Economists usually think that people’s revealed preferences (what they do) are more important than their stated preferences (what they say they’ll do). With that in mind, let’s consider George Calombaris’ claim that the minimum wages he has to pay his staff on Sundays make it uneconomical to open his restaurant(s). Is it true? Well, he claims that it is uneconomical to open on Sundays, yet he nevertheless opens on Sundays. Why would he do that if it were true that his costs exceeded his revenue?
To believe that Mr Calombaris would open his restaurants on Sundays only to have them run at a loss is to believe that he’s running some sort of altruistic quasi-charity, an impression he attempts to give by suggesting that he opens on Sundays for reasons of “tourism”. I don’t believe that a successful businessman like him would run at a loss out of the vague goodness of his heart. Alternatively, he might choose to run at a loss on Sundays in order to build brand loyalty and increase his custom on other days of the week; the total return to opening on Sundays would therefore presumably make it worth his while.
He claims that he “recently stumped up $45,000 for a pasta extruder for Mama Baba” but that labour costs are now threatening his ability to make a decent return on that investment. The obvious question is why he dropped $45k on a pasta extruder if he knew he wasn’t going to be able to use it at a profit. The current restaurant industry award has been in effect since 1 January 2010; he would’ve known full well at the time he made the investment what the minimum wages and penalty rates were in his industry.
Anyway, he also makes some assertions about minimum wages that are straight-up false. He says that waiters would have to be paid $40 per hour on Sundays. This isn’t true.
The highest minimum wage in the Restaurant Industry Award 2010 is for a Cook Grade 5, described in the award as as a:
chef de partie or equivalent who has completed an apprenticeship or has passed the appropriate trade test or who has the appropriate level of training in cooking.
To employ such a chef at the highest grade would cost Mr Calombaris $19.71 per hour for ordinary time, or $24.64/hour if the chef is a casual (and therefore not entitled to paid annual leave and sick leave). If they’re employed as a casual on a Sunday, they receive a minimum of $34.49 per hour. Calombaris claims that he has to pay his staff a 75% loading on Sundays, but this includes the 25% casual loading. Even a worker at the highest grade in the award would not be entitled to the $40/hour Sunday rate that Calombaris bemoans.
But Calombaris’ criticism is specifically directed towards the wages paid to waitstaff. Here he is even more off base. Waiters (‘food and beverage attendants’ in the language of the award) would typically be employed at Level 1, 2 or 3, depending on their skill, experience and range of duties. If they’re employed at level 3, their ordinary time minimum wage is $17.14, or $30 on a Sunday for a casual.
Minimum wages in the restaurant industry
| Minimum hourly wage | with casual loading | Minimum wage for Sundays | Sundays including casual loading | |
| Level 1 | $15.96 | $19.95 | $23.94 | $27.93 |
| Level 2 | $16.57 | $20.71 | $24.86 | $29.00 |
| Level 3 | $17.14 | $21.43 | $25.71 | $30.00 |
| Level 4 | $18.06 | $22.58 | $27.09 | $31.61 |
| Level 5 | $19.19 | $23.99 | $28.79 | $33.58 |
| Level 6 | $19.71 | $24.64 | $29.57 | $34.49 |
Source: Restaurant Industry Award 2010
If Calombaris is paying any of his waitstaff $40/hour on Sundays he is paying at least 33% above the award. Good on him, but if he’s doing so then he can’t really claim that the award is the cause of his high labour costs.
Another of Calombaris’ claims is that Australian fine dining restaurants are more expensive than their overseas equivalents. He told The Power Index, as reported in Crikey, that:
I can eat at [UK three Michelin star restaurant] Fat Duck cheaper than I can at some fine dining restaurants in Australia. But I know why it’s like that … because of our labour laws.
This is a strange claim. The tasting menu at The Fat Duck is £180 per person (plus an ‘optional 12.5% service charge’). At the current exchange rate, that’s around $AU270, without the service charge. The best restaurant in Australia, Quay, charges $220 for its tasting menu. Mr Calombaris’ own flagship restaurant The Press Club, charges $135 for its somewhat ostentatiously titled ‘symposium degustation’ tasting menu.
