7-Eleven Australia chiefs resign over wage fraud claims

The chairman and chief executive of 7-Eleven convenience stores in Australia resigned Wednesday, following allegations that franchises systematically underpaid workers.

Media reports earlier this year uncovered evidence that many of the nation's 620 stores were exploiting staff, while a subsequent Senate inquiry heard some franchisees doctored payslips to cover up underpayments.

"Mr. (Warren) Wilmot offered his resignation following the recent realisation of the extent to which 7-Eleven franchisees had underpaid workers," 7-Eleven Australia said of its chief executive in a statement.

"Mr. Wilmot acknowledged it would be difficult for him to play a central role in navigating the company through the current challenges it faces given his long-standing executive role and that a new independent CEO was appropriate in the current circumstances."

The company also said chairman Russell Withers had brought forward plans to step down from his post and transition the role to independent non-executive director and deputy chair Michael Smith.

"Naturally this is a major decision for me to stand aside as chairman, however I will continue to be a shareholder and I am determined to make sure the company is in the right hands to move forward," Withers said.

Bob Baily, who has extensive retail and management experience, has been appointed interim chief executive while Smith will lead a search to find a permanent replacement.

Smith, the former chairman of telco iiNet, said 7-Eleven was working to uncover the full extent of the underpayment of staff and implement remedies, including refining the business model for franchisees.

Former head of the Australian consumer watchdog Allan Fels had criticised the 7-Eleven model under which he said the only way franchisees could make a living was by cheating workers, often young people, including international students.

Some franchisees reportedly doctored their pay slips so that staff were only paid for half the hours worked, while many employees were foreign students afraid to speak out for fear of being deported.

Since then, 7-Eleven has appointed Fels to chair an independent panel to identify underpaid workers and how much they are owed.

"Any valid claims of underpayment will be met by 7-Eleven in lieu of seeking recompense from the relevant franchisees," the company said in the statement issued Wednesday.