Australia’s largest petrol and convenience retailer, 7-Eleven, has signed a Proactive Compliance Deed with the Fair Work Ombudsman which will set a new standard for franchising in Australia.
The landmark agreement commits 7-Eleven to a range of measures designed to ensure all its workers receive their lawful entitlements through strong accountability for all operators across its franchise network and supervision by the Fair Work Ombudsman.
The measures include installing and overseeing biometric shift scanning systems and the roll out of 7-Eleven owned CCTV systems at all outlets in order to allow the head office to monitor employee hours and make sure workers are paid correctly.
The deed also implements measures aimed at overcoming the challenging and unlawful practice of ‘cash backs’ by workers to franchisees which were revealed by the Fair Work Ombudsman’s Inquiry Report into workplace non-compliance in the 7-Eleven network.
Fair Work Ombudsman Natalie James said the commitments in the deed would help prevent the unlawful practices identified in the regulator’s April 2016 Inquiry Report, increase accountability across the entire franchise network and introduce a culture of compliance from head office down.
“The measures in this deed are the most robust and comprehensive that any franchise brand has in place in Australia,” Ms James said.
“The goal is to make sure franchisees pay workers correctly in the first place. As we noted in our Inquiry report, non-compliance in this network has been long term, extensive and systemic. Some franchisees have demonstrated they will go to extreme lengths to circumvent record keeping systems. The deed establishes a framework for 7-Eleven to detect, investigate and rectify underpayments within its network now and into the future. It also maintains commitments to backpay workers underpaid in the past.”
The actions required by the deed will ensure employees and franchisees understand their rights and obligations, including ensuring franchisees understand the wages costs associated with their store. It will make franchisees and Head Office accountable through new systems and oversight by the Fair Work Ombudsman. The measures include:
Improving systems and record keeping
Identifying Employees and Maintaining Employee Records
Fully implement a biometric time recording system that can ensure periodical verification of workers supported by a 7-Eleven owned and operated CCTV system. Franchisees will not be permitted to alter any systems owned by 7-Eleven.
Payment and Payroll Records
All franchisees must use a central payroll system which will specify lawful minimum rates of pay for all employees, and which cannot be manually altered by Franchisees. All payments to be made by electronic funds transfer, rather than cash.
Managing claims of underpayment:
The current 7-Eleven Wage Repayment Program will continue to receive and process all employee Claims submitted prior to 31 January 2017, as well as all Claims previously made to and received by the Panel. 7-Eleven will pay the aggregate Claim amounts approved through the 7-Eleven WRP on an uncapped basis and will report to the FWO at least quarterly regarding the outcome of Claims to the 7-Eleven WRP. Claimants who disagree with the outcome of a claim can seek review by the WRP and further review by the Fair Work Ombudsman if they choose. Note – to date, 7-Eleven has paid more than $55 million in wages to employees who were underpaid by 7-Eleven franchisees.
Internal Investigations Unit
An Internal Investigations Unit (IIU) will be established to ensure compliance in individual franchises by monitoring and detecting issues when and where they arise. From 1 February 2017 the IIU will receive and investigate claims from 7-Eleven employees and make franchisees accountable for any underpayments that have occurred. The IIU will report on all activity to 7-Eleven and the FWO on a quarterly basis.
Rectification of Underpayments
Where an underpayment claim is substantiated by the IIU, 7-Eleven will require the relevant franchisee to rectify any underpayment to that Employee within 30 days of service.
If the Franchisee fails to rectify the underpayment within 30 days of 7-Eleven having notified the Franchisee of the substantiated Underpayment claim, 7-Eleven will rectify the underpayment within a further 15 days.
7-Eleven will ensure that it has funds available to enact prompt rectification of underpayments on an uncapped basis for all claims lodged with both the WRP and the IIU. 7-Eleven will report to the FWO on all amounts paid for the rectification of underpayments.
Acknowledgement and Accountability
Compliance with Commonwealth Workplace Laws
7-Eleven acknowledges its moral and ethical responsibility to ensure compliance with the law in relation to all employees and meet Australian community and social expectations
Auditing and Reporting to the FWO
7-Eleven will engage an independent auditor to conduct three annual audits throughout the duration of the Deed assessing compliance with Commonwealth Workplace Laws and applicable Fair Work Instruments. Within two months of the audit, 7-Eleven must provide the Fair Work Ombudsman with a summary report prepared by the auditor outlining findings and steps taken to rectify contraventions.
Internal Auditing and Risk Analysis
In addition, 7-Eleven must appoint a Senior Manager with responsibility for auditing time and payroll data. The Senior Manager will report to the 7-Eleven Audit and Risk Committee at least every six months and advise the Fair Work Ombudsman of any stores where serious non-compliance has been detected.
