Case Study 1: 7 Eleven and wage fraud – the issues for governance

Read the following and answer the questions below.

Introduction: In 2015, a joint investigation by Fairfax Media and Four Corners revealed widespread wage fraud throughout the network of 7-Eleven franchise stores in Australia. Claims of doctored timesheets, underpayment, threats of deportation and forced repayment of wages to the store owners/franchisees as well as allegations of complicit behaviour on the part of the Australian Franchisor led to steps by the franchisor that could be interpreted as damage control or a means of acknowledging and dealing with the injustices and legal breaches that have occurred.

The story can be followed via these links (and others)

An interactive documentation of the revelations and responses:

http://www.smh.com.au/interactive/2015/7-eleven-revealed/

More detail of the wage manipulation:

https://www.vice.com/read/everything-we-know-so-far-about-7-eleven-australias-wage-fraud-scandal

The broader implications and suspicions are raised here:

http://www.workplaceethicsadvice.com/2015/10/7-eleven-wage-scandal-reflects-corporate-irresponsibility.html

While the potential costs are reported here:

http://www.dailymail.co.uk/news/article-3530924/7-Eleven-wage-compensation-payouts-hit-100-million-biggest-case-deliberate-wage-fraud-Australia-s-corporate-history.html

The saga continues:

The independent panel was dismissed – a step that raises issues around the promises made:

http://www.abc.net.au/news/2016-05-11/7eleven-underpaid-workers-alan-fels/7405968

 While even compensation payments may not be safe:

http://www.businessinsider.com.au/another-7-eleven-store-just-copped-a-record-fine-for-exploiting-workers-2016-6

Questions:

  • What legal risk factors are associated with a franchise arrangement that differ from those in the case of a business model with subsidiaries?
  • How are those risk factors reflected in the 7 Eleven case?
  • What implications does the 7 Eleven case have for independent franchisees who may not be complicit in the wage fraud?
  • What implications does the saga have for governance principles, policy and practice within the franchisor organisation?
  • What steps would be appropriate for the franchisor to take to prevent such allegations being made?

Order a Similar or Custom Paper from our Writers