Small businesses often do not have a higher management that checks all the figures, so owners can sometimes be tempted to cut corners by stashing a payment or scrimping a dollar off something when they can.
However, it may not always be a smart move, especially if they are unknowingly short-changing an employee. Sky Accountants Ballarat talk about it in detail.
Two hospitality businesses were recently featured by the media for underpaying staff and it caused a lot of embarrassment and adverse consequences to the owners who will face legal charges.
A Pizza Hut franchise owner has underpaid his delivery driver $6,000 in a year. The Indian national driver relied on his wife’s international student visa to work and received $16 per hour despite his entitlement to at least $20.36 for ordinary hours and up to $40.72 for public holidays and overtime. He also did not receive enough per-delivery entitlement, uniform and superannuation allowance.
The driver has now received a back-pay in full and the owner is now being sued for penalties of up to $54,000 per contravention for his company and up to $10,800 per contravention personally.
Another franchise business was also alleged to have underpaid 22 employees with a total of $27,920 from December 2014 to 2015. The staff at a Han’s Café outlet were paid at lower flat rates which were below minimum rates. These employees included nine juniors aged between 17 and 19 with seven of them from Vietnam. Most of them were on international student visas.
The owner has now back-paid all of them but is facing penalties of up to $54,000 per contravention for the company and up to $10,800 per contravention personally.
Imposing a flat rate is illegal and directly contravenes the Australian standard pay rate. Violators will certainly get caught as the Fair Work Ombudsman constantly reviews hospitality businesses. Many franchisees also misclassify their staff as contractors, when in fact, they are employees. Underpayment can be human error, but ignorance is not an excuse. Educate yourself to avoid hefty penalties that the Fair Work Ombudsman may impose.
Consult us about human resources and wages. Click here to speak to experts who specialise in the hospitality industry. Sky Accountants Ballarat are big believers in the use of professional tools to manage your business. The right tools can streamline your processes so that the business is best placed to trade profitably.