Penalty rates, part 3 – what happens if I’m not paying penalty rates?

  • What happens if I'm not paying penalty rates?

First question is whether or not you should be paying penalty rates. That comes from the employment agreement or the relevant award. For most hospitality businesses, unless you’ve gone for award flexibility and agreed with the employee not to pay, you’re probably up for penalty rates. We’ll cover each kind of hospitality business over the next few Small Plates. 

But I haven’t been paying penalty rates

Then you’re underpaying your staff. You’re at risk of having to pay:

  • Gap between what you paid and what you should have paid, plus interest
  • Penalty or fine plus legal costs after court proceedings
  • You, personally, as the owner, being fined

Here’s some examples:

There’s more

If you’re underpaying on salary, you’re probably also underpaying on superannuation and PAYG. That will attract the ATO’s attention.

You’re probably not making the proper WorkSafe payments either. Premiums are calculated based in part on expected wages declared to WorkSafe. You may be uninsured, be liable for penalty premiums and have committed an offence.

If you’re paying wages under the table, there’s a whole lot more you could be in for.


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