02 Sep, 2019

Overpaying or Underpaying? Either one is costing your hospitality venue

Over the last few years there has been significant media coverage about large and small hospitality venues underpaying their staff. Well known establishments as well as small cafes and restaurants across Australia have been under the scrutiny of the Fair Work Ombudsman to ensure that hospitality staff are being paid fairly and properly for the work they are doing.

Fines have been issued across the industry in the millions of dollars. Regardless of the size of your venue, you cannot afford the time, money or publicity of having manual or antiquated staff and payroll management systems that struggle to keep up to date with the relevant Modern Award.

Hospitality venue managers have plenty to juggle every day and managing the payroll with an Industry Award that changes regularly is time consuming and often a full-time job. Venues are at risk of inadvertently either underpaying or overpaying staff and both of these end up costing them their bottom-line profit.

Casual overtime – daily overtime or weekly overtime?

To demonstrate the complexity of managing a payroll with various staff in various roles at different times of day in your venue, it is worth examining the changing conditions applicable to casuals under the Hospitality Industry General Award 2010 (HIGA).

In January 2018, casual overtime was introduced. Previously casual staff were not paid overtime and there were no limits on the number of hours a casual could work within a day or a week, with casual loaded rates being in lieu of overtime and leave entitlements that full time or part time staff have.  Given the nature of the hospitality industry requires flexibility, a high percentage of staff are casual in many venues. 

Since January 2018, HIGA stipulates the maximum hours in a day and across a week that a casual employee can work.  Casual employees go into daily overtime if they work more than 12 hours in a day. The first 12 hours are known as ordinary hours – if an employee works more than 38 ordinary hours across a week, they then also go into overtime conditions.

The rate of overtime that is paid depends on the day and time they are working. For example, on weekdays the first two hours of overtime are paid at time and a half of the base full-time rate, and double time thereafter. On weekends, overtime is calculated at double time. In addition to this, there are penalties if an employee works more than 6 hours without taking an unpaid meal break and additional loading for hours worked after 7pm and after midnight to be calculated for weekday hours.

Many venues also have employees working at different levels depending on their duties of the day.  Add more venues and different employee contracts, and it is easy to understand how difficult this can be to correctly manage and why we have seen so much media coverage on the topic.

Overpaying and underpaying?

Today many people are still using manual processes and spreadsheets to track payroll and manage staff rosters. Fair Work is regularly auditing businesses and finding inaccurate payroll reporting and much of this is due to not having systems in place to manage it correctly.

When you have multiple venues, many staff, special events, peak periods, seasonal changes – it is not hard to make the mistake of overpaying or underpaying. If you don’t have an automated system, these simple mistakes can end up costing you a lot of money.

As a venue manager, we would encourage you to consider the following questions about your operation:

  1. How long does a payroll person spend on payroll?
  2. Are you confident you are not either overpaying or underpaying your staff?
  3. How up to date are you with your payroll and awards?
  4. Can you afford to pay for underpayment later? Can you afford to be overpaying today?

H&L Workforce Management makes managing labour costs efficient

H&L's Workforce Management is our solution to navigating the complex award interpretation to pay your staff correctly and comply with the relevant conditions of your award. 

More significant to the success of your business is taking control of the labour costs proactively.  With Workforce Management, you can forecast revenue based on previous sales history and roster to budgets based on that.  Venues that roster to budgets and monitor their actual wage costs on a daily basis are then aware of any variance to rosters as the week unfolds rather than only on payroll day.  This allows you to be proactive to ensure you are not blowing out your payroll budget for any given period.

H&L Australia have a variety of products designed to proactively manage your operations. Call your local H&L Account Manager or our Sales division on 1800 778 340 for more information or a free demonstration of how you can better manage your business.