Australian fine dining restaurants appear to be a fair bit cheaper than their overseas counterparts, if we use the Fat Duck as a yardstick (as Calombaris himself has done) and convert the prices using current exchange rates. A better way to compare the prices across countries is in terms of median wages – how much of a typical full time wage would a diner have to spend to purchase a tasting menu at each of these restaurants? Well, in the UK the median full time wage is £501. This means a typical full time worker would need to spend 36% of her pay packet to buy a tasting menu at the Fat Duck (without the service charge). The Australian median full-time wage is $1050 per week, so a tasting menu at Quay costs 21% of a typical pay packet. The Fat Duck is more expensive for English people (and also for us) than its counterparts in Australia. Of course, overseas restaurants seem a lot cheaper to Australians than they used to, but that’s due to the soaring exchange rate.
Stepping back from Calombaris, what about the restaurant industry more generally? It’s certainly true that a greater than average proportion of workers in restaurants are paid at the award (minimum) rate. 45% of workers in the accommodation and food services industry are award dependent, meaning they’re paid exactly according to the minimum conditions in the industry. Only 15.2% of workers across all industries are award dependent. This means that if a change to the award system really had made it less profitable to employ staff, we’d expect to see the impact of the change most severely in the accommodation and food services industry. If Mr Calombaris’ story was accurate and modern awards were strangling his industry, we’d expect to see the profitability of restaurants go down, and employment in food and beverage service go down. This hasn’t happened.
Profit to sales ratio in the Accommodation and Food Services industry
Source: ABS 5676.0, table 22
Gross operating profits in the industry represented 12% of total sales in the September 2011 quarter, the latest quarter for which the ABS has released data.This is a higher ratio than during most of the WorkChoices period. Since the Restaurant Industry Award came into effect on 1 January 2010, the profit to sales ratio in the industry has been around 10% to 12%, in line with its typical level for the past decade. If the modern award is damaging the industry, it’s not showing up here.
You’d think that if the modern award had made food and beverage workers too expensive to profitably employ, then employment in that industry would fall, or at least grow more slowly than total employment across all industries. That hasn’t happened. Since November 2009, the last quarter before the Restaurant Industry Award took effect, total employment in food and beverage services has risen by 4%. Employment across all industries has also risen by 4%. The Restaurant Industry Award doesn’t seem to be damaging employment in that industry. Note that the employment data let us get down to the industry sub-division level, rather than just the overall industry level like the profits data above.
Employment in the Food and Beverage Service industry sub-division and in all industries (Index)
Source: ABS 6291.0.55.003, table 6.
Employment fell a little in the highly cyclical restaurants sector in 2011, but total growth since the new award system came into place has been the same as for the economy as a whole. If you’re going to blame the modern award system for the industry’s sluggish employment performance in 2011 then you also have to credit it with the surge that began in mid-2010.
At this point some conservatives might claim that total employment growth has been sluggish since the modern awards came into effect, so the effect is spread across all industries and therefore doesn’t show up in a comparison like the one in the chart above. If that were the case, wouldn’t the employment growth slowdown still be more severe in food and beverage services, an industry with a high proportion of award-reliant workers? The story just doesn’t hold up.
George Calombaris would like to pay his staff less money. He is entitled to make his case, but I wish his claims were subjected to a bit more critical scrutiny.
What a well researched and argued piece of genuine journalism, so sadly lacking in the Australian media. When I read the original piece the first thing that went thru my mind was “as if he is running his business at a loss as a public service.”
I was also disgusted by his comment about the staff not having degrees – as if that somehow justified lower wage rates! My life experience tells me it’s often the opposite!
Anyway, thanks again for an excellent post.
Very well argued. Superb.
Calombaris gave the exact same spiel to the Herald Sun last year http://www.heraldsun.com.au/news/more-news/diners-wallet-feel-sting/story-fn7x8me2-1226128846243. I don’t know why these publications decided to give him more free exposure.
If you’ll excuse my cynicism, Paul, I suspect those publications give him free exposure because they agree with Calombaris. Top piece, Matt, facts getting in the way of a “good” story
Because Paul, Calombaris is now a “celebrity” and elevated to God status by what passes as journalism these days.
as the others have said – a pleasure and such a cogent piece – ty :)
Excellent demolition job. It’s a disgrace how some of our lowest paid workers are blamed for not providing cheap enough food for the middle class.
Lovely. Always nice to see this sort of pleading smacked down with actual data.
