7-Eleven admits it allowed franchisees to pay employees whatever they wanted; Australia Post reports $222 million loss; Midday Roundup

Convenience chain 7-Eleven has admitted its payroll system used to allow franchisees to pay employees whatever rate they liked, even if it was below the minimum wage, according to Fairfax.  

The admissions were made at a Senate hearing into 7-Eleven’s business practices yesterday, with the franchise’s founder Russ Withers apologising for widespread staff underpayments.  

“I can certainly say that the level of underpayment has been… we’ve certainly been blindsided,” Withers said.  

“I was not aware it was so significant as it appears in the evidence.”  

The Senate hearing follows SmartCompany revealing how, in comparison to other leading franchises in Australia, 7-Eleven’s model is “unusual”.  

7-Eleven’s head office takes a 57% of each store’s gross profit, while 43% of gross profits go to the franchisees.  

While 7-Eleven does pay for each store’s rent, other Australian franchises such as Boost Juice and Cold Rock pay an 8% and 6% royalty to head office respectively, along with a small marketing fee.  

Australia Post reports $222 million loss 

A decline in letter volumes is being blamed for the national postal service’s first full-year loss in 30 years. 

Australia Post has reported a full financial year loss of $222 million after tax for the 2014-15 financial year.  

The government-owned corporation recorded a 7.3% drop in addressed letter volumes for the period, while ordinary stamped letter volume fell by 10.3%. 

While the postal service’s group revenue remains stable at $6.37 billion, parcels revenue is up, climbing 3.6% to $3.21 billion or half the total revenue. 

In acknowledging the full-year loss, Australia Post managing director and group chief executive Ahmed Fahour said in a statement the mail carrier had made strides in reforming the service. 

“As we had forecast, this has been a challenging but crucial year of transition for our business, reflected in the numbers,” he said. 

“We continue to make headway with reforming our letters business and we are investing in the infrastructure and digital capabilities – vital to servicing the changing needs of our customers.” 

Shares down on open 

The local sharemarket is in the red this morning, off the back of falls on Wall Street overnight.  

Michael McCarthy, chief market strategist at CMC Markets, said this morning it is a case of “banker’s remorse”. 

“US Federal Reserve Chair, Janet Yellen, attempted to ‘right the ship’ in her first speech since the board decided not to lift US rates in September,” he said. 

However, McCarthy said Yellen’s re-iteration that the Federal Reserve plans to lift interest rates this year might have some positive effect. 

“The signalling effect of her speech is lifting risk currencies and US share market futures, suggesting the Asia Pacific zone may shrug off negative overseas leads and post gains today,” he said.  

 McCarthy said said a better night for commodities, including oil, copper and gold, could see additional support for the Australian index. 

The S&P/ASX200 benchmark was down 0.3%, falling 16.9 points to 5054.8 points at 11.50am AEST. On Thursday, the Dow Jones closed down 0.48%, falling 78.57 points to 16201.3 points.