Fumihiko Nagamatsu, president of Seven-Eleven Japan Co., and other executives disclose that the company withheld overtime payments to part-time workers for many years during a news conference in Tokyo on Dec. 10. (Reina Kitamura)

Photo/Illutration Fumihiko Nagamatsu, president of Seven-Eleven Japan Co., apologizes the company’s failure to make proper overtime payments to part-time workers at its franchisees during a news conference in Tokyo on Dec. 10. (Reina Kitamura)

Embattled Seven-Eleven Japan Co. disclosed Dec. 10 that it withheld 490 million yen ($4.5 million) in overtime payments to more than 30,000 part-time workers since 2012.

The operator of the nation's largest convenience store chain also acknowledged that the final figure is bound to balloon, given other outstanding cases dating to the 1970s.

The problem surfaced in September after the labor ministry’s labor standards inspection office issued a recommendation to correct a calculation formula error in the payroll system for franchise owners.

Fumihiko Nagamatsu, president of Seven-Eleven Japan, apologized for the error at a news conference in Tokyo.

The company said 30,405 part-time workers at 8,129 outlets nationwide were affected by the glitch dating from March 2012 to November of this year.

The 490 million yen owed includes 110 million yen in late payment charges.

Seven-Eleven Japan’s announcement comes on the heels of a confrontation with franchisees nationwide over the company's 24-hour operating policy and a smartphone payment service that was introduced this year, but was forced to be canceled after unauthorized use was discovered.

“We offer our deepest apologies for causing enormous trouble and anxiety,” Nagamatsu said as he announced he will voluntarily take a 10-percent cut in his monthly remuneration for three months as a gesture of responsibility for the company's mishandling of the situation.

Franchisees hire and pay part-time workers, while Seven-Eleven Japan’s headquarters calculate the unpaid amounts separately and transfer the funds later.

To calculate overtime pay, the headquarters should have multiplied base pay by 1.25, but instead used a rate of 0.25.

As a result, payments did not reflect the time put in at work, which is a violation of the Labor Standards Law.

Seven-Eleven Japan, which was established in 1973, also acknowledged that underpayments in other forms had continued since the 1970s.

In 2001, a franchisee was advised by a labor standards inspection office to seek redress for underpayment.

Although the company headquarters was alerted to the situation, it made no public announcement about the lapse nor did it correct the difference.

Seven-Eleven Japan asserted that it tried to handle the matter appropriately after the error came to light, but its Dec. 10 announcement showed it was still lax with respect to the pay issue.

“We should have disclosed the matter and paid the disparity,” Nagamatsu said, adding that he had no idea why the company did not announce it earlier as “no records remain.”

Seven-Eleven Japan pledged to pay the full amount owing to part-time workers.

But records kept at the company's headquarters only go back as far as March 2012.

As for payments predating that time, the company is banking on records kept at franchise owners and part-time workers who worked at that time.

Industry analysts predicted the process would be anything but smooth.