The hospitality industry is a key focus of the FWO's compliance operations. Our operational data has consistently indicated this industry is over-represented in non-compliance with workplace laws. Despite it only making up around 7% of Australia’s workforce, the hospitality industry accounted for the highest number of disputes the FWO assisted with both in 2016-17 (17%) and 2017-18 (18%). We also made over $4.8 million in recoveries from this sector - 19% of all our recoveries.
It is the industry in which a significant proportion of vulnerable workers (in particular young workers and migrant workers) seek our assistance, accounting for 33% of all formal disputes we assisted migrant workers with, and 29% of all formal disputes we assisted young workers with. Thirty-seven per cent of all anonymous reports received were in relation to the hospitality industry.
The industry is also over-represented in our compliance and enforcement outcomes. It makes up almost a third of all of our litigations in the last two years, and had the highest number of compliance notices (34%), infringement notices (36%) and letters of caution (30%) issued in 2017-18.
As an agency, we want to better understand the factors influencing the high rates of non-compliance in the hospitality industry. As part of our ongoing program of intelligence-led audits, we conducted a number of proactive compliance activities that targeted popular food precincts in Melbourne, Sydney and Brisbane. Our inspectors visited businesses in three prominent hospitality precincts in each city. The precincts were chosen using a range of intelligence and analysis (including anonymous report information) to determine high concentrations of known, or suspected, non-compliant practices.
The campaign audited 243 businesses in total, finding a non-compliance rate of 72% and recovering $471 904 for 616 employees. The most common breaches were in relation to underpayment of wages (38%), and failure to provide pay slips in the prescribed form (17%).
The campaign delivered valuable insights into the compliance barriers for these precincts. This included factors like:
- the costs associated with employment as well as other key inputs such as amenities
- low awareness of where to get help
- industry norms
- language barriers
- a reliance on third-party wage advice (such as accountants).
These insights assist to explain the potential drivers of non-compliance in the hospitality industry and will assist the FWO in designing future education, communication and compliance activities.
Another key method for addressing non-compliance in the hospitality industry is through deterrence. Where we identify serious exploitation and a deliberate disregard for the law, we use available tools to hold those responsible to account. In 2017-18, we secured a total of $2 263 360 in court-ordered penalties against non-compliant companies, business owners and their accessories in the hospitality industry, a 56% increase from the previous financial year. In one of our most significant litigations, we secured almost $400 000 in penalties against a restaurant and three individuals - including a human resources (HR) manager - who underpaid their staff almost $600 000.
Fast food, restaurants and cafés
The hospitality industry remains a key concern and focus
for us. In the next year, we will concentrate on those areas of the hospitality industry with the highest rates of non-compliance; the fast food, restaurant and café (FRAC) sub-sectors. Our FRAC strategy looks to impact the behaviours and compliance levels of this sector by:
- working with key business owners and influencers in the industry to drive behavioural change
communicating our messages across sector networks
using our new legislative powers to hold lead businesses and others involved in non-compliance to account.