Heat turns up on hospitality underpayments

Hospitality Industry

As celebrity chefs George Calombaris and Neil Perry deal with the fallout of underpayment scandals, Australia’s 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.

Senior Employment Relations Adviser at Employsure, 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 puts 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.”

He noted that 30 per cent of calls from clients in the hospitality sector relate to basic employee entitlements, adding that it is clearly an area where they struggle. He also noted that FWO will be targeting fast-food, restaurants and cafes as part of its compliance and enforcement action over the coming 12 months, which he says is 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,” Wilkinson said.

Wilkinson has advised 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 payslips to rostering. It’s a solid foundation to protect your business in the event of a claim.

He also reminded employers to be aware that the new minimum wage now applies across Australia, and it’s essential that businesses are compliant with new rates.

Ben Thompson, co-founder and CEO of people management platform Employment Hero, pointed out that as part of the penalty, Calombaris must become a “Fair Work Ambassador” educating the restaurant industry on the importance of workplace compliance.

“While I praise the Ombudsman for using Calombaris’ profile to provide more education, the fact remains that paying correctly under the Australian Modern Award system is incredibly difficult,” Thompson said. “We’ve seen many other large employers like Super Retail Group, Lush, Qantas and ABC get payroll wrong. These businesses have whole departments dedicated to paying their people correctly. When you consider that large employers (>200 employees) only make up four of businesses in Australia, how can we reasonably expect the other 96 per cent, who don’t have in-house expertise, to get it right 100 per cent of the time?

“The unfortunate reality is that Australia’s Modern Award wage system is so complex that it is inevitable that employers will continue to make mistakes even with the very best of intentions,” Thompson added.