The Australian Border Force’s review of the hospitality industry: are you a target?

ABF Hospitality March 2019
14
Mar

The Australian Border Force’s review of the hospitality industry: are you a target?

14.03.19

Following the recent reports by Australian Border Force (ABF) of employee exploitation and improper remuneration within the Australian hospitality industry, the Fair Work Ombudsman (FWO) has increased its scrutiny of the employment conditions at many cafes and restaurants.

Employment contracts, awards and agreements can be complex, and in a sector where work is often shift based and skill diverse, understanding and correctly applying the industry award can be difficult. Yet, a failure to do so can not only lead to underpaid staff, but litigation, substantial fines, reputational damage and more recently potential jail time under new reforms announced by the Federal Government yesterday.

Are you at risk?

Majority of businesses value renumerating their employees appropriately, however issues can arise when employees are paid salaries above the industry award to compensate for any potential additional hours worked. While the employee may earn a higher salary, salaries are often still close to the award, and as such may not fairly cover the overtime worked. Furthermore, this can create the unreasonable expectation that employees must regularly work additional hours which they are not properly compensated for.

Who is being targeted?

It is important to note that these investigations are not limited to the hospitality industry and business employing staff at any time may be subject to an investigation. The FWO have stated that selected regions for audit are based on intelligence, such as requests for assistance from workers and census data, however many employers are often randomly selected. Moreover, as part of the FWO’s National Compliance Monitoring Program, they will continue to promote workplace compliance by visiting workplaces to ensure businesses comply with their workplace obligations. It is evident from the results of these investigations that the program has been very successful.

Penalties and repercussions

The Court can impose a penalty on both a company and the director where the employer company has underpaid its employees. In 2016-17, the Courts ordered over $4.8 million in financial penalties against non-compliant businesses and directors, an increase of 66% on the previous year. Moreover, reputational damage is also likely as businesses found guilty of underpaying staff have been named and shamed on the FWO website and by media outlets.

Ensuring your business is compliant

By taking some simple steps, these can be mitigated. Implementing clear and award appropriate employment contracts are vital to ensure your business remains compliant. As pay rates and awards are often updated, periodic reviews should be carried out to identify any issues before they arise.

Record-keeping

It also important that the relevant documentation such as wage records, timesheets and payslips are maintained to support the payments made to employees. Employers are required to keep payroll records for 7 years and detailed information on what is required to be kept can be found on the FWO website.

Mistakes can happen

If you discover that an employee has not been paid in accordance with the obligatory minimum pay rates and entitlements, or there are similar workplace issues that need attending to, it is important to address these issues now. Finally, should you have any questions in relation to the above, please do not hesitate to get in touch with your engagement partner on 02 9283 1666.