Hospitality Payroll Compliance: What Fair Work’s Latest Audits Can Teach Us
Fair Work’s latest hospitality inspections make for uncomfortable reading.
In Hobart, Fair Work Inspectors visited 28 fast food, restaurant and café businesses. Of those, 22 were found to be non-compliant, with more than $129,000 recovered for 180 underpaid workers.
The most common problems were underpayment of base rates and penalty rates, along with record-keeping and payslip breaches. Fair Work also issued fines and compliance notices, and has said surprise inspections will continue in areas of concern nationally. Read more
That is the bad news.
But buried in those results was a much more encouraging story: one operator who had previously got payroll wrong had changed the way he ran the business.
One operator got it wrong, then fixed it
One North Hobart operator had previously been inspected in 2019 and later back-paid 55 workers more than $150,000.
He told Fair Work that when the business was first inspected, he was new to the industry and did not properly understand the Award.
The earlier underpayment had come from incorrect employee classifications.
After that first experience, he changed the way the business operated. He improved his understanding of the Award, paid more attention to classifications and introduced better time records.
When Fair Work returned, the business was largely compliant. The remaining issue was an age-related pay increase missed for four employees, which was promptly corrected.
That is the part hospitality operators should pay attention to.
Hospitality payroll is not always straightforward
It is easy to assume that once a pay rate is entered into payroll, the difficult part is done.
In hospitality, there are usually several moving parts.
Different Awards may apply depending on the business. Employees need to be placed in the correct classification. Penalty rates, overtime and allowances can apply depending on when and how someone works. Pay rates also change over time, and employee duties can change as their role develops.
Fair Work’s current guidance makes it clear that employers need to understand which Award applies, use the correct classification and keep appropriate wage and time records.
For someone buying their first venue or moving into hospitality from another industry, that can be a lot to get right from day one.
Classification mistakes can become expensive
The Hobart case is a good example because the original problem was not described as a deliberate decision to underpay employees.
It came back to incorrect classifications.
That matters because classification is the starting point for much of the payroll calculation.
If the classification is wrong, the base rate may be wrong. Once penalty rates, overtime or allowances are added, the difference can grow quickly across multiple employees and multiple pay periods.
This is why job titles alone are not enough.
A “supervisor”, “manager”, “cook” or “chef” still needs to be assessed against the relevant Award and the work they are actually performing.
Good time records matter just as much
The operator also specifically pointed to better time records as one of the changes he made.
That is not surprising.
Hospitality payroll often depends on exactly when someone worked, not simply how many hours they worked.
Late nights, weekends, public holidays and overtime can all affect what an employee should receive.
If the underlying time records are poor, even a well-configured payroll system can only work with the information it is given.
Fair Work found record-keeping breaches at seven of the Hobart businesses and payslip breaches at five.
The goal is to find mistakes before Fair Work does
No payroll process is immune from error.
Employees change roles. Junior employees have birthdays. Award rates increase. Rosters change. Someone gets promoted and their payroll setup is not updated.
The important thing is having a process that gives you a reasonable chance of finding those issues early.
A sensible hospitality payroll review should periodically look at:
whether employees are still in the correct classification
whether current Award rates are being used
whether penalties and overtime are being applied correctly
whether time and attendance records match payroll
whether changes in age, role or duties have been reflected in payroll
The 2026 Annual Wage Review increased minimum Award wages by 4.75% from the first full pay period on or after 1 July 2026, which is another good reason to review existing payroll setups rather than assuming everything carried across correctly.
Getting it wrong once does not mean staying wrong
That is probably the best lesson from Fair Work’s Hobart inspections.
The numbers show the consequences of getting payroll wrong, and surprise inspections are a very real possibility.
But one operator’s experience also shows that a business can identify what went wrong, improve its systems and become substantially more compliant.
You do not need to know everything about hospitality payroll the day you open or buy a venue.
You do need to recognise where the complexity sits, keep good records and get the right support when you are unsure.
The goal is not to pretend payroll mistakes never happen.
It is to have systems good enough to find them before Fair Work does.
If you are reviewing your classifications, payroll setup or hospitality payroll processes, Admyn can help you work through the numbers and identify where your current process may need tightening up.
Chat to us today.