Underpayment Scandals Turn Spotlight On Hospo Sector

Published July 26, 2019 (last updated June 6, 2022) -

As celebrity chefs George Calombaris and Neil Perry deal with the fallout of underpayment scandals, Australia’s leading workplace relations consultancy is advising hospitality employers to be vigilant around how they pay their staff.

The call comes after Calombaris was hit with a $7.8m underpayment bill, while Perry is facing legal action for the alleged underpayment of a chef.

Employsure’s Team Leader of Advice Services Michael Wilkinson said the heat was on the hospitality sector to ensure they are paying their staff correctly.

“While systematic underpayment is a serious matter, it’s honest errors and a lack of understanding of entitlements that put smaller hospitality businesses at risk,” Wilkinson said. “Yet ignorance is not an excuse in the eyes of the FWO, which will pursue cases of underpayment in an attempt to reclaim any unpaid wages.

“It’s no secret that we have one of the most complex workplace relations systems in the world, and hospitality employers are especially prone to making wage errors,” he said. “Between casuals, part-time and full-time workers, along with rising minimum wages, various penalty rates and Award entitlements, it’s a merry-go-round and they can find it hard to navigate.

“Thirty percent of calls from our clients in this sector will relate to basic employee entitlements, so it’s clearly an area where they struggle.

“The FWO will be targeting fast-food, restaurants and cafes as part of its compliance and enforcement action over the coming 12 months. This is certainly a cautionary tale for all employers in the sector.

“It’s incredibly easy for employees to tip-off and report cases of underpayment. With the attention being placed on the sector, it’s a wake-up call for employers to be confident that they are compliant with the entitlements of their staff.”

Related: Ask Our Specialist: Understanding and Avoiding Underpayments

Wilkinson advises employers to be familiar with the Modern Awards applicable to their staff, and the entitlements that apply to each.

“At the very least employers need to know which Modern Award and entitlements apply to their staff,” he said. “It’s also important to have robust record-keeping processes covering everything from pay slips to rostering. It’s a solid foundation to protect your business in the event of a claim.

“Also be aware that the new minimum wage is in effect across Australia, and it’s essential that businesses are compliant with the new rate.”

Editor Notes

  • 30% of calls from Employsure clients in the Accommodation and Food Services industry relate to employee entitlements. Wages are a key component of employee concerns. Almost a quarter (23%) of all calls to the Employsure Advice Line relate to wages.
  • The Fair Work Ombudsman recently announced its enforcement and compliance priorities for 2019-2020, and will target fast food, restaurants, cafes and horticulture businesses, amongst others.
  • In 2018-2019 the Fair Work Ombudsman audited 4,572 Australian businesses, recovering more than $29.6m in unpaid wages for more 13,000 underpaid workers. It also received 15,138 anonymous tip-off from employees.

Employsure is Australia’s largest workplace relations specialists, servicing more than 25,000 Australian businesses. Each year, Employsure takes more than 267,000 calls, with 23% relating to employee wages and entitlements alone.

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