The Fair Work Ombudsman is continuing its crackdown on businesses in the hospitality industry, with an Albury fish and chip shop the latest target.
Thurgoona Takeaway and its operating company Barry Scott Distributors along with its sole director Ian Andrews will appear in the Federal Circuit Court in Sydney on Friday for allegedly underpaying staff more than $60,000.
The FWO alleges three workers were underpaid a total of $62,514 between July 2011 and May 2012 and are also entitled to more than $7000 in unpaid superannuation payments.
The three staff were supposedly employed on a flat-rate of pay which did not cover penalty rates, overtime or public holiday loadings.
The hospitality industry is often in the limelight for underpaying staff – M+K Lawyers partner Andrew Douglas told SmartCompany the complex award system can be at fault.
“The hospitality industry is once again struggling with compliance,” he says.
“Some of it is probably a lack of understanding around the award rates since the Australian award environment is complex and small business people often struggle with it.”
Douglas says some employers opt to pay flat rates because they think it will limit their fixed costs, but in order to be compliant, this flat rate needs to be equal to or greater than the minimum wage and cover all appropriate penalty rates, including weekend and overtime.
This case was brought to the attention of the FWO following complaints lodged by the employees.
SmartCompany contacted Thurgoona Takeaway and Barry Scott Distributors, but received no response prior to publication.
If an employer realises their mistake and actively addresses it and repays staff members, Douglas says it’s unlikely the FWO will pursue legal action.
Until there are significant changes to the awards system and the sector, Douglas says breaches in the hospitality industry are likely to continue.
“There are too many cases of young people or foreigners being underpaid and I think it will always be an issue where there is casualisation of unskilled labor,” he says.
Douglas says the way to solve the problem is to develop an “appropriate award structure” for the industry.
“At the moment it’s terribly expensive to have people working weekends, businesses can’t afford to put enough people on to service the customers, even though weekends are often the busiest time. This either results in unhappy customers or workers being underpaid.”
“The simpler the awards system is, the more likely it is to be complied with,” he says.