House debates

Monday, 12 October 2015


Fair Work Amendment (Recovery of Unpaid Amounts for Franchisee Employees) Bill 2015; Second Reading

10:30 am

Photo of Adam BandtAdam Bandt (Melbourne, Australian Greens) Share this | | Hansard source

I move:

That this bill be now read a second time.

This is a bill to ensure people in Australia get paid properly, whether they are citizens or visitors.

It will put some responsibility on head offices in franchise chains to have a better understanding of what is going on in the stores that carry their name. It is a bill that will also help make contracts fairer for small business franchisees, many of whom say that turning a profit and paying the legal minimum wage are often incompatible under the terms and conditions of their franchise arrangements.

Many of us have gone into a 7-Eleven. We have probably done it at a time when other stores have been closed, and most of us have presumed that the person behind the counter is getting paid properly for having to work inconvenient hours so that the rest of us can enjoy that convenience.

But, over the past few months, Australians have been shocked by reports that have exposed the rampant exploitation of workers in 7-Eleven franchises across the country.

One man, Michael Fraser, has dedicated years of his life to learn of the plight of workers in 7-Eleven stores across the country and stand up for them.

Michael first noticed something was strange in the Runaway Bay 7-Eleven store across the road from his house on the Gold Coast. When Michael would visit the store to get bread, milk and other items, he kept seeing the same worker, Sam Pendem. It seemed to Michael that Sam was working a never-ending shift.

Over a number of months, Michael became friends with Sam. Sam, and the other employees in that Runaway Bay store, began telling Michael about the length of the shifts they were required to work and the pay and conditions they would receive. And they told him that this kind of exploitation was happening throughout the 620 7-Eleven franchises across the country.

This led Michael to begin a years-long investigation, and he gathered information and evidence from 7-Eleven franchises around Australia that indicated Sam was right. Workers throughout 7-Eleven franchises were being paid for half the hours they were working—now known as the half-pay scam. Workers were not getting paid penalty rates or even being given breaks. And they were being intimidated into accepting this underpayment and these conditions.

Sam Pendem is an international student from India. In fact, the majority of people working in 7-Eleven stores are people who come here on student working visas. Something to reflect on is that around the country almost all 7-Eleven store employees are here on student working visas. A condition of these visas is that workers can only work 20-hours a week. But the 7-Eleven franchises were forcing them to work over this number of hours to earn enough money to cover even their basic expenses—breaking the conditions of their visa, and that meant that they were at risk of deportation if the authorities were to become aware of the hours that they worked.

As more stories and evidence came to light, it became apparent that 7-Eleven's business model was dependent on their franchises employing people on working visas who were not necessarily aware of their rights at work, who did not understand our systems in place designed to enforce our labour laws and who were afraid to speak up about this exploitation because, if they did, they risked deportation.

It was back in 2012 that Michael first got in contact with 7-Eleven's head office to discuss with them what he had found, yet they continued to avoid him and ignore his requests to meet and share the information with them. They knowingly and blatantly allowed this exploitation to continue.

It was only when ABC's Four Corners and Fairfax Media went public with Michael's findings, and other evidence of this widespread exploitation of 7-Eleven workers, that the head office even began to acknowledge there is a systemic problem throughout their franchises.

I take this moment in introducing this bill to congratulate Fairfax journalists Adele Ferguson and Sarah Danckert, as well as their teams, and Michael Fraser, for pursuing these reports, for speaking to these workers and for exposing this widespread exploitation, because now there is a question about what we should do about it and what we, as legislators, should do about it.

With reports continuing to break of the head office being complicit in this widespread exploitation and public pressure continuing to grow, the owner and chairman, Russ Withers, who is at the helm of a billion-dollar empire, CEO, Warren Wilmot, and General Manager of Operations, Natalie Dalbo, have resigned. 7-Eleven has also set up an independent panel to hear reports of exploitation and pay people for the hours that they worked. I hope that this panel is successful in its stated aims and that these people who have been vastly underpaid for the hours they work really do receive the wages that they are owed.

But for the people working for 7-Eleven to come forward to the panel, they need to know that by speaking up they will not risk being deported. That is why the Prime Minister and this government must grant anyone on a temporary working visa for 7-Eleven an amnesty.