Reporting of Non-Compliance with Commonwealth Workplace Laws
7-Eleven will, at its own expense, establish and maintain a dedicated telephone hotline and email account service with interpreter accessibility to ensure that any person, including Employees and members of the public, may make enquiries, lodge complaints or report potential non-compliance with workplace laws, including underpayment of wages, at 7-Eleven Franchises. The hotline must have the capacity to receive, respond to and manage complaints made anonymously.
Access to Stores
7-Eleven will allow and facilitate Fair Work Inspectors access to its Franchises, stores or offices at any time for the purpose of the FWO verifying compliance with Commonwealth Workplace Laws.
Clear expectations for franchises
Wage Costs of Franchises
Prior to the sale of any new or existing Franchise, 7-Eleven will provide information to each prospective franchisee outlining the applicable minimum wages, loadings, penalty rates and overtime rates of pay for full-time, part-time and casual employees of each classification under the relevant Fair Work Instrument.
It will also provide detailed wage modelling, outlining the range of expected minimum wage costs required to operate the type of 7-Eleven store, details of the range of expected minimum working hours required to operate and details of the specific store’s income and expenditure data for a period of the previous two years. 7-Eleven will refer franchises to the IIU if wage costs fall below modelled figures.
Franchisee obligations to comply with workplace laws
The Deed calls on 7-Eleven to take reasonable steps to ensure that each franchisee signs a compliance commitment document certifying that its directors, officers and managers understand their obligations to comply with Commonwealth Workplace Laws; agrees to report to 7-Eleven on the details of the terms and conditions upon which each Employee is engaged; that directors and managers will not require or accept payments from Employees in respect of wages paid and acknowledge that such conduct is unlawful. They will also be required to register with the FWO’s My Account Portal so as to ensure they have access to current and accurate information about wage rates and entitlements.
7-Eleven has acknowledged the culture of underpayment and false records that had become normalised in its network and recognised it must do more to detect and fix the issue. It has also acknowledged it had not recognised the need for additional financial support for some stores and that these factors contributed to the exploitation of vulnerable workers.
Ms James said every person working in Australia had the right to receive the relevant entitlements relating to their occupation.
“The law requires direct employers pay all workers, including visa holders, their minimum rates of pay. The community also expects other entities that benefit from labour to take responsibility for making sure workers are paid properly. We are pleased that 7-Eleven has acknowledged this by agreeing to this Compliance Deed, entering into a partnership arrangement with the FWO which sets a new Australian standard,” Ms James said.
“With the government committing to new laws to enhance franchisor responsibility for workplace entitlements, I call on all franchises to consider what steps they might take to ensure their network is compliant. We are happy to work with any business that wants to take responsibility for compliance with workplace laws in its supply chain or network”
The Fair Work Ombudsman and 7-Eleven signed the compliance deed on Tuesday 6 December 2016.
© Fair Work Ombudsman www.fairwork.gov.au
The Fair Work Commission (FWC) has varied some awards with new or changed terms about taking annual leave. Most changes take effect from 29 July 2016. There are changes to rules about:
Fair Work have put together a summary of the changes below.
Cashing out annual leave
Most awards now allow employees to cash out annual leave, if they:
Find out whether cashing out is now allowed under your award and what the rules are on our Cashing out annual leave page.
Taking annual leave in advance
Most awards now allow employees to take annual leave before they have accrued it if their employer agrees in writing. The agreement needs to:
Find out whether taking annual leave in advance is allowed under your award on our Taking annual leave page.
Managing excessive annual leave balances
The rules about what happens if an employee has accumulated an excessive annual leave balance have been changed in some awards. Excessive annual leave is when an employee has accumulated at least 8 weeks of leave (10 weeks for a shiftworker).
Direction by employer
If an employee has an excessive annual leave balance and can’t agree with their employer on when to take it, the employer can:
There are rules about how long the period of leave has to be and how much the employee has to have left afterwards. Find out more and whether this applies to you on our Direction to take excess annual leave page.
Notice by employee
Some awards have a new clause allowing employees with excessive annual leave balances to tell their employer that they will take a period of leave. This clause takes effect from 29 July 2017.
Until July 2017, employees who are covered by these awards and have large amounts of accrued annual leave should follow the normal process for requesting annual leave.
Payment for annual leave
Some awards say that annual leave has to be paid before the employee starts their leave. A new clause has been added to these awards. Now, if an employee is paid by electronic funds transfer (EFT), they can continue to be paid using their usual pay cycle during periods of leave.
Find out more and whether this applies to you on our Payment for annual leave page.
Fair Work Commission decision
To read the decisions, variations and statements about the changes to annual leave in awards, go to the Modern award 4 yearly review ‘Annual leave’ page .
