How Smart Cafés Avoid Wage Disputes & Stay Fair Work Compliant

In Melbourne’s thriving café scene, maintaining a positive workplace culture is just as important as serving great coffee. However, wage disputes and underpayment claims can damage your business’s reputation and lead to costly penalties. In this blog, we’ll explore how a Melbourne café resolved an $18,000 back-pay claim—and how you can prevent similar issues in your business.

Understanding Wage Compliance in Hospitality

Wage underpayment is a significant concern in Australia’s hospitality sector, with over 800 reported cases. Common issues include:

• Incorrect pay rates under the Hospitality Industry General Award (HIGA)
• Unpaid overtime or missed penalty rates
• Failure to provide required breaks or leave entitlements

Proactively ensuring compliance protects your business from disputes and fosters trust with employees.

How One Café Resolved an $18,000 Back-Pay Claim

A Melbourne café owner, let’s call him Mark, faced a claim from a barista, Sarah, who believed she had been underpaid. Sarah used:

• Text messages discussing her shifts and pay
• POS system logs proving her actual working hours

Rather than engaging in a lengthy dispute, Mark took proactive steps:

1. Reviewed payroll records against HIGA requirements
2. Engaged Fair Work for clarification on entitlements
3. Rectified the underpayment promptly to avoid further penalties

This approach not only resolved the issue fairly but also strengthened workplace trust.

How to Avoid Wage Disputes in Your Business

1. Stay Updated on Awards

   • The Hospitality Industry Award 2025 outlines minimum wages, penalty rates, and conditions. Regularly check for updates from the Fair Work Commission.

2. Maintain Accurate Records

   • Use reliable rostering and payroll software to track hours, breaks, and overtime.
   • Keep digital records of payslips, timesheets, and employment agreements.

3. Train Managers on Compliance

   • Ensure your team understands casual loading, overtime rules, and penalty rates.
   • Conduct regular payroll audits to catch discrepancies early.

4. Use Automated Payroll Solutions

   Manual calculations increase the risk of errors. Automating payroll ensures:

   • Correct award interpretation
   • Accurate penalty rates and overtime
   • Compliant payslips and reporting

How Workstem Helps Hospitality Businesses Stay Compliant

Simplify award interpretation and payroll processing with Workstem, the all-in-one workforce management & payroll software designed for every industry. Our system supports 122+ modern awards & 34 EAs, including the Hospitality Industry Award 2025, and keeps you up-to-date with changes in wage rates, penalty rates, and overtime rules.

Managing payroll under the Hospitality Industry Award 2025 can be complex. Workstem’s workforce management software ensures:

• Accurate award interpretation (122+ awards supported)
• Automated penalty rates & overtime calculations
• STP2 & Fair Work-compliant reporting
• Compliant payslips & record-keeping
• Seamless integrations with Xero, NetSuite, and more

Choose from our Standard or Advanced plan to suit your business needs, and stay Fair Work compliant with confidence.

Book a free demo with our payroll experts and experience how Workstem can streamline your payroll and workforce operations.

FAQs About the Hospitality Industry Award 2025

Q1: What is the Hospitality Industry Award 2025?
A1: The Hospitality Industry (General) Award 2025 (MA000009) sets minimum pay rates, penalty rates, and employment conditions for workers in hotels, restaurants, cafés, pubs, and clubs across Australia. It’s updated annually by the Fair Work Commission.

Q2: What are the key changes in the 2025 Award?
A2: Minimum wage increase: ~3.5% (projected) for full-time, part-time, and casual employees;penalty rates: Unchanged for weekends/public holidays, but base rates rise;casual loading: Remains at 25%.

Q3: Does the Award apply to casual workers?
A3: Yes. Casual employees receive: base rate + 25% loading (e.g., $24.05 + $6.01 = $30.06/hour); additional penalty rates for weekends/nights.

Q4: Are breaks and overtime included?
A4: Breaks: 10-minute paid rest breaks per 4-hour shift; overtime: Paid after 38 hours/week (full-time) or 10 hours/day.

Q5: Can Workstem help with casual employee management?
A5: Absolutely. Workstem supports casual loading, dynamic rosters, and real-time tracking to ensure casual workers are paid correctly and fairly under the award.

Q6: Is Workstem compliant with Fair Work and STP2?
A6: Yes, Workstem is fully compliant with Fair Work obligations and Single Touch Payroll Phase 2 (STP2), ensuring seamless reporting to the ATO.

Read More:

Hospitality Industry (General) Award Guide [MA000009]

Updated Hospitality Award Rates: What You Need to Know

Hospitality Award

Restaurant Award vs Hospitality Award: What’s the Difference?