Fair Work Ombudsman to audit fast food sector in hospitality industry crackdown

The Fair Work Ombudsman is writing to 7,000 fast food businesses across Australia, in the next step of its three-year crackdown on the hospitality sector.

The aim of the campaign is to educate fast food businesses about their legal obligations toward their employees and will be backed-up by a random audit of 300 businesses early next year.

Fair Work Ombudsman Natalie James told SmartCompany it’s targeting the fast food industry because it employs a large number of people and includes many small and medium-sized businesses.

She says the sector has also generated a significant number of complaints from workers.

“About 300 fast food businesses in metropolitan and regional locations will be selected for audit in January, and during the audit phase Fair Work Inspectors will check employers are paying workers the correct rates of pay, penalty rates and loading and overtime rates, as well as complying with record-keeping and pay slip obligations.”

A free webinar for employers in the industry will be held at 3pm AEDT on Tuesday, November 19, 2013.

The fast food industry award was created in 2010 and includes information such as how many hours employees can work, loading rates for work outside of the ‘normal hours’, and how often employees have to be paid.

There are also links to record-keeping and pay slip templates, best practice guides and fact sheets.

As part of the three-year campaign, the FWO has also cracked down on accommodation providers, pubs, taverns and bars and cafes, restaurants and caterers.

“In the first wave, 750 accommodation providers, pubs, taverns and bars were audited in 2012, and hundreds of cafes, restaurants and caterers across Australia are being audited now as part of the second wave,” James says.

The results of this first round of audits are due for release in the coming weeks.

Workplace law expert Peter Vitale told SmartCompany it’s not a surprise the fast food sector is being targeted.

“The sector is dominated by small business, many employees are young and sometimes they don’t have English as a first language, and I think the most significant aspect is they operate in a world where their peak business periods are those where they’re required to pay penalty rates,” he says.

“Historically, one of the most common underpayment issues is the failure to properly pay penalty rates.”

Vitale says it’s difficult to gauge the effectiveness of FWO education campaigns.

“The results, if you like, are judged based on a reduction in prosecutions, but there are only a certain number of prosecutions each year. But it’s an important part of the ombudsman’s function to continue to do this and to continue to assist employers to understanding their obligations,” he says.

Ombudsman James says education is a key part of the FWO’s role.

“It’s our job to educate and help businesses – particularly small businesses that don’t have the benefits of in-house HR staff – about how to comply with workplace laws, and that’s what we’ll be doing throughout this campaign, we’ll be working with these employers to help them get it right,” she says.

In January the operators of a fast food pretzel outlet were fined a total of $36,630 for sham contracting.

Also in January, the FWO found a generally high-level of non-compliance within the hospitality industry following an audit in three states. One of the revelations included a number of businesses trying to hire employees on probation for three month periods without pay.

Vitale says the fast food industry award isn’t any more complex than any other industry awards.

“They’re all, to some extent, difficult instruments to expect SME owners to understand comprehensibly. I think the FWO, the government and the industry associations recognise this is an area where employers need some help to understand their obligations.”