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Education and Employment References Committee
20/11/2015
Australia's temporary work visa programs

McKENNA, Miss Emmaline Rose, Private capacity

[16:01]

CHAIR: I now welcome Miss Emmaline McKenna. Information on parliamentary privilege and the protection of witnesses and evidence has been provided to you. I now invite you to make a short opening statement of no more than a few minutes. At the conclusion of your remarks, I will invite members of the committee to put questions to you. Do you have any comments to make on the capacity in which you appear?

Miss McKenna : I am here as an ex-employee of 7-Eleven.

CHAIR: What are you wanting to tell the committee, in particular, Miss McKenna?

Miss McKenna : I did work for 7-Eleven last year from November until April. Whilst I was there, I worked for that Starbucks component doing the Starbucks payroll within the organisation in the payroll department with the 7-Eleven payroll people. I assisted them in some of the processing of the 7-Eleven pays. I was privileged to have seen, obviously, some of the annual leave that was not paid out, and there were some certain things that I did not think was towardly. So I am here to try to assist in any way.

CHAIR: One of the questions that we have tried to uncover through both the Fels committee and through 7-Eleven itself is how the payroll system is set up and whether, in your view, it is set up to replicate the award in its entirety, including penalty rates, overtime and all of that. What sort of pay system is it?

Miss McKenna : The franchisees send through time sheets that are directly uploaded to the SAP system. From there, if we did not have the time sheets one of my responsibilities was to assist in calling the stores and asking for the time sheets. It was the franchisee's discretion as to what was on that time sheet. In this system, I do know that the actual correct award rates were there. But when it came to people leaving and so forth—whether they were leaving to go back overseas or anything else—certain franchisees cited that their annual leave entitlements were not to be paid out, and they would not pay them out, even though it is legislation and regulation to do so.

CHAIR: To the best of your knowledge, the pay system replicates penalty rates, overtime, breaks, et cetera.

Miss McKenna : It does, yes—for what is admitted on the time sheets.

CHAIR: What can you tell us about the cashback arrangements? Do know anything about that?

Miss McKenna : No, I do not. I have actually heard a little bit about it but I do not know anything about it myself. I was not privileged to that. I did enter employees in. I must admit that, for most of the employees I did enter, they had their own details and so forth in there. But I only did a very small percentage.

CHAIR: How do you know annual leave was not paid out?

Miss McKenna : Because we would actually send emails to the actual franchisee, telling them the entitlements that ought to be paid out, and they were not paid out. So the franchisee—

CHAIR: Sorry, I did not catch that. You received emails?

Miss McKenna : No. We sent emails saying, 'These are the entitlements that ought to be paid out to the employee upon leaving.' The franchisee would send back an email saying, 'We're not paying that. We don't want to pay it out.' I was told by my boss, 'We're a processing department and we're to process what we are given.'

CHAIR: And not to question what you were sent in?

Miss McKenna : Basically. So if we were told not to pay it, it was not our business and it was not our money, so therefore we were not to pay it. So you just do as you are told.

CHAIR: Were you ever contacted by 7-Eleven employees who had not received their proper entitlements?

Miss McKenna : No. I believe a lot of those went directly through the store. The actual franchisees were their first point of contact and then, perhaps, the actual area managers. On a very rare occasion did any employee contact head office. It was always the franchisee on their behalf.

CHAIR: Do you think the non-payment of annual leave on termination was a widespread occurrence?

Miss McKenna : I could not say how widespread. I did see around 10 or 15 emails while I was there, but I was only there for a six month period, and that was not over all of it, and some of the payroll officers did not share that information. I knew that mainly through one person sharing.

CHAIR: And superannuation?

Miss McKenna : That is basically paid. The system is set up, so the system would pay the superannuation on what went through on the payroll, so it had to balance for the auditors and so forth. That was paid, from my understanding.

CHAIR: So, it is paid on the hours the franchisee sent through, not on hours which may have been worked by the staff member?

Miss McKenna : That is correct. From what I understand at the moment the hours that employees worked and what was on the timesheets may not have always been accurate.

CHAIR: Does the earlier evidence by the Fels group, that something like $2.3 million is owed to, at this point, 101 staff, surprise you?