(Source: Fair Work)
As part of the Fair Work Commission (FWC)’s four yearly review of modern awards, the FWC determined that as there were a number of complexities in reviewing the modern awards, it was important that the issue of annual leave be dealt with as a common issue as annual leave related to all modern awards.
On 11 June, 2015 the FWC Full Bench issued its decision in relation to the issue of annual leave across the modern awards.
During the preliminary stages of the review, the FWC determined that there were a number of matters to be considered in the context of annual leave.The issues were determined by the FWC- these have been outlined below.
Excessive annual leave
Based on the evidence tendered by the employer associations in relation to employees not using their leave entitlements, and the threat to health and safety of employees, the Full Bench was satisfied that all modern awards should include a clause relating to employees taking excessive annual leave.
However, rather than adopting the clause proposed by the employer associations, the FWC proposed its own model term to deal with the taking of excessive annual leave. The proposed model term (which is open for comment) provides that excessive leave accruals (i.e. more than 8 weeks of paid annual leave) can be decreased by agreement between the employer and employee, by the employer direction to the employee or by the employee providing notice to the employer. As a safeguard, 6 weeks accrued annual leave must remain.
Cashing out annual leave
The FWC noted that under previous legislative regimes and predecessor bodies to the FWC, there was a consistency approach to reject proposals for the cashing out of annual leave on the basis that it undermined the purpose of annual leave. However, the FWC also noted that the Fair Work Act 2009 (Cth) (FW Act) now makes provision for the cashing out of annual leave and it is now a common feature of enterprise agreements as well.
Whilst the union parties strongly opposed the insertion of the cashing out provisions in modern awards, the FWC agreed with the employer associations that there should be an insertion of a cashing out of annual leave clause in all modern awards.However, the FWC proposed its own model clause. This model clause provides a number of safeguards:
A maximum of two weeks’ paid annual leave can by cashed out in any 12 month period (in the case of part time employees, this is based on the employee’s weekly ordinary hours);
Specific requirements relating to record keeping and the content of any agreement relating to cashing out accrued annual leave;
§ If the employee is under 18 years’ of age the agreement to cash out a particular amount of accrued paid annual leave must be signed by the employee’s parent or guardian; and
The clause is to include notes at the end of the clause referring to the general protections provisions of the FW Act relating to employer undue influence and misrepresentation in relation to rights under the clause.
Annual close down
Employer associations sought to include a close down provision into 65 modern awards. The purpose of this clause was to enable businesses to shut down and require annual leave to be taken at the best time in terms of production or service fluctuations.The unions opposed this claim.
The FWC was not persuaded by the submissions to grant the variation for three reasons:
The model term proposed by the employer associations was not reasonable in light of the FW Act;
Close down provisions need to be considered on an award by award basis as different industries had different demands;
Employers would be able to reduce the annual leave liability.
The FWC provided the option for interested parties to apply to seek a variation on an individual award basis.
Granting leave in advance
The FWC agreed with the proposal by employer associations to vary 48 modern awards to include a provision which permitted the taking of annual leave in advance of having accrued the entitlement. The provision would also allow an employer to make a deduction from monies payable to an employee on termination of employment. Union groups opposed this claim.
The FWC proposed its own model terms and also indicated its view that it should be extended to all modern awards.The model term was to include requirements regarding the agreement to be kept on an employee’s record.
Payment of annual leave entitlements on termination
An issue that is subject to regular contention is that of annual leave entitlements payable on termination, in particular whether annual leave loading or other entitlements are to be paid. The ACTU sought a variation to 118 modern awards to remove inconsistency and ambiguity on this issue.
The Full Bench declined to make the variations as sought as this time. It did not consider it appropriate to do so as the issue was currently under consideration by Federal Parliament under amendments proposed in the Fair Work Amendment Bill 2014. Further it noted that the recent decision on the matter is on appeal to the Full Bench of the Federal Court of Australia.
Electronic funds transfer (EFT) and paid annual leave
The employer associations sought a variation to 51 modern awards which required employers to pay annual leave prior to the commencement of the period of leave to allow employees who are usually paid by EFT to also permit the payment of annual leave in this manner and in accordance with the employer’s ordinary pay cycle.
The Full Bench agreed with this claim, noting that the requirement to pay annual leave in advance was no longer of relevance in light of evidence which showed that most employers pay employees by EFT or other electronic means rather than on a cash basis.
In relation to purchased annual leave, the Australian Industry Group proposed a model clause to be inserted into each modern award to allow employees additional annual leave in a year with a corresponding reduction in salary either for the period of their annual leave (for example, half pay for twice the standard annual leave period) or throughout the year.
This proposal was not pressed further during the proceedings.However, the FWC noted that there seemed to be a level of interest in providing the arrangements which facilitate the purchase of additional annual leave.The FWC will publish a discussion paper in relation to this issue which parties will have the opportunity to make submissions regarding whether a provision for purchased leave should be included in modern awards.
