A worker was employed and promoted by his employer in a range of roles, including chef de partie, junior sous chef and eventually sous chef.

He claimed his employer had breached the requirements of the Hospitality Industry (General) Award 2010 (the Award) and the Fair Work Act 2009 (FW Act) by:

• Rostering him more than the maximum hours per week
• Failing to provide breaks
• Underpaying entitlements to overtime, penalty rates and meal allowances.

The employee said he was classified as a ‘Cook (tradesperson) Grade 5’ under the Award. The employer claimed that once the employee was promoted to junior sous chef, he was classified as ‘Managerial Staff (Hotels)’ and not entitled to overtime or penalty rates payable to a Cook Grade 5.

The Court was satisfied that the employee could be classified and paid as a manager during the period in dispute. However, while the Hospitality Industry (General) Award 2020 offsets entitlements such as penalties and loadings, the pay must be 25 per cent above the comparable rate – which the employee did not receive.

The Court also found that because he was not paid the additional 25 per at the time, he was entitled to be paid Award-based allowances and penalty rates relevant to the work he performed.

The company was ruled to have breached the Award and the Act, even though it later back paid an amount equivalent to the relevant provision at the time.

This decision highlights the equal importance of getting it right in the first instance, and regular auditing and checking thereafter.

While employers that take reasonable steps to comply from the outset will be in the best position to defend a wage theft claim, the legislation expects ongoing compliance from employers.

Expanding legislation

Expansion of federal employment legislation around wage theft and compliance highlights the need for correct employee recordkeeping and timekeeping, particularly around any overtime hours. This is an area that is likely to attract increased regulatory scrutiny.

Regulation 3.34 of the Act requires employers to keep a record of the number of ‘overtime hours’ worked by an employee on each day that might attract a penalty or loading, or a record of when the employee started and stopped overtime hours.

This means that identification of an employee’s ordinary hours (as typically defined within an Award) accompanied by tracking of actual hours (or, at a minimum, the overtime hour/s) is required to meet this obligation.

While this happens routinely where employees are paid against an Award, there is now increased risk for those who do not have these systems in place – particularly where an above-award salary arrangement is in place.

What should employers do?

1. Review how you are classifying employees

It is crucial to classify employees under the correct classification within the relevant modern award or industrial instrument. Classifying employees accurately and paying accordingly will reduce the likelihood of employers obtaining any contractual, underpayment or wage theft claims. By failing to do so, employers are likely to contravene the relevant award/instrument and the FW Act

As highlighted in the case study above, confusion around award coverage and classifications led the employer to incorrectly classify the applicant as he changed roles and undertook higher duties, subsequently underpaying him.

2. Consider if your salaried employees are engaged appropriately

It is common for businesses to engage employees who may be award-covered on annualised wage or salaried arrangements. These are intended to compensate employees for all hours worked and cover any entitled penalties, loadings and allowances.

Under legislation, employers must ensure that employees engaged on annualised wage arrangements are compensated as per the conditions stipulated under their relevant award/instrument.

It is also important to ensure that any contract of employment accurately reflects what the payment is for, including the entitlements it compensates for.

3. Review how you are fulfilling record-keeping obligations

It is important for employers to understand that record-keeping obligations are crucial and apply to all levels of employees within a business.

Even where an individual is employed on an annualised wage arrangement and has received overall compensation at award minimums, the employer is not exempt from obligations under the Fair Work Act 2009 (Cth) and Fair Work Regulations 2009 (Cth). For example, an employer would be in breach of legislation if they failed to keep a record of every hour an employee worked beyond the number of ordinary hours.

4. Create a Roadmap for 2024

Don’t hold off! Act now to implement a roadmap to ensure you have a timely plan to meet employer obligations and set clear internal controls and delegations for actioning any changes required.

How the Victorian Chamber can help

Our Workplace Relations Consultants are the experts in award coverage, classifications, contracts, and recordkeeping obligations. For further advice on how to navigate and comply with your obligations as an employer, or to discuss any other workplace queries you may have, please contact our Workplace Relations Advice Line on (03) 8662 5222.