1 April 2022

The operator of the Shangri-La hotel in Sydney has entered into an Enforceable Undertaking (EU) with the Fair Work Ombudsman and has back-paid employees more than $3 million.

The Fair Work Ombudsman discovered that Lilyvale Hotel Pty Ltd, which operates the five-star hotel located at The Rocks, had underpaid employees during a proactive auditing campaign in 2018.

The primary cause of the underpayments was the company failing to ensure that annualised salaries paid to some hotel staff were sufficient to cover all of their minimum lawful overtime and penalty rate entitlements under the Hospitality Industry (General) Award 2010.

The error resulted in significant underpayments of overtime rates and penalty rates for weekend, night and public holiday work. Meal break penalties and annual leave loading entitlements were also underpaid.

Workplace laws relating to rostering, record-keeping and providing new employees with a Fair Work Information Statement were also breached.

A range of non-managerial staff were underpaid, including cooks, chefs, food and beverage attendants, porters, and those in purchasing, engineering, room service and front office roles.

The underpayments occurred between 2013 and 2019. Lilyvale Hotel has already back-paid 199 current and former employees $3.09 million, which includes interest. Individual back-payments, excluding interest and superannuation, have ranged from $16 to $119,447.

The EU requires Lilyvale Hotel to calculate and back-pay amounts owing to every affected employee, plus interest and superannuation, within the next four months.

Some of the underpaid employees were on skilled worker, working holiday and student visas from countries including Thailand, India, Burma, South Korea, the Philippines and the UK.

Fair Work Ombudsman Sandra Parker said that an EU was an appropriate outcome as Lilyvale Hotel had cooperated and demonstrated a strong commitment to rectifying underpayments.

“Under the Enforceable Undertaking, the company has committed to stringent measures to comply with the law and protect its workforce. This includes engaging, at its own cost, an expert auditing firm to check its workplace compliance for each of the next two years,” Ms Parker said.

Ms Parker said underpayments resulting from insufficient annual salaries for employees covered by awards had become a persistent issue among various industries.

“Businesses paying annual salaries cannot take a ‘set-and-forget’ approach to paying their workers. Employers must ensure wages paid are sufficient to cover all minimum lawful entitlements for the hours employees actually work – otherwise a substantial back-payment bill awaits,” Ms Parker said.

Under the EU, Lilyvale Hotel will also make a $90,000 contrition payment to the Commonwealth’s Consolidated Revenue Fund.

The company is also required to formally apologise to staff, commission workplace relations training for relevant staff, publish workplace and website notices detailing its contraventions, and offer all operational non-managerial employees the option to be remunerated on a weekly or hourly basis, rather than an annualised salary.

Employers and employees can visit www.fairwork.gov.au or contact the Infoline on 13 13 94.