Restauranteur Faces Underpayment Claim

As a business owner and Employer in the hospitality industry, it can get very busy. Not only are you ensuring your customers are receiving the best products and service, you are also ensuring that all shifts are covered and the business is returning a profit. Due to the fast paced and hectic environment of the hospitality industry, when an employee raises issues you may not immediately address those issues.

This recently occurred to an Employer who owned a restaurant had an employee raise issues in relation to alleged underpayments. The employer was simply ‘too busy’ at the time to address the employees allegations immediately. The employee then went on extended sick leave and queried whether they were being paid correctly while on sick leave. The employer had doubts as to the genuineness of the sick leave however was unsure on how to address the matter.

By the time the employer sought assistance with the matter it had escalated to the point the employee was making demands for a pay rise and in relation to their terms and conditions of employment whilst remaining off work on sick leave. This left the employer in a precarious position and they were unsure of how to address the multiple issues that were now present with the employee.

The employer did reiterate to the employee that any issues concerning their rate of pay and terms and conditions of employment will be addressed when they are fit enough to return to work. However, the issue in relation to the alleged underpayment should have been dealt with at the time it was first raised.

In this situation there are two main issues:

  1. Alleged underpayment of wages; and
  2. Sick leave.

This situation may have been avoided by taking the following steps as outlined below.

1. Underpayment of wages

To avoid the risk of underpaying your employees you are obliged to identify the Modern Award that applies to their employment, their corresponding rate of pay and the conditions of their employment. In addition, each year an employer should confirm the rate of pay remains correct in the event the Fair Work Commission announce a pay rate rise.

If the employer was aware of the correct Modern Award that applied and the rate of pay when the alleged underpayment was first mentioned, the employer would be in a better position to present evidence that they were being paid correctly. As this matter was left unanswered by the employer other issues arose and the situation then became more complex to deal with.

The issue of underpayment of wages is especially topical at the moment with the wide ranging investigation into 7-Eleven Franchisees finding that many of their employees were vastly underpaid.

2. Sick leave

In this case the primary issue was the doubt about the genuineness of the employee’s illness. While each case should be dealt with according to the circumstances present, generally the following steps are best to be taken.

  • An employer may request evidence (to satisfy a reasonable person) of the illness by requesting a medical certificate;
  • If there is doubts about the genuineness of the illness and especially if there has been extended sick leave taken, an employer can request the employee see a medical practitioner of the employer’s choice for a second opinion;
  • The employer should provide the medical practitioner with a list of the core duties the employee is required to perform;
  • The medical practitioner should set out whether the employee can perform the core duties or the inherent requirements of the employee’s job; and
  • If the medical practitioner finds the employee is unable to perform the inherent requirement of their job the employer may be able to dismiss the employee on this basis.

Extra vigilance is always required in dismissing an employee who has been diagnosed with a medical condition, particularly when other matters such as an allegation of underpayment of wages has recently been made. In light of this, employers should always seek proper legal advice prior to undertaking performance management and/or dismissing an employee.

If you are unsure of your obligations in relation to whether you are paying the correct rate of pay to your employees or if you are concerned about an employee taking extended sick leave NB Lawyers offer a consultation to all Employers.

For further information please contact,
Jonathan Mamaril
Principal & Director, NB Lawyers – Employment Lawyers
07 3876 5111
[email protected]