The paper aims at reviewing the inquiry involving 7-Eleven franchise stores with the allegation of underpaying employees. There is an outline of the concepts and theories that are prevalent in the industrial relations system. These theories include Pluralist, Unitarism and Marxist. There is a brief description of the 7-Eleven inquiry. This includes the conclusions that were made, the process that was used in the inquiry and the difficulties encountered along the way. Several gaps in the industrial relations system that made it possible to the exploitation of employees have been outlined too. This includes both internal and external failings. There is also a provision of recommendations that help to curb such problems in future. The recommendations focus on both holistic and individual solutions.
The relevant concept of Industrial Relations with regards to this discussion is that of viewing industrial relations as a process of control and regulation over organization tasks, the workplace relations, relations between employees and their respective representative and relations between employers and their representatives among others. Relevant theories include Pluralist, Unitarism and Marxist theories. The pluralist theory assumes that employees and employers normally have differing objectives at the workplace. It views conflict as being inevitable, and it is caused by the difference in values and opinions (Kelly, 2012). The theory views trade unions as an integral part of industrial relations and reiterates collective bargaining as an efficient means of enhancing employment rules. Unitarism theory on the other hand, sees the employees and management as sharing common interests. The theory views trade unions as an unwarranted intrusion to any workplace environment and reiterates that collective bargaining causes unnecessary divisions of interest. Marxist theory on its part argues that trade unions ought to raise revolutionary consciousness among the workers and that collective bargaining only merely accords temporary accommodations (Teicher et al., 2013).
The Fair Work Ombudsman (FWO) conducted an inquiry on 7-Eleven franchise networks. The need for the inquiry was as a result of the allegations towards systemic non-compliance with regards to federal workplace laws. The inquiry identified that several franchisees had been falsifying records so that they can disguise wage underpayments. Approaches used by 7-Eleven did not help in identifying or addressing non-compliance (Natalie, 2016). There had been concerns from FWO and other relevant agencies regarding 7-Eleven’s compliance since 2008. Employees had been lodging complaints for the past seven years with allegations of underpayment of wages. Since 2009 up to 2014, the agency expected to see changes on issues to do with compliance, but this did not materialize. FWO commenced its inquiry into 7-Eleven on the basis of continued intelligence and concerns. This was conducted in stores across NSW, Queensland and Victoria in June 2014 (Natalie, 2016). Assessment of 20 stores provided the agency an opportunity to identify the causes of non-compliance.
7-Eleven was fully engaged as the inquiry continued. However, Fair Work Ombudsman noted that investigations into the stores were marred with significant challenges. The inspectors involved alleged that breaches of workplace law lack the capacity to require individuals to attend interviews to answer questions on record as it is done by regulators. There was a lack of co-operation from several parties involved. Some franchisees did not keep proper wage records while some produced falsified records. Most of the employees provided evidence anonymously, and there was need to find alternative evidence to confirm the claims (Natalie, 2016). The inquiry identified cash back scams in some stores. Employees are paid correctly, but they are required to withdraw a portion of the wages and pay it back in form of cash. This is a manifestation of the lengths that the franchisees are willing to go so that they can underpay the employees.
The concepts of industrial relations; a process of control and regulation over organization tasks, the workplace relations, relations between employees and their respective representative and relations between employers and their representatives can be used in explaining the gaps that have enabled 7-Eleven to exploit its employees. The employees are under the control of the employers hence they ought to obey the orders coming from them. The hope for better remuneration is usually dependent on the unions; which are tasked with ensuring that employees are being treated in the best way possible. The nature of relationships involved normally determines how efficient these mechanisms will work (Forsyth, 2012).
The pluralist theory tries to explain a gap in the industrial relation system that might have resulted in the exploitation of the 7-Eleven employees. This is based on theory’s notion that employees and employers tend to have different objectives with relation to workplace relationships. This is emphasized by the Marxist theory regarding workplace conflict. The theory asserts that conflict is inevitable since as the employer seeks to reduce cost and employees on the other hand seek fairer wages (Creighton, 2011). In this case, 7-Eleven franchisees are seeking to increase their profits, and they view a reduction of costs as the best approach to actualizing this aspect. Reducing the wage expenses reduces the cost for the franchisees hence boosting the profits. The franchisees use different forms of coercion to ensure that employees cooperate. Marxist theory views this practice as being common at the workplace since capitalists are used to coercing the working class since they are the dominant figures.
The labor laws in the country have also made it possible for 7-Eleven to underpay its employees. The franchise stores are known for their reputation of ensuring that most of their employees are international student visa card holders. According to the law, such individuals are only mandated to work a maximum of 20 hours in a week (Nunweek, 2015).This is a limit that employers are quite aware of. 7-Elevn franchises take advantage of the situation. They ensure that they employ the visa holders and make them work 40 or 50 hours a week. The franchises tend to pay the employees half of the hours that they have worked. In case the employees raise any concern, they are usually pointed to the breach of their visa conditions. Some are also fearful that they would lose their jobs in case they complained. To others, it is more of the fear of being deported (Cox, 2016). This makes it difficult for them to come out in case there is an inquiry on such an issue. The efforts of a trade union to weigh in become problematic too. This is why the Marxist theory views the role of trade unions as bringing diverse workplace interests. The unions deal with problems using a collective basis. This means they will not be fruitful where employees are not forthcoming.