Miss McKenna : It probably would not. I know the bottom line for the franchisees is quite little. They have a lot of royalties and payments expected to be made of them, so wherever they can pull back some profit, I would understand them doing it, because it is not a very profitable business for them to be in.

CHAIR: Are you aware that after the setting up of the Fels committee, the 7-Eleven have established another company which will pay the pay to these underpaid workers?

Miss McKenna : No.

Senator O'NEILL: Thank you for coming forward. It is a very hot issue, and it is a good civic duty that you are doing, putting on the record what has come to your attention. When you went to 7-Eleven were you working exclusively on 7-Eleven, or was there an associated company that you were working with?

Miss McKenna : No, I was predominantly on the Starbucks component. It was a new business that they brought in. It had 26 stores, which are not franchised at this point. I was doing the payroll for those stores. As they were owned by 7-Eleven, I ensured that the award rates were paid to those employees.

Senator O'NEILL: So your main work, if I understand what you said just then, was with the 26 stores that are yet to be franchised?

Miss McKenna : Yes, yet to be franchised. They are quite unprofitable at this point. They are not making a profit. The idea was to franchise them when they started making profit.

Senator O'NEILL: That is a very important thing for people to have on the public record: they are not very profitable at this stage. So has the franchise model for that been established yet?

Miss McKenna : I was not privileged with that information, no. That was done by the people higher up in 7-Eleven.

Senator O'NEILL: Were you responsible for setting up the payroll system for the Starbucks?

Miss McKenna : For the Starbucks for the time-and-attendance system, yes; I assisted them getting that working correctly. It was set up so that whatever people's hours went through, it was calculated and paid correctly.

Senator O'NEILL: Was the structure there the same one—to ring in the hours?

Miss McKenna : No, we actually had a time-and-attendance system, so all staff had to clock in and clock out. So each staff member had their own code that they would enter into the time-and-attendance system upon entering and leaving the work site.

Senator O'NEILL: How would you contrast that with the 7-Eleven practices?

Miss McKenna : They had time sheets. The 7-Eleven had timesheets, and that was run by the franchisee. They had manual timesheets, I believe; there was no clock-in system.

Senator O'NEILL: So you are in the same office doing this work around payroll. In one business with 26 stores, the technology exists for you to have accurate record keeping of time worked?

Miss McKenna : Yes.

Senator McKENZIE: But in the same office—with charges of 57 per cent of the turnover of the 7-Eleven stores—that technology was not applied?

Miss McKenna : No.

Senator O'NEILL: Can you give a reason you think that might be the case?

Miss McKenna : The time-and-attendance system is expensive, and because there are over 600 stores, there may have been that cost factor. I think they left it so that each individual franchisee runs their own business. It is their duty to report on their own things. It was up to the franchisee to do them. It was his responsibility and his business.

Senator O'NEILL: Can you take me through what happened when you became aware that there were unethical behaviours around the payment of wages? What did you do, and what response did you receive?

Miss McKenna : When I was in Starbucks I used to do wage checks and ensure that everyone was on the same rate for their age and so forth. I found that some people were being overpaid, which is a good situation, but three months later after trying to get things resolved, they were still being overpaid with the expectation that the employee would repay the money. I thought, 'As soon as something is known, you should fix it straightaway so that you do not disadvantage an employee later down the track.'

Senator O'NEILL: Just to be clear: you identified some overpayments and alerted your supervisor?

Miss McKenna : I alerted my supervisor and the HR manager who was dealing with the area managers. I sent emails every week and then it got to the point where I was asked not to deal with the HR manager, because I continued to put pressure on to get responses, so my boss dealt with the HR manager on my behalf. My boss ended up not getting responses, so she went to the Starbucks CEO who was hired to look after the Starbucks component. After that, there was still no response. I was getting quite depressed working in a place where I could not get things sorted out, so I explained to them that I did not like working there and would start looking for other work. They immediately called a meeting within 10 minutes and paid me out seven weeks wages.

Senator O'NEILL: Why do you think they did that? Was that your entitlement?

Miss McKenna : My entitlement, plus a couple of weeks. They paid about two extra weeks than they had to pay.

