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7-Eleven squeezes interest rates

7-Eleven logo on awningThe 7-Eleven saga refuses to go away, with new allegations the company has continued to short change underpaid workers, this time on the interest rates applied to their back pay.

The convenience store chain was issued with a letter of demand on behalf of underpaid claimants last week, however the company responded with a request for an extension on the response period.

With media refusing to take the spotlight away from the disgraced retail chain, it was reported yesterday that 7-Eleven has been using an “ultra low cash rate” to calculate interest on repayments.

It’s alleged that 7-Eleven’s wage payment panel decided to pay a rate of 1.5 per cent on repayments to underpaid workers, despite charging interest rates of up to 7.0 per cent (Westpac Indicator Rate) on loans to franchisors.

The lower rates are not in accordance with the Federal Court Rate dictated by the Fels Panel, which was the official cash rate (currently 1.5 per cent) plus 4.0 per cent.

Numerous workers allege they have been underpaid the amounts calculated by class action representative Maurice Blackburn.

A spokesperson for Maurice Blackburn told C&I Week that the firm issued a final demand for full payment according to the Fels Panel directions, with a deadline of Friday last week.

“Our firm has only recently begun to receive determinations of our client’s claims from the WRP, a number of months after its establishment,” employment principal Giri Sivaraman wrote.

“On receipt of these determinations, it is apparent that there are significant discrepancies between our claims for interest and the determination of interest by the WRP.”

“All of those claimants whose claims were submitted by our firm to the Panel and then determined by the WRP have lost thousands of dollars as a result of this [interest rate] change.”

Maurice Blackburn said that 7-Eleven responded to the demand letter before the deadline requesting an extension, and the firm has allowed an extension until Friday 1 November 2016.

Mr Sivaraman has indicated Maurice Blackburn is prepared to commence proceedings on behalf of clients to prevent their determinations being issued at lower rates of interest.

Some workers have been underpaid amounts ranging up to $100,000 on their total back pay.

It was reported that 7-Eleven has paid back $44.7 million to remedy franchisee’s non-compliance with workplace laws, however the interest on an estimated $28 million of that amount has been calculated at the lower cash rate.

C&I Week has approached 7-Eleven to offer a right of reply.

[UPDATE]

 7-Eleven general manager, corporate affairs Clayton Ford vigorously defended the franchise’s actions, saying that the company “stood-up and committed to restore individuals to their full wage entitlements” as soon as the underpayments were uncovered.

“In establishing the Wage Repayment Program (WRP), we moved to take full accountability for this restitution, and implement a comprehensive, fully documented process to ensure legitimate claimants are paid as quickly and as fairly as possible,” he said.

“The details of the WRP were shared with the Fair Work Ombudsman prior to commencement, and the objectives, principles and processes are published on the WRP website. The methodology has been carefully developed in collaboration with Deloitte, utilising their expertise in developing restitution programs, and determined in good faith to place legitimate claimant interests at its centre.  The WRP provides a no-cost, accessible, streamlined and confidential avenue for claimants to seek reimbursement as an alternative to a court process.”

“Applying the RBA cash rate of interest to back-paid wages ensures that claimants receive the full monetary value of their entitlements, restoring them to where they would be had they been correctly paid by their employer at the time. 

“We consider that the rate is appropriate and fair in all the circumstances.

“A total of 1,167 claims have so far been approved totalling $44,772,475. Of these, 745 claims totalling $28,059,153 have been paid out since the Wage Repayment Program (WRP) was established. We continue to be encouraged that the rate of both claims and payments have increased, and continue to encourage any legitimate claimants to come forward.”

Mr Ford said 7-Eleven would respond to Maurice Blackburn directly, “rather than through the media”, and could not comment on specific calculations.

“Claimant confidentiality is at the heart of the WRP and it is totally inappropriate to seek to negotiate individual cases through the media,” he said.

“The WRP treats all claimants in the same manner, whether they have legal representation or not.”

“The WRP is continuing to meet our commitment to address the historic underpayment of franchisee employee wages, as quickly and as fairly as possible.”

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