Good wait staff are hard to find in a tight labor market where a high demand for unskilled workers in other sectors reduces the supply of ‘skilled’ wait-staff to the hospitality industry, so if the equilibrium wage is $40, then its $40. Suck it up.
George may be happy to pay his workers less, but if everyone else lost penalty rates (affecting their discretionary income), how would anyone be able to afford to eat at his restaurant?
This is the biggest piece of s**t I’ve ever read. If this clown ever decides to leave university and operate some sort of small business on his own, I want to be there when the land-lord locks him out. Can’t see that happening though, no doubt this c**t has a job in the public sector.
Now go do another degree and come back in 5 years and tell us all how it’s done.
Regards,
One of the guys that employs our tourists, students, professionals and your children on weekends.
What exactly is it about this article that makes it “the biggest piece of shit” you’ve ever read? Now that you’ve attacked the author personally, how about you spend some time pointing out & explaining the holes you see in his argument?
Regards,
Also one of the guys that employs our tourists, students, professionals and your children (but hopefully not yours Jeremy as I suspect their interpersonal skills are nil) on weekends.
I presume the primary sin is probably the citing of statistical evidence – the sure sign of a mind corrupted by the demons of fact. Begone foul harpies!
Man, Jeremy is going to go to *town* on you lukeayresryan
It doesn’t take a University degree to know that running around the internet calling people ‘c$%ts’ using your real name while you have public social networking accounts that reveals your employer probably isn’t brilliant.
Given that the hotel you manage is:
“all about food, drink, and socialising in relaxed style. Whether you join us for a drink with friends, an important business lunch, a casual function, or a family celebration, you will understand that we are all about service, value, and great quality food.”
I’m not sure your abusive comments are consistent with the public image that your employer is trying to project.
I hope you are employing tourists with the right visas Jeremy? Reckon a quick visit from FWA is in order to check out your employment practices.
I’ll be sure to avoid Hotel ***** when I’m next in Brisbane and I’ll be sure to tell everyone I know not to go to Hotel *****
Hi Ian, I edited your comment to take out the name of Jeremy’s employer. I appreciate that you are on my side against Jeremy’s abuse and invective, but I’m not comfortable with including the name of the hotel.
Cheers
Matt
It’s a pity you didn’t have the guts to tell us where you work, Jeremy Kilvington, so that we could be sure to boycott any establishment that employs you, now and in the future. I know I won’t be visiting the ***** Hotel anytime soon.
Let’s hope the search engines pick this up so when potential future employers/employees search for you by name, they’ll know to keep away from you.
Hi James,
I hope you don’t mind, but I’ve removed the name of Jeremy’s employer from your comment.
Matt
Hi Jeremy,
I find your perspective, in which having a degree disqualifies someone from having an opinion, quite strange. Each to his own, I guess.
I’ve edited your comment to obscure the swear words.
The only person who is full of s**t is Jeremy Kilvington.
He hasn’t bothered to make a single actual criticism of the figures presented in the article.
I suspect Jeremy Kilvington likes to have a go at people in universities because he knows deep down that his type of intellectual dishonesty wouldn’t be tolerated there.
Wow Jeremy Kilvington, you certainly have an unusual and memorable name! How nice for you!
Before you start calling people the word you used (I have no problem with that word, but others do), maybe you should learn to obscure your real name, like all the other tough-guy keyboard warriors.
By the by, you’re the Venue Manager at Hotel *****? How nice it must be.
Regards
A person who isn’t a fuckwit.
Hi Morrie,
I’ve edited your post to remove the name of the hotel.
Matt
Yeah, sorry about that. I wrote the post in a blind rage and didn’t see the post above mine, where you’d edited the hotel name.
Great article!
I wouldn’t bother complaining about Jeremy Kilvington’s behaviour to the hotel where he works – it’s owned by his father.
That could explain how he’s managed to remain employed in hospitality with the interpersonal skills he displayed so wonderfully above.
Oh, and what was that about “employinging your children” Jeremy?
“oh, and award rates ain’t too shabby either” on Jeremy Kilvingtons Facebook page, in an entry where he’s advertising for staff.
Hilarious.
Thats funny, that Facebook is currently unavailable. Surprise surprise.
This is the calibre of management at the Hotel *****. Beware!!
