Exploitation of foreign workers at Australian 7-Eleven stores has claimed the scalps of the chain’s founder and chairman, Russ Withers, and chief executive Warren Wilmot.
The announcement on Wednesday follows weeks of revelations about 7-Eleven stores chronically underpaying international students and threatening them with deportation if they report the issue.
The convenience stores came under scrutiny following an ABC Four Corners and Fairfax investigation that found the company was paying its workers half the minimum wage.
Former iiNet and West Coast Eagles chairman Michael Smith has been appointed chairman after spending more than 15 years on the 7-Eleven board.
“There is no question it’s a much bigger problem than we realised … we were shocked at what we saw,” Mr Smith told AAP on Wednesday.
“It’s nothing like a majority of stores … but it’s a significant blow to our business.”
Mr Smith denied the company’s unique business model forced franchisees to look at ways to cut costs, including systematically underpaying staff, but said a board meeting on Thursday would discuss ways the model can be changed.
All underpaid workers should be paid in full by Christmas, he said.
Despite stepping down as chairman, Mr Withers will remain chairman of the group holding company that owns 7-Eleven and Starbucks stores in Australia as well as an expansive real estate and share portfolio.
“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,” Mr Withers said in a statement on Wednesday.
He had planned to step down in 18 months’ time, but said now was the right time to move on.
It is understood he will still have a hands-on role in the operation of 7-Eleven.
In a statement, 7-Eleven Australia said before the scandal broke it was working closely with the Fair Work Ombudsman and accounting firm Ernst & Young to investigate a number of allegations.
Employment lawyer Josh Bornstein, of Maurice Blackburn Lawyers, says up to 5000 workers across the company’s 620 store network are affected, but many had not come forward because they feared deportation.
Professor Allan Fels has been appointed to run an independent panel to identify underpaid workers and pay their missing wages.
ALP senator Sam Dastyari, who is part of a Senate inquiry into the exploitation of foreign workers, told ABC radio in Melbourne on Wednesday high-level managers at 7-Eleven were either grossly negligent or they wilfully covered up their treatment of foreign workers.