The Fair Work Ombudsman is issuing businesses a warning about the dangers of paying flat rates after a restaurant on Tasmania’s east coast underpaid five employees more than $20,000.
The underpayments occurred at the Saltshaker Café and Restaurant, at Swansea.
After receiving requests for assistance from employees, the Fair Work Ombudsman audited the restaurant and found four waiters and a chef had been underpaid a total of $20,242 during the 10 months to August 2015.
A significant portion of the underpayments was due to the restaurant paying the employees flat hourly rates during the peak tourist season that were insufficient to cover the penalty rates they were entitled to under the Restaurant Industry Award.
The waiters were paid an hourly rate of $22.90 and the chef $26.50 – however, they were entitled to Award rates of up to $27.71 on weekends, up to $36.94 for overtime hours and more than $46 on public holidays.
The restaurant also contravened the Award during the business downturn in the off-peak season by failing to provide at least 38 hours of paid work per week and minimum shift lengths of six hours to four of the employees who were employed on a full-time basis.
Full-time employees were given as little as 17 hours paid weekly work and shifts as short as three-hours during the off-peak season.
The restaurant also failed to provide the minimum hours that the fifth employee, employed on a part-time basis, was entitled to.
Total individual underpayments ranged from $3341 to $4929.
Fair Work Ombudsman Natalie James says payment of flat hourly rates that undercut Award penalty rates is a persistent issue in the hospitality industry and employers need to be aware it is not acceptable.
“This restaurant has avoided facing legal action by fully co-operating with our investigation and agreeing to rectify all underpayments – but it has been put on notice of the need to comply in future,” James said.
James says hospitality businesses also need to be aware that downturns do not exempt them from meeting their employees’ minimum lawful entitlements.
Saltshaker Café and Restaurant has entered into an Enforceable Undertaking (EU) with the Fair Work Ombudsman aimed at encouraging behavioural change and future compliance.
Under the EU, the restaurant has commenced back-paying the employees via a six-month back-payment plan.
The restaurant will also commission two external audits of wages and records for all employees this year, report the results to the Fair Work Ombudsman and rectify any underpayments found.
The restaurant will also display a workplace notice detailing its contraventions and take steps to comply with workplace laws in future, including registering with the Fair Work Ombudsman’s My Account portal.
James says the Agency is committed to helping employers understand their obligations and put processes in place to ensure breaches are not repeated.
James says the Agency is also committed to improving compliance in the hospitality industry.
The Fair Work Ombudsman’s three-year National Hospitality Industry Campaign, finalised last year, resulted in more than $2 million being recovered for underpaid employees.
Inside Small Business