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:
- Hobart hotel underpaid assistant manager $28,441 in overtime and annual leave entitlements. Company fined $52,800 and its sole director $10,560. Magistrate considered that the employer wasn’t even sorry.
FWO media release, Ikin v Crown Trading Group Pty Ltd (9 December 2009)
- Central coast restaurant underpaid wages, penalty rates and other entitlements. Company fined $19,575 and owner fined $4,415.
FWO media release, FWO v Jaycee Trading Pty Ltd (No. 1) (31 October 2013) and (No. 2) (12 December 2013)
- NSW restaurant underpaid its workers $21,986 – then refused to pay the workers back. Company fined $33,280 and the owner $6,656.
FWO media release, Thio v Global GTO Pty Ltd (19 December 2008)
- Launceston Japanese restaurant underpaid base wages, penalty rates and loadings to 50 workers over its operations by $105,738. Company fined $122,960, two owners each fined $27,984.
FWO media release, FWO v Bento Kings Meadows Pty Ltd (1 August 2013) and FWO v Kojima & Zhang (1 August 2013)
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.