Restaurant operators fined $395,000 over underpayments and false employment records

On 1 May 2025, the Fair Work Ombudsman published the outcome of a Federal Court matter in which a restaurant operator and the business manager were ordered to pay a combined $395,000 in penalties over widespread employment compliance failures.

The matter involved two Vietnamese eateries in Adelaide. The operator was fined $265,000 and the manager was fined $130,000. The regulator’s summary states that 26 of 36 workers were affected.

What happened

The assessment period ran from 29 January 2018 to 5 September 2021. During that period, the operator employed at least 31 people at the restaurant under the applicable Restaurant Industry Awards. A further 10 people, some of whom were also included in the restaurant group, worked at a fast-food stall under the Fast Food Industry Award.

The regulator identified failures involving:

• minimum rates of pay
• casual loading
• Saturday, Sunday and public holiday penalty rates
• overtime
• payment for time worked
• meal breaks
• deductions from wages and requirements for workers to spend or pay money for the benefit of the business operators
• employee records
• pay slips
• records that were knowingly false or misleading
• pay slips that were knowingly false or misleading
• documents and information provided to the Fair Work Ombudsman.

Five of the employees were under 20 during part of their employment. This is significant because junior rates and award classifications can require additional payroll checks.

Financial consequences

The workers were repaid $407,546.45 in underpaid wages, plus interest. The verified facts also identify unpaid superannuation.

Those repayments are separate from the penalties. The penalties were imposed on the two respondents in their respective roles: $265,000 for the operator and $130,000 for the manager, totalling $395,000.

The matter also involved alleged or admitted conduct concerning false or misleading records and pay slips. These record-keeping issues add a separate layer of risk to ordinary payroll underpayments because accurate business records are central to demonstrating compliance.

Why this matters to managers

This outcome is a reminder that employment compliance is not limited to paying an employee’s ordinary hourly rate. Managers need a system that captures the full employment arrangement, including:

• the correct modern award and classification
• employment status, including casual status
• ordinary hours and overtime
• weekend and public holiday work
• meal and rest breaks
• junior employee rates where applicable
• superannuation obligations
• lawful deductions
• required payslip information
• records of hours, rates and payments.

The use of multiple awards, different work locations and junior employees increases the need for a documented review process. A payroll system may process figures accurately while still applying the wrong award, classification or rate.

The matter also demonstrates why managers should treat requests from a regulator as a formal compliance process. Records supplied to a regulator should be complete, accurate and capable of being reconciled to payroll, rosters, bank payments and employee records.

Practical controls for business owners and managers

Businesses can reduce avoidable risk by assigning clear responsibility for the following controls:

1. Award and classification review — confirm the applicable award, classification, employment type and rates when a worker starts and whenever duties change.
2. Payroll reconciliation — compare payroll results with rosters, time records and actual payments at regular intervals.
3. Penalty and overtime checks — test weekends, public holidays, overtime and other premium payments rather than relying only on ordinary hours.
4. Casual and junior employee checks — separately review casual loading and junior rates.
5. Break monitoring — record meal breaks and investigate missed or incorrectly recorded breaks.
6. Deduction approval — document the reason, authority and calculation for every deduction, and obtain appropriate confirmation before processing it.
7. Payslip and record audits — check that required records and payslips are issued accurately and retained for the required period.
8. Regulator response controls — nominate one responsible manager, preserve source records and conduct a reconciliation before documents are provided.
9. Remediation tracking — record any underpayment, interest, superannuation correction, repayment and follow-up action separately.

These controls should be proportionate to the business but should not depend on one person’s memory or informal spreadsheets.

What managers should take note of

The central lesson is that payroll compliance requires an operating system of controls, not just a payroll program. Award coverage, rates, hours, breaks, deductions, payslips and records need to work together and be checked over time.

Managers should review whether their business can produce a clear audit trail from roster to payslip to bank payment. If it cannot, the business may have difficulty identifying and correcting an issue before it becomes a larger underpayment or enforcement matter.

This article is general educational information, not legal advice. Businesses should obtain advice about their specific employment arrangements where needed.

Source information

• Regulator/source: Fair Work Ombudsman
• Source type: Regulator summary and litigation outcomes page
• Decision date: 1 May 2025
• Source URL: https://www.fairwork.gov.au/about-us/compliance-and-enforcement/litigation/2024-2025-litigation-outcomes#fwo-case-f32054b14fee863520f9196a
• Source limitation: The supplied source intelligence identifies the regulator summary as the primary source and notes that no court judgment, tribunal decision or sentencing remarks were attached for review.