Tales of employee exploitation and how to avoid it 

Paul Bibby

Michael* needed a job and he needed one fast.

With just $3 left in his bank account, the young traveller went from shop to shop in Byron Shire asking the owners and managers if they had any work going.

A day or two later, the owner of a local takeaway hired him as a casual on the front counter, offering plenty of hours and payment in cash.

It wasn’t until weeks later that Michael realised that the $15 hourly rate he was getting was way below the minimum wage.

‘I was doing ridiculous hours during the night… working with mad drunk customers who were coming in,’ he says.

‘I think when you really need the money, you just say “thank you” even if it’s a low wage and it’s all off the books.

‘I didn’t realise it was below minimum wage.’

For many in the region, Michael’s story is all too familiar.  

A series of interviews conducted by The Echo with local hospitality workers and the Northern Rivers Legal Centre has revealed that, despite government promises to crack down on exploitation, the practice remains alive and well within some businesses.

The workers, mostly in their 20s and 30s, said they had experienced underpayment of wages, unpaid overtime, unpaid and underpaid work trials, and poor working conditions.

Some also expressed concern about cuts to weekend and public holiday penalty rates, which will now go ahead unhindered after a union challenge was defeated in the Federal Court last week.

However, the workers The Echo interviewed stressed that there were many fair and decent employers in the local hospitality industry who deserved to be acknowledged.

‘In the other places I’ve worked, I was treated much better,’ Michael says of his experience after he left the take-away outlet about a month after starting.

‘You can see the difference straight away when you find a good place.’

40% of workforce

Figures from Byron Shire Council show that the food and accommodation industries are among the largest employers in the shire.

They form part of the so-called ‘household services’ employment category, which accounts for nearly 40 per cent of the total workforce of the shire.

Those employed in the industry span a range of ages and backgrounds, from overseas students fresh off the plane to long-standing locals raising children and grandchildren in the shire.

An audit of accommodation, pubs, taverns and bars conducted across the Northern Rivers by the FairWork Ombudsman in 2013 found that 18 per cent had broken the rules relating to payment of staff.

And in the 2015–16 financial year, the Ombudsman recovered $111,755 for 87 workers in the Richmond-Tweed region.

Vulnerable at risk

According to the principal solicitor from the Northern Rivers Legal Centre, Ken Beilby, young people and recent migrants are the most vulnerable to exploitation.

‘It’s the under 25s, the backpackers and other travellers – anyone who’s in a vulnerable position because they really need the money or they don’t know what the law is,’ he said.

‘People from those groups are also often a bit reluctant to come forward because they’re afraid that they’ll be blacklisted and be unable to get another job.’

Mr Beilby said that underpayment of wages was a common complaint among those who came to the legal centre with allegations of exploitation.

‘I’ve seen someone who was being paid for 15 hours of work per week when they were actually working 38 to 40 hours a week,’ he said.

There was also a lot of ‘off-the-books’ work, which became a serious problem in cases where an accident occurred and the worker wasn’t covered for workplace injury.

Mr Beilby said there were also problems with employers asking people to do lengthy work trials for little or no pay prior to hiring them.

‘We’ve had a run of clients who were forced to do unpaid work trials,’ he said.

‘Typically the employer requests that the person do a free trial so they can assess their skills. Then they would keep them working for five or six hours and then they might not get the job at the end of it.’

‘It’s basically a way of getting a bit of extra help without paying for it.’

Cafe trial

A local woman, who asked not to be named, said that the owner of a local cafe had asked her to come in to do two ‘trial shifts’ as a kitchen hand at well below the minimum wage.

She then discovered that the position was being advertised again in the following week’s paper.

‘At that point I didn’t know what the law was about trials,’ the woman said.

‘But I didn’t feel good about it. I felt that it wasn’t fair.’

The woman said that when she went back to the cafe to talk to the owner and express her feelings about what happened, the owner gave her a few extra dollars and told her that the first shift hadn’t been a ‘real trial’.

Know your rights

Mr Beilby said this type of experience was not uncommon and that the best defence was to know your legal rights.

‘A trial is supposed to be a way for an employer to assess the skills of a potential employee, so it shouldn’t be any longer than the time it takes to determine that – usually no more than a couple of hours.

‘If you’re being asked to come in for a second shift you should be paid at the normal rate.’

The Northern Rivers regional manager of the NSW Business Chamber, Jane Laverty, said that while there were some unscrupulous hospitality employers in the region, this was a ‘small group’ within the industry.

‘I think it’s a small group of rogue operators who get known in the community and generally don’t last long,’ Ms Laverty said.

‘We promote widely to our members about the importance of being an employer of choice in order to get and retain the best staff.

‘And the bottom line is that to be an employer an of choice you have to treat your employees well.’

Penalty rate cuts

While the impact of exploitation in the local hospitality industry may be limited to a relatively small number of businesses, the cuts to penalty rates will almost certainly be felt more widely.

They will affect hundreds of full and part-time workers in pubs, holiday accommodation, fast food outlets and retail, particularly those who rely on Sunday penalty rates to make ends meet.

Those who work in restaurants and cafes outside of the region’s hotels and resorts will be less severely affected because they are under a different award. However, these workers will lose hundreds of dollars in public holiday shift bonuses.

‘The services sector is the lifeblood of areas like Byron Bay,’ said Jo-Anne Schofield, the head of the union representing hospitality workers, United Voice.

‘To keep young people in the area, they need opportunities and the chance to work and build a career. These cuts are really counter to that.’

However, Ms Laverty said the cuts were necessary to help local small businesses stay open.

‘We’re finding that a lot of hospitality businesses were making decisions not to open, or to reduce their opening hours on the weekend because of the cost of paying penalty rates,’ she said.

‘Mum-and-dad operators were walking away from a day of trading and then the people they were employing don’t get any hours at all.  

‘Some of the smaller towns in the region ended up being ghost towns on a Sunday because all of the shops were closed.’

Ms Laverty acknowledged that it was difficult for local hospitality workers to stay living in the shire because their lower wages weren’t keeping up with rising rents and other living costs.

However, she said the solution was greater diversity in the local economy so that a greater number of well-paid jobs were available.

‘Because we’re very reliant on tourism and health, we have more people on low wages than other regions,’ she said.

‘If we can have a greater diversity of industries then there’s going to be a greater number of better-paying jobs available.’   

*Not his real name.