Most of 7-Eleven's 20,000 employees over the past decade were underpaid half their wages, says the man who had been chosen to decide how much they should be paid.
Professor Allan Fels was hand-picked to run an independent process reimbursing workers after it was revealed some franchisees systematically underpaid international students on threat of deportation.
But he now says 7-Eleven's management has "welshed" on their public promises to pay workers back after he was sacked as an independent judge of workers' claims.
The investigation will now be conducted internally, which Prof Fels says is "very bad news" for the compensation process.
"They didn't want an independent panel, they're doing it themselves. The first problem is they're not independent, their wish is to minimise the payout," he told the ABC on Wednesday.
Prof. Fels says franchisees had been intimidating workers into not submitting claims for payment, which he estimated could climb to $100 million.
"In some cases with threats of physical violence but more often dire threats of retaliation against them and their families of numerous kinds," Mr Fels said in a statement.
"The panel believes that about 20,000 employees worked for 7-Eleven franchisees in the last decade and most were underpaid by about half."
Prof. Fels said 7-Eleven promised to give underpaid workers anonymity but now wants to abandon it.
He said the franchisees wanted to minimise the payouts, so they put pressure on management in recent weeks to raise the standard of proof "impossibly high".
About 400 workers have been paid a combined $12 million so far, with another 2000 to go, and Prof Fels said 7-Eleven's concerns had been rising as the bill got higher.
Professor Fels' panel will stop its work on Friday, and all existing and new wages claims will be handled by an independent unit within 7-Eleven, the chain announced on Wednesday.
"It is important to state unequivocally that the process for claims will continue and 7-Eleven will pay all legitimate claims by franchisee employees for the past underpayment of wages," chairman Michael Smith said in a statement.
"Ethical corporate standards cannot and should not be outsourced. We are happy to be held to the standards we have set for and expect of ourselves."
But Prof. Fels said 7-Eleven has "eagerly" jumped on unproven claims of fraud among some workers.
"We've been asking them for months to come up with evidence and they keep failing to do so," he told the ABC.
"It's just a story they want to generate in order to discredit the panel a bit and give themselves an excuse for managing the process and getting the claims down."
He called on the senate to investigate as 7-Eleven was clearly trying to get out of its public commitment to repay workers.