FWO has limited powers when it comes to investigating issues related to the industrial relations system. It does not have the capacity to request the individuals being investigated to attend interviews so that they can be questioned. The aspect makes it difficult to get to the root of any probing issue. Employers are aware of this detail hence operate under the belief that most of their actions will not be uncovered. This might be among the gaps that resulted to 7-Eleven breaching workplace laws for an extended period.
There are several recommendations that would help to protect employees’ rights from being exploited in a similar manner in future. Among them is the changing of the employment law. The regulatory framework affecting visa holders ought to be altered to ensure that employers do not have an opportunity to exploit them. The laws should be made quite favorable to this group of employees. When an employer has nothing against an employee, it becomes difficult to coerce them. This will ensure that employees that are not within the confines of holding student visas are not affected too. This is due to the ability to maximize on the prospect of collective bargaining. The framework that regulates the powers bestowed on FWO when it comes to solving problems relating to the industrial relations system should be revised too. The agency should be accorded autonomous powers while conducting its investigations (Natalie, 2016). This prospect is likely to make organizations comply with the labor law since they fear of other malpractices that might be uncovered in the process.
7-Eleven can work towards preventing employees’ exploitation by franchisees through self-regulation. This can be done via a review of the operating model to ensure a frequent review of legal exposure of franchise agreements and financial viability by engaging an external party to conduct self-audit on its compliance. Establishing an employees’ consultative forum with the designated representatives from different franchise stores would also help in uncovering the malpractices taking place (Natalie, 2016).
Changing the outlook of the Fair Work Act 2009 would also prove beneficial in ensuring that employees’ rights are not exploited. Since the adoption of the Act, there has always been a notion that it ensures the wellbeing of the employees at the expense of the employers (Thomsen, 2016)). This is why most employers are reluctant to adopt the Act fully. The Act ought to adopt a unitarism theory approach whereby employees and employers share a common interest. None of them will view the other as a threat to their wellbeing hence they will be prompted to act in good faith.
The Industrial Relation system is engraved in the concepts of a process of control and regulation over organization tasks, the workplace relations, relations between employees and their respective representative and relations between employers and their representatives. This can help explain the gaps that in the industrial relations system that helped 7-Eleven franchisees to exploit their employees. An inquiry into the franchise stores showed that several franchisees had been falsifying records so that they can disguise wage underpayments. Among the gaps that made this possible is the idea that employees and employers have different objectives at the workplace. The Marxist theory argues that as employees try to maximize wages, employers on the other hand aim at reducing costs to help increase profits. The drive to reduce costs might have resulted to the franchise stores underpaying their employees. The concept of employing international student visa holders also made it possible for exploitation. The employers have a way of coercing this type of employees hence reducing the prospect of collective bargaining as outlined by the Marxist theory. FWO also has limited powers when it comes to investigating issues related to the industrial relations system hence it takes time before such malpractices are uncovered. Enacting a regulatory framework that favors visa-card holders would help in reducing the tendency of employers exploiting employees in future. Ensuring employees and employers work with similar objectives will also be helpful in reducing the gaps since they will act in good faith. 7-Eleven on its part has to institute self-audit on its operations to ensure the franchisees are operating according to the franchise agreements.
Creighton, B. (2011). A Retreat from Individualism? The Fair Work Act 2009 and the Re-collectivisation of Australian Labour Law. Industrial Law Journal, 40(2), 116-145.
Cox, D. (2016). 7-Eleven cash-back scheme ‘still alive and kicking’, union claims. Retrieved July 21, 2016, from http://www.abc.net.au/news/2016-05-16/7-eleven-hunter-cash-back-scheme-still-alive-union-says/7415940
Forsyth, A. (2012). Rediscovering Collective Bargaining: Australia’s Fair Work Act in International Perspective. New York: Routledge.
Kelly, J. (2012). Rethinking Industrial Relations: Mobilisation, Collectivism and Long Waves. Oxford: Routledge.
Natalie, J. (2016). Statement on 7-Eleven. Retrieved July 21, 2016, from https://www.fairwork.gov.au/about-us/news-and-media-releases/2016-media-releases/april-2016/20160409-7-eleven-presser
Teicher, J., Holland, P., & Gough, R. (2013). Australian workplace relations. Cambridge: Cambridge University Press.
Nunweek, J. (2015). Lessons from 7-Eleven’s scam. Retrieved July 21, 2016, from https://overland.org.au/2015/10/lessons-from-7-elevens-scam/
Thomsen, S. (2016). The inquiry for 7-Eleven’s underpaid workers just imploded, and Allan Fels has gone ballistic. Retrieved July 22, 2016, from http://www.businessinsider.com.au/the-compensation-panel-for-7-elevens-underpaid-workers-just-imploded-and-allan-fels-has-gone-ballistic-2016-5
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