Salaried workers in pubs, hotels, cafes and restaurants will get top-up payments if they work more than 18 hours a week on weekends and public holidays, according to new rules brought in by the workplace tribunal.

Following a series of underpayments of salaried staff in hospitality due to extreme work hours, the Fair Work Commission will in September bring in limits on how many overtime and penalty-rate hours annualised wage staff can work under the hospitality and restaurant awards.

Employees will be paid the hourly penalty or overtime rate regardless of how high their salary is if they work more than 18 hours of penalty rate periods a week or more than 12 hours overtime a week

Hospitality employers have said the rules add to complexity of the system and predict it will reduce the flexibility of paying staff salaries.

“This decision will increase the complexity for mum and dad hotel operators in administration and payroll,” Australian Hotels Association chief executive Stephen Ferguson said.

“It also limits their ability to offset hours worked in busier periods against hours in quieter trading periods,” he said.

“Sadly, smaller businesses are quite likely to move away from annualised salaries due to the complexity.”

The Restaurant & Catering Association warned the hourly limit and extra cost could restrict its members’ hours of operation given 57 per cent of employers indicated they opened on Sundays as well as public holidays.

“Creating disincentives for businesses to stay open due to rising staff costs is just not what Australian hospitality needs after two years of COVID and the general rise in the cost of doing business,” chief executive Wes Lambert said.

However, the cost has been tempered after employers successfully removed nights from the previously proposed penalty rate limit.

The FWC full bench, led by vice president Adam Hatcher, considered employer claims that its original 16-hours-a-week limit was “unworkable” as hospitality staff routinely worked evenings and weekends and so would exceed the limit simply by working two eight-hour shifts on Saturday and Sunday.

The commission decided to restrict the coverage to weekends and public holidays while also increasing the limit to 18 hours after noting staff could still receive backpay for working long evening hours at the end-of-year reconciliation process.

It also increased the overtime limit from 10 hours a week to 12 “for more abundant caution”.

High-profile incidents

Australian Industry Group workplace policy director Stephen Smith said the changes “will make the clauses a lot more workable for both employers and employees”.

“The 16-hour limit that the commission previously proposed was unworkable given how common it is for employees covered by these awards to work at nights and on weekends.”

Businesses can pay award-covered hospitality workers a salary that is at least 25 per cent more than the minimum award rate to cover off on hourly rates, allowances, loadings and penalties.

But in several high-profile incidents, such as at George Calombaris’ Made Establishment or at Dinner by Heston, salaried chefs or front-of-house staff were underpaid thousands of dollars compared to their hourly counterparts due to extreme shifts alleged to be as long as 80 to 90 hours a week.

The Fair Work Commission’s hourly limits were originally set to come into effect in 2020 but were delayed with the onset of the pandemic.

The United Workers Union (UWU) argued that annualised wage arrangements were “intrinsically problematic” in hospitality “due to the prevalence of unsocial hours of work, the variability of hours of work and apparent entrenched non-compliance with award standards by some employers”.

It called for the minimum 25 per cent salary uplift to increase to 40 per cent as it was too low to avoid underpayments.

The full bench declined the union’s claim, saying “we are too far down the road in the conduct of the review”, despite agreeing that the 25 per cent uplift will be “nowhere near enough to properly compensate the employee” working at or near the hourly limits.

Employers should be paying staff at least 65 per cent more than the award if they worked an average 48-hour week with evening and weekend work, the bench said.

“Thus, our adjustment to the outer limits should not be understood as an endorsement of the proposition that the minimum 25 per cent uplift will necessarily, or even likely, be sufficient to properly compensate employees with work patterns that are typical for full-time employees under the hospitality award or the restaurant award,” the bench said.

Chefs and managers are currently exempt from penalty rates or overtime if they earn more than $84,000 a year, or 170 per cent of the award rate, and don’t work beyond 57 hours a week. The exemption is part of a 12-month trial brought in by the commission that ends in August.


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