High-profile wage scandals in the hospitality sector are leading to calls for employers to be extra vigilant, amid claims that wage losses could be $1.8 billion, and superannuation three times that figure.
Most Australians are now aware of the $7.8 million underpayment of hundreds of employees at the George Calombaris-linked MAdE Entertainment group, which operates a number of high-end restaurants in Melbourne.
The issue has sparked heated debate in the business community, with some suggesting it highlights the complexity of Australia’s industrial relations system, particularly industry awards. Others — including My Business readers — have suggested that if they and most other employers can be compliant, then all should be, regardless of the complexity.
Another business to come under scrutiny in recent days was a franchisee of Endota Spa, which the Fair Work Ombudsman (FWO) found had underpaid penalty rates and annual leave as well as made deductions from the pay of 457 visa holders to cover the costs of sponsorship.
In light of the high-profile businesses falling afoul of workplace rules, services businesses, in particular, are being warned to be extra vigilant about their compliance with employee pay and entitlements.
Senior employment relations adviser at Employsure Michael Wilkinson said the heat has now been turned up on the hospitality sector and employers in this space should brace for extra scrutiny.
“While systematic underpayment is a serious matter, it’s honest errors and a lack of understanding of entitlements that puts smaller hospitality businesses at risk,” he said.
Mr Wilkinson said that “it’s no secret” that Australia’s workplace relations system is one of the most complex in the world, making it difficult for employers to navigate.
However, he cautioned that “ignorance is not an excuse in the eyes of the FWO, which will pursue cases of underpayment in an attempt to reclaim any unpaid wages”.
“Thirty per cent of calls from our clients in [the hospitality] sector will relate to basic employee entitlements, so it’s clearly an area where they struggle,” Mr Wilkinson said.
“The FWO will be targeting fast food, restaurants and cafes as part of its compliance and enforcement action over the coming 12 months. This is certainly a cautionary tale for all employers in the sector.”
1 in 7 workers not receiving payslips: Ascender
Meanwhile, a poll of 1,010 working Australians by software provider Ascender suggested that more than one in five (22 per cent) of workers had been underpaid at some point — with those amounts amounting to an average of 18 per cent below their entitled rate of pay.
According to Ascender, this short-changing potentially amounts to almost $1.8 billion across Australia’s entire workforce each year. Underpayments were also occurring on average three times each year.
The impact of late payments or underpayments is putting financial stress onto employees, which in turn can have an impact on the wider economy.
More disturbingly, Ascender’s survey found that one in seven workers (14 per cent) are not receiving payslips from their employer — a direct breach of the Fair Work Act — meaning they are unable to check that they have been paid correctly.
“Understandably, employees care about their pay. It’s important as an employer to get this right, as it can negatively impact your workforce and have a significant impact on a business’s bottom line,” said Inna Wahlberg, Ascender’s general manager.
“Not only can incorrect pay impact the productivity and ‘care factor’ of your workforce, but it can also lead to significant fines and reputational damage for businesses.”
Ms Wahlberg added: “Most businesses are not doing this on purpose, with many of these errors being caused by accident or having outdated information in their systems.”
‘Make super mandatory on payday’: ISA
A separate push by Industry Super Australia (ISA) is underway, encouraging the government to mandate employee superannuation to be paid on payday, a measure which it said federal politicians already enjoy.
The industry lobby suggested that one in three Australian employees are being docked almost $6 billion worth of super each year, which it said amounted to an average of $2,000 per person.
ISA is running a new advertising campaign across various media highlighting the discrepancy between how politicians are paid super and that of the average working Australian.
“Federal politicians have their super paid at the same time as wages, and it’s only right this same protection is extended to all Australians,” it said.
Acting chief executive Matthew Linden said the change would be “a simple fix” for parliament to make.
“One in three Australian workers are having their super stolen by unscrupulous employers. It’s daylight robbery and it’s got to stop,” he said.
“The simple fix is for federal politicians to change the law and make employers pay super at the same time as wages. If it is good enough for our federal politicians, it should work that way for all Australians.
“Making super payable on payday for everyone will make cash flow easier for small business and protect the nest eggs Australians work so hard for — it’s a win-win.”
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.
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