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The cost of underpaying employees.

Hot off the press this week is the news George Calombaris from MasterChef has been underpaying his workers.  This seems to be a common trend in some industries and hospitality is among them.

The celebrity chef has been caught underpaying approximately 40% of his workforce, short changing them a total of 2.6 million dollars.

The MasterChef judge has told the media he is ‘devastated’ by what was happened and the error was not at all intentional.  It has been reported that as an average employees will be repaid in excess of $16,000 each.

It has been stated that the Fair Work Ombudsman alerted the issue to MAdE Establishment over 18 months ago.  The CEO of MAdE establishment Troy McDonagh has come forward stating this was an oversight, apparently there was an issue with calculating overtime payments.  This issue had been ongoing for a 6 year period.

It has been reported that the repayments of money owed are voluntary and that there isn’t a formal investigation in place with FWA in relation to this matter.

The Fair Work Ombudsman currently have their eye on the hospitality sector as it historically has issues with employees working long hours and not being paid the correct penalty rates.

Some famous examples of underpayments in hospitality are:

  • Grill’d
  • Mamak
  • Bavarian Bier Café
  • The Argyle

It begs the question, “Why is this issue is so prevalent in the hospitality industry?”

A popular theory is that many workers in hospitality are vulnerable, being international students, young workers and people with English as a second language, which makes them easier to take advantage of.  Regardless of the reasoning underpaying employees in any sector is unfair and downright illegal!

If you would like to know more about the tougher penalties being introduced for employers underpaying employees, please have a read of last week’s blog written by resident HR Guru Jessy Warn http://www.hrgurus.com.au/new-legislation-increases-penalties-for-employers-underpaying-workers

HR Gurus can help get you ready for tighter and tougher compliance legislation.  Contact HR Gurus on 1300 959 560 and one of highly qualified HR professionals will be able assist.

Written by resident HR Guru Natalie Bol.

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