When these reports first broke, I referred these shocking claims to the Senate inquiry into Australia's temporary work visa programs and requested they hold a special hearing.

I believe these claims must be properly heard so that we can learn how to prevent this scale of exploitation occurring in the future. So I am pleased that the Senate committee agreed to the Greens' call for a special hearing into these claims.

It is clear that something is wrong with our system when the boss of 7-Eleven is a billionaire and the workers are getting paid under $10 an hour and threatened with deportation.

It is wrong that people are being paid for only half of the hours they work or are not receiving penalty rates or proper conditions. It is doubly wrong if this is happening because they are fearful of having their visas cancelled.

Too much exploitation is happening under our current system of visa and workplace laws, and that is why we need this bill.

There are many more reports that suggest this kind of widespread worker exploitation does not end with 7-Eleven.

In fact, Fairfax media has exposed many more examples of people working for below minimum wage and not receiving their conditions at work. These are the people they call 'the workers who live in the shadows'.

Journalists and whistleblowers exposed the 7-Eleven scam and are now exposing many more, but the reality is that government should have picked it up earlier.

As politicians, we must now ask how this kind of widespread flouting of labour laws could happen. If you do not pay your tax, the tax office comes after you and comes down on you like tonne of bricks. But it seems that, in this country, in the corner stores that we all go into on a daily basis, you do not have to comply with industrial relations law. If you ignore labour law, it seems that nothing happens.

It is time to treat labour laws as seriously as tax laws so that everyone in Australia—whoever they are and wherever they come from—gets paid a legal wage.

I am introducing this bill, the Fair Work Amendment (Recovery of Unpaid Amounts for Franchisee Employees) Bill 2015, into the House today to address one part of the problem.

The bill amends the Fair Work Act 2009 by inserting a new part 6-4AA into the act, which provides for employees employed by a franchisee to recover unpaid remuneration from the franchisor or head office entity. This is modelled in similar provisions in part 6-4A of the act that deal with workers in the textile and clothing industry. This will allow people who have been underpaid in franchise stores to go straight to head office to claim their underpayments if they have not been able to sort it out with their direct employer.

The bill will help prevent widespread worker exploitation in franchises like that in 7-Eleven across the country. It will do this by making head office franchisors responsible for their franchisees' underpayments.

Why should we do this? If head offices can enter into franchise contracts and then turn a blind eye to what happens in their stores under their brand name, workers can get exploited—as we have found out.

When it comes to stopping underpayments, prevention is better than cure.

By allowing workers to claim any underpayments directly from head office, this law will bring about a culture shift because, instead of leaving it to vulnerable workers to uphold the law through expensive legal action, head offices would take more responsibility for what goes on in the stores that carry their name.

An important point about this bill that I want to stress is that the head office could still pursue the franchisee for the amount of any underpayment, but they would have an extra incentive for ensuring the underpayment did not happen in the first place.

How it would work in a practical sense is that the employee could serve a demand on the head office and, if there was no payment, then take the head office to court and get the money from them. The head office would have the responsibility then for pursuing the franchisee operator. That would mean that the underpaid person gets paid first, and the others can sort out amongst them who is responsible.

This will also help stamp out the practice of unfair franchise contracts, where franchisors effectively force franchisees to underpay workers if the business is to make a profit. This is crucial in the 7-Eleven context. We have seen it happen. In the 7-Eleven context the franchisees—the people who operated and ran the corner 7-Eleven store—were required to give 57 per cent of their gross profit back to head office. That led a number of them to say, 'We had no choice but to underpay people.' Whether or not that is right, this bill will make sure that that never happens again, because the franchisor—in 7-Eleven in this instance—will lose any incentive to put small businesses in that kind of difficult situation.

This law will make things fairer for the workers and fairer for the small business franchise operator.

I call on everyone in this House, and the government and the opposition, to get behind this bill and help stamp out worker exploitation and exploitation of small businesses right across this country.

Photo of Craig KellyCraig Kelly (Hughes, Liberal Party) Share this | | Hansard source

Is the motion seconded?

Photo of Andrew WilkieAndrew Wilkie (Denison, Independent) Share this | | Hansard source

I second the motion and reserve my right to speak.

Debate adjourned.