11 May Make the News for the right reason, not because you’re underpaying your staff

Many of you will have seen there have been a string of restaurants and fast food businesses in the news recently having been found guilty of underpaying staff or exploiting staff.  In recent weeks, celebrity chefs Adriano Zumbo and George Calombaris have been in the news for underpaying staff, particularly around failure to pay appropriate penalty rates.  Further, a Coffee Club franchise has recently made the news for forcing an employee to pay back wages in cash, having the effect of making that employee underpaid.

All this coincides with the Fair Work Ombudsman (“FWO”) taking its tough stance on employers who are not meeting their obligations under the applicable modern awards and the Fair Work Act 2009.  The FWO has conducted a number of investigations and raids on businesses in Sydney, the Gold Coast and most recently last week in Brisbane’s Fortitude Valley.

So how do you avoid scrutiny from the FWO and underpaying your staff?

The simplest way is to make sure you are meeting your obligations under the Fair Work Act 2009 and any modern awards that apply to your business.  Below are three key points to assist you with this:

1.  Know your modern award/s

Most businesses are covered by at least one modern award.  In many instances, there is an industry award such as the Fast Food Industry Award 2010 or the Restaurant Industry Award 2010 that will apply.  Knowing which modern award/s apply to your business is a starting point to making sure you are complying with your legal obligations.

It’s also important to know more than one modern award can apply to a business.  Making sure you are aware off all of the modern awards that apply to your business is vital.

2.  Know what classifications apply

For each individual employee you employ, you need to assess the duties they are performing against the classifications under the modern award that applies to that employee and determine which classification best applies.  You then need to make a record of that classification and advise the employee of their classification under the award.

3.  Know the pay rates

Modern awards set out for each classification the minimum pay rates for ordinary hours of work and hours of work that attract penalty rates such as late night trading, weekend work and overtime.

Sometimes the wording in modern awards can be confusing.  The FWO publishes pay guides for each modern award which sets out for each classification each applicable pay rate for various hours worked as well as in most instances any allowances that could apply.

So why does all this matter?

Because the obligation is on an employer to ensure that they are complying with the obligations they have under the Fair Work Act 2009 and any applicable modern award/s.  Failure to comply with your obligations means you as the employer will be liable to rectify any underpayment made, as was seen in the case of these celebrity chefs whose businesses have been exposed.  Additionally, you could also be faced with costly litigation either commenced by an employee or the FWO.  If you are found guilty of contraventions of the Fair Work Act 2009 or a modern award, your business can be penalised up to $54,000.00 per contravention and individuals complicit in those breaches, such as a director, owner, HR manager, accountant etc. can have penalties of $10,800.00 awarded against them per contravention.

If you are unsure if your business is meeting its obligations to its employees, get in touch with the team at HR Law today for your workplace health check.