It’s not just Calombaris: hospitality is a hot zone of wage theft

The $7.8 million underpayment admitted by George Calombaris’ MADE Establishment group of companies might be eye-popping for the extraordinary size of the rip-off carried out across the group’s restaurants, but it reflects business-as-usual across the hospitality sector.

Restaurants, cafes and food services outlets are one of the worst sectors for wage theft, and a routine target of the Fair Work Ombudsman’s (FWO) compliance activities. In its 2017-18 annual report last year, the FWO noted:

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… Thirty-seven per cent of all anonymous reports received were in relation to the hospitality industry.

The sector also accounted for around a third of FWO litigation. One 2018 FWO investigation campaign targeting 243 restaurants and cafes in Glebe in Sydney, Victoria St in Melbourne and Fortitude Valley in Brisbane found wage underpayment in 38% of them, with over 600 workers found to have been dudded more than $470,000 in unpaid wages.

That compares to underpayment rates across all industries of around 27%.

Since 2018, it’s been more of the same: according to FWO data, the hospitality sector has been forced to repay more than $2.6 million in unpaid wages to over 1500 workers in the course of 2018-19. One investigation of nearly 500 regional businesses, with a strong focus on food and accommodation businesses, found 31% of businesses were underpaying staff. An investigation of nearly 1400 regional business earlier this year found “the hospitality sector was the least compliant of all industries audited by the FWO”.

As the FWO has repeatedly noted, the hospitality sector primarily preys on young workers and visa holders. Seventeen of 26 investigations dealing with non-compliance in the hospitality sector during 2018-19 involved visa holders, often exclusively so. In one case, a pizza restaurant paid its Australian workers award rates and assiduously made sure its workers holding visas — usually either student or working holiday visas — were significantly underpaid. And in this regard, while they may lack the glamour of a high-end Calombaris-owned restaurant, suburban mall sushi outlets are standout performers.

In 2018-19, the FWO has investigated four major sushi chains across the country and forced the repayment of a staggering $1.69 million to over 500 workers in more than 80 outlets — nearly all of whom were foreign workers here on temporary visas.

Cafes and restaurant spending by Australians has dramatically accelerated in the last decade, and many businesses have moved to cash in on the shift in spending from household goods to what is termed experiential consumption. But it has come at a cost in worker exploitation — though Australians seem happy to look the other way as long as it’s foreigners being exploited.