Senator O'NEILL: Why do you believe they did that? Were you such a valuable employee? They took your advice—well, it does not seem they did take your advice, actually.

Miss McKenna : No, they did not really care.

Senator O'NEILL: What was happening? Why did they give you two extra weeks?

Miss McKenna : I put pressure on people to do the right thing. Yes, we did visa checks when the employees for Starbucks were hired, but no-one was looking after the visas and making sure that people worked the hours their visa required and no-one checked that visas were current at the time of working. I tried to take on that project to do a visa check for everybody and I was told, It's not your job. Don't do it.'

Senator O'NEILL: That was with regard to particularly Starbucks?

Miss McKenna : To Starbucks only—yes.

Senator O'NEILL: Were you aware of any processes of that kind in the 7-Eleven structure?

Miss McKenna : I believe it was done by the franchisee. Again, it was their business, it was their onus and their responsibility.

Senator O'NEILL: I take you to one of the things that you said about an email being sent telling the franchisee that this is what their payout responsibility is and this is what should be paid. You got an email back that said, 'I'm not paying that.'

Miss McKenna : There was either no email back or an email saying, 'We're not going to be paying that out.' That is my understanding. I did not receive them, but it was said to me and shown to me. I saw documents saying that that was not going to be paid.

Senator O'NEILL: In that context, what happens next? The franchisee says, 'No, we're not going to pay.' What happens then?

Miss McKenna : The email was left and it sat in a tray. Each payroll officer had a different state and territory that they looked after. So they had it sitting in their tray as a to-do item that would never come about.

Senator O'NEILL: People would have received some pay.

Miss McKenna : Their final pay for their final hours of work, but not necessarily the annual leave. Those instances—I am assuming here—were perhaps when people were leaving to go back overseas and their visa had expired. It was like: 'They're not here. They don't know the rules. We'll just not pay that. We don't have to. They're going.'

Senator O'NEILL: Was that money forfeited completely or did it go to the franchisee? What happened with that?

Miss McKenna : It is not that the money just goes anywhere. It does not get paid out, so it does not come out of the franchisee's kitty, so to speak, and get charged to them later on. It just does not come out from them. It stays as their profit.

Senator O'NEILL: You spoke about auditors and people coming into check to make sure that the books are done correctly. How did they get away with not doing that part of the payment?

Miss McKenna : I do not know. I really do not know how they did it, but I do know that there was paperwork and that it was filed in employees' files afterwards, if it was not done after a certain time, I presume. They were quite strict on the paperwork and having the files updated and maintained. Everything in my file always had to be there and I made sure it was right. I lost a tax file number once and spent two days looking for the right tax file number to have it in the right place. I do know there were strict ways to make things right.

Senator O'NEILL: The data that is being used to calculate the repayments is being provided by the people who were seeking redress. Do you know if they are accessing those files?

Miss McKenna : They should be able to. All the files are there in the file room that is specifically for payroll staff only.

Senator O'NEILL: How far back do those files go?

Miss McKenna : Some of them are quite large for employees—mostly employees who run in many different stores and have been there for a while. Some of them can be quite thick. I would say they go back quite a few years.

Senator O'NEILL: If there are inadequate digital records, you say that there are significant physical records that go a long way back?

Miss McKenna : Yes.

Senator O'NEILL: Excellent. I will ask you about your supervisor's response when you raised your concerns.

Miss McKenna : I was told that we are a processing department and to process what we are given. As I said, when I wanted to take over, check the visas and make sure everything was right, I was told, 'It's not your job. Don't do it. Don't take on responsibilities that are not your problem. It's not your job, so just leave it. It's the problem of the person not doing it, not yours.'

Senator O'NEILL: I assume you have worked in other contexts. Clearly you have changed jobs because you were unhappy with what you considered—if I am not verballing you here—unethical behaviours. Is that why you left?

Miss McKenna : Unethical and unsupportive employers, to be honest, that would not support me in trying to do my job right.

Senator O'NEILL: You are working in a new environment now and you have worked in previous workplaces. How would you describe the culture of the Starbucks, 7-Eleven workplace that you entered?