Comment – what can your business learn from this decision?
As noted above, while the decision to vary modern awards to include a cashing out of annual leave clause will apply to all awards; other variations will only apply to certain modern awards.
The Full Bench has also indicated its preliminary view to include a standard clause across all modern awards in relation to excessive annual leave and the granting of leave in advance.
(Source – Athena Koelmeyer, Workplace Law)
As part of the Federal Budget, the Federal Government has announced radical changes to the interplay between the current government-funded parental leave scheme and any similar paid schemes operated by employers.
Under the current Federal Government scheme, eligible working parents can receive government-funded pay when they take time off from work to care for a newborn or recently adopted child.
From 1 July 2016, parents will no longer be allowed to access the government-funded paid parental leave scheme if their employer provides a more generous scheme. The proposed changes may have some unintended consequences.
These changes may encourage some employers to consider withdrawing their existing schemes (whether they go beyond the government-funded scheme or not), and to use the money saved to offer employees other attractive benefits or payments in addition to statutory parental leave pay.
Alternatively, where an employer wishes to maintain their own scheme, they may consider reducing the level of payments to employees if the payments (and the cost to the employer) were set on the basis that those payments would act as “top ups” only to the government-funded parental leave pay employees would receive. Depending on how payments are calculated and described in the employer-funded scheme, maintenance of those schemes may result in an employer being now required to pay each of its eligible employees up to an additional $11,540 before tax. Of course, whether an employer can lawfully vary, withdraw or replace their existing paid parental leave scheme will always need to be carefully considered and expert assistance should be sought.
THE PROPOSED CHANGES THAT NEVER WERE …
Since the introduction of the government-funded scheme, the Coalition Opposition (as it then was) and now Federal Government has proposed a number of changes to potential payment levels under the scheme – it has been a roller-coaster of a ride:
In May 2013, the “Coalition’s Policy to Improve the Fair Work Laws” was released and proposed establishing a new scheme giving mothers 26 weeks’ paid parental leave at the equivalent of their full replacement wage or the national minimum wage (whichever is greater) up to a maximum of $75,000, plus superannuation contributions;
In May 2014, the Federal Government announced that for the 1 July 2015 start of its new scheme, the maximum parental leave payment would drop from $75,000 to $50,000; and
in late 2014, the Federal Government signalled that it was re-examining its proposed changes to the scheme in light of the Productivity Commission’s report into Childcare and Early Childhood Learning. The report determined that the proposed changes to the scheme were unlikely to bring about significant increases in workforce participation beyond those occurring under the existing scheme, and as a result, the Federal Government stated that it would shift its focus to childcare arrangements.
In February 2015, the Federal Government finally abandoned its proposed changes to increase paid parental leave payments.
WHAT HAS NOW BEEN ANNOUNCED AS PART OF THE FEDERAL BUDGET?
It has now been announced that from 1 July 2016, parents will no longer be allowed to access the government-funded paid parental leave scheme if their employer provides a more generous scheme.
The previous Labor Government introduced a national paid parental leave scheme in Australia on 1 January, 2011. Under the current government-funded scheme there are two types of payments – Parental Leave Pay and Dad and Partner Pay. Parental Leave Pay provides eligible working parents up to 18 weeks pay calculated at the national minimum wage rate (currently, $16.87 per hour or $640.90 per 38 hour week (before tax)).
Where a parent is offered the opportunity to receive higher paid parental leave payments under their employer’s scheme, then the Federal Government considers that that parent is “doubling dipping” by also receiving 18 weeks’ pay at the minimum wage rate ($11,540 before tax) under the Federal Government scheme. Parents who have access to an employer scheme that is more generous will no longer be eligible for additional government-funded parental leave pay.
If an employer scheme offers a lower level of payments, then the parent will receive “top up” payments so that they receive the same as under the government-funded scheme.
Not surprisingly, these proposed changes have come in for loud criticism for various quarters. These criticisms include that:
The government-funded scheme was only ever intended to be a basic scheme that would be added to, and complemented by, employer-funded schemes; and that the current scheme does not provide for superannuation contributions to be paid in conjunction with those payments. These contributions can often be provided for under an employer-funded scheme, meaning parents will not increase their superannuation balances during any period of leave. This may have a result in further widening what is already seen as a gap between retirement savings for those working, and those taking time off work on parenting duties.
Legislation to implement this change is proposed to be introduced into Federal Parliament in August 2015, but it remains to be seen whether the Federal Government can garner the necessary support for these changes to be introduced into law.
Prior to these changes coming becoming law, employers may nonetheless wish to consider whether or not they wish to continue to operate their own employer-funded paid parental leave schemes, and if so, whether those schemes need to be amended in light of these announced changes
(source BRW online)