spokesman said. "7-Eleven is continuing to share progress and information with the Fair Work Ombudsman," the spokesman said.

Loading In regards to the cash back scam, the spokesman said there will "always be some who might seek to subvert the law". "7-Eleven, as a result of improved detection, prevention, investigation and risk management capabilities is aware that a small number of franchises are seeking to flout the system. Any wrong doing will be pursued vigorously."