Miss McKenna : Probably carefree. They do not really care about what they are doing. They are paid very good wages. We are paid very high wages at 7-Eleven, at the top end of every scale. I just do not think they really care. Some of the people have been there for years and, whether or not they have raised concerns before about things not being right, they have got to the point where they do not think they are being listened to or they do not care, they just ignore it and do their daily job just to get across the line.

Senator O'NEILL: You were saying the wages are paid properly to all the staff at head office?

Miss McKenna : Yes.

Senator O'NEILL: What is the mix of permanent Australian residents and temporary visa holders at head office?

Miss McKenna : I could not tell you what the mix was of permanent Australian visa holders or not. We did have very multicultural staff at head office. Probably only around 20 per cent were Australian, Caucasian people, and the rest were Asian or Indian.

Senator O'NEILL: Did those workers come through from the franchisees?

Miss McKenna : No, not at all—none.

Senator RICE: I have only a few questions. Senator O'Neill asked most of them. When you identified the annual leave discrepancies with the franchisees and alerted your supervisor to it—as you said, you were told not to do anything about it—how high up in the system do you think the knowledge of those discrepancies in payments would have gone in the 7-Eleven head office?

Miss McKenna : I did not process them. It was other team members who processed those things. They did show me the documents and said, 'This is what we're waiting on. This is what we deal with. It's so frustrating.' I do believe my boss had been told about it before. She had been with the organisation for about seven years or so, so I do believe that at some point she did try to get things sorted out, but nothing was ever done so obviously it was just pushed to the side and not seen to be important.

Senator RICE: What is the management structure? Who would your boss have—

Miss McKenna : My boss reported to the finance manager and the finance manager would then report up to the CEO at the top.

Senator RICE: Given your boss had tried to sort it out, you would think that at least the finance manager knew that there were discrepancies in payments.

Miss McKenna : Absolutely, yes.

Senator RICE: At that level at least, at head office, there was knowledge of discrepancies in payments by the franchisees?

Miss McKenna : Yes.

Senator RICE: Starbucks are different because they are not franchisees; they are owned directly by 7-Eleven. Can you go through this again? When you were working directly for Starbucks, you pointed out the pay discrepancies. What was the reaction from management?

Miss McKenna : It was more the HR component. My boss said, 'I'm not allowed to change anything without authorisation from HR'—to change any files or anything like that, because they arranged any back pays or reimbursement from the employee for overpayments. In each instance, they said, 'Yes, we'll sort it out,' and nothing was done. It took a good month or two to get anything done. There was one still there when I left that they had not done anything about. I just think it is wrong. I do not think it is right for an employee to be penalised when they know they are being overpaid, because later on down the track the employee has to pay the money back. It is a financial burden and it should not be done to them.

Senator RICE: In this case, it is the direct responsibility of 7-Eleven, given that Starbucks are not franchisees.

Miss McKenna : Yes.

Senator RICE: Similarly, there was knowledge throughout the organisation that the visa checks were not being done?

Miss McKenna : Yes. I had two managers call me up to say, 'I've just realised that the visa has expired for this employee. They worked last week. Can I have them work to this weekend?' and I would tell them, 'No, I'm sorry, you can't. You need to take them off the shift and you need to put someone else on immediately. They're not entitled to work, I'm sorry.' The managers of the stores were left with the responsibility of doing the checks, I believe, which were not done. The managers were also left to do the checks to make sure they were not working over their 20 hours or 22 hours a week whatsoever.

Senator RICE: And you do not believe that was done either?

Miss McKenna : No. There was no monitoring of it. The managers have enough to deal with with running a store without looking after the employee's side of things. That is why we have a HR office and a payroll office. That is what we should be doing.

Senator RICE: Did you report those discrepancies to your supervisors?

Miss McKenna : Yes. When I tried to take on the visa checks, I was told not to—'It's not your project. Don't take on more work than you should have to.'

Senator RICE: Thank you.

CHAIR: Thanks very much, Miss McKenna. As Senator O'Neill said, we appreciate the fact that you have come to the committee with your evidence this afternoon. It is much appreciated. That concludes today's proceedings. I thank all of the witnesses who have given evidence to the committee today. I also thank Hansard, Broadcasting and the secretariat.

Committee adjourned at 16:20