7-Eleven's payroll system up until a few years ago allowed franchisees to pay whatever rate they liked even if it was below the legal minimum, a Senate hearing has heard.

The explosive admission was made as 7-Eleven founder Russ Withers and other executives at the company admitted that wage exploitation at 7-Eleven's stores was "widespread".

The hearing, in Melbourne, follows revelations by a joint media investigation between Four Corners and Fairfax Media that exposed widespread wage fraud across the 7-Eleven franchise network with some staff working for as little as $5 per hour.

"I can certainly say that the level of underpayment has been, we've certainly been blindsided you can say. I was not aware it was so significant as it appears in the evidence," Mr Withers told the Senate hearing.