The Flat-Rate Trap: Why Restaurants and Cafés Underpay Without Knowing It

Short answer. A flat hourly rate above the award base rate can still underpay staff. The award applies shift by shift, so a rate that's generous on a Tuesday can fall short on every Sunday, public holiday and late-night hour. And without a written contract saying what the flat rate covers, the extra you paid on weekdays may not count towards what you owe for weekends.

“I pay everyone above award. We’re fine.” It’s the line I hear most from restaurant and café owners. Fast food, restaurants and cafés are a Fair Work Ombudsman priority sector, with surprise inspections across Australia this year.

1. “Above award” is tested shift by shift, not on average

Say a café pays its cook a flat $30 an hour. The award base rate is $26, but Sunday work attracts a 50% penalty, so each Sunday hour should be paid at $39.

	Weekday hour	Sunday hour
Award requires	$26	$39
Café pays	$30	$30
Difference	+$4	–$9

Illustrative figures. Real rates depend on the award, level and type of employment.

2. Your weekday “extra” may not cover the Sunday shortfall

Many owners assume the $4 extra on weekdays makes up for the $9 short on Sundays. It may not. Counting one against the other usually depends on a written contract that clearly says what the flat rate is meant to cover. Many small hospitality businesses don’t have one. Some have a contract that doesn’t match the award. This is where an employment lawyer protects you: a properly drafted contract, matched to the award, is what makes a flat rate defensible.

3. The bill goes back years

Eight Sunday hours a week is about $3,700 a year per employee, plus super. Across five staff over three years, that’s more than $60,000 before interest. Claims can generally reach back six years. And since 1 January 2025, intentional underpayment is a crime.

Quick check: you may be exposed if

• you pay the same rate for every hour, including Sundays, public holidays and late nights
• your staff have no written contract, or one that doesn’t say what the rate covers
• casuals work the same roster every week
• some hours (set-up, close-down, training) or wages (cash) don’t show up in payroll

What to do

• Check the numbers. A fixed-fee sample check tests selected staff and pay periods against the award, and shows whether there’s a problem and how big it is. Book a confidential payroll check.
• Fix the contracts. An employment lawyer can put the right agreements in place so your pay arrangements are protected. Contact Trio Lawyers.
• Already received a letter from the Fair Work Ombudsman? Speak to an employment lawyer before you reply. Contact Trio Lawyers.

FAQs

Can I pay hospitality staff a flat hourly rate?

Often, yes, if it leaves each employee at least as well off as the award for the hours they actually work, and the arrangement is properly documented.

Do I need a written contract to pay a flat rate?

Without one, it can be hard to show what the flat rate was meant to cover, and the extra you paid on weekdays may not count towards weekend penalty rates. An employment lawyer can advise on the right contract for your award.

What if I've already received a Fair Work notice?

Note the deadline, keep every record, don't contact the employee about the complaint, and speak to an employment lawyer before you reply. Then get an independent calculation of what's owed.

Sources: Fair Work Ombudsman 2025–26 Annual Report; Fair Work Ombudsman, Border Force and LGIRS target Perth in joint inspections (5 November 2026); Surprise inspections uncover underpayments for Hobart food workers (4 August 2026).

General information only. It does not take account of your circumstances and is not legal, tax or financial advice.