While I agree that Calombaris somewhat discredits himself by claiming to open on Sundays at a loss out of the goodness of his heart, the truth is that the awards are making it non-viable to open on Sundays for most restaurants without his celebrity and media reach. Now this may well be the social intent of the policy, but it is job destroying.
I would also note that your calculations appear to ignore the additional 10 or 15% loading per hour for work conducted between 7pm and 12am Monday to Friday.
The analysis also excludes the compulsory 9% superannuation – not saying that this takes the analysis to the $40 mark.
The point I want to make is – which seems to be ignored – is why should “penalty rates’ have to paid for working evenings or weekends etc?? If it is such an inconvenience to work at those times / hours, then don’t take the job in the first place. Hospitality businesses in particular are at a disadvantage as they are geared to those times. Surely if you take a job in a restaurant or hotel etc then you should accept that they are the hours you will have to work. To expect a “penalty” to work those times when you knew all along that was required is absurd and unreasonable. If you don’t like it, then work elsewhere – eg a bank, the government.
does it follow that if youre born in a poor country you should just expect a crap life? work somewhere else you say- banks and government offices arent open on weekends or at night- the only time that students studying during the day can get work. the reason penalty rates are paid- is because it levels the playing field a bit, as while you are all having fun and eating with friends- we are working! for example- i have to catch a $20 cab-ride every shift, because there are no buses running and as a sole-parent pensioner, i dont have a car. its not an inconvenience- its my life, i just have to accept it- whats your excuse??
fantastic article- jeremy is one of many spoilt brats who couldnt hold down a job anywhere daddie doesnt own.
Facts are wonderful, impressions are unreliable – a properly researched article that shows true journalism but which will be ignored because the writer is not a publicity seeing “celebrity” chef
@Jeremy, it’s a wonder anyone works for you at all with your attitude and language. Nice. Please don’t employ my children.
It’s interesting to note that Jeremy works at Daddy’s hotel… I can’t help but suspect that nepotism rules over merit or talent in that family business.
Whilst it’s prudent to pay attention to daily profitably, in reality we look at profitablity at a weekly, monthly & yearly level to amortise out the seasonal and trade fluctutions that occur. Sunday’s may have higher costs but it’s up to the business owner to assess what the compelling factors are to continue trading on sundays. Good will? Higher table turnover ? I think we often see is a lack of business sofistication in small businesses and often more so with chefs …. The need more education to understand the bigger economic picture for their business. And idiots like George just show how much more needs to be done in this industry.
No one yet has commented on how poor the work conditions are in this industry … work hours, rostering neglect, EEO and work place bullying are rife still
Cowgill, I doff my cap to you, sir.
Such mighty pwnage of a trumped-up little big man.
Being a good (heck, even great) chef doesn’t give George C the right to propagate lies and talk shite to mislead the public.
Well played.
Great article, it does everything it should for a well reasoned and researched piece.
My opinion of George Calombaris has significantly fallen – not just for being so ignorant of the facts he purports to be an expert on but for whining about his profitability when he is taking home so very much more than the vast majority of people (especially those who work for him on hospitality wages). This mentality that unbridled profits are a *right* really is just greed. Disgrqaceful.
And special mention to Jeremy Kilvington – how’s that for a public display of an anger management problem? Not likely I will be visiting your fine establishment any time soon or letting my kids anywhere near you what a shocker.
Wow!! What a great piece.. Whether you believe it’s right or wrong, it’s well done.. And true. It’s always galling to hear high profile hospitality employers constantly bemoaning wage conditions for their staff.. No other industry employers would dare blast minimum conditions in this manner for fear of militarising unions and receiving public backlash, but bashing waiters pay packets has become a favoured and acceptable thing to do recently. Anyone else from the media or unions on here reading this? Tell us what you think. As good as the article is, the ensuing debate has been fascinating!! Keep it coming!
I work for a union and sadly, this is often how the IR debate goes, not just in the public forum, but also in Fair Work Australia.
Employers with no evidence to support their claims will loudly and publicly bitch, moan, complain about the inability to “do business” i.e. make super profits and look immediately to blame first, union interference and second, the restrictive regulation of the Fair Work Act (and its concomitant Awards and NES).
What one must always keep in mind is that Calombaris is now a Murdoch stooge. Murdoch pays most of Calombaris’s wages now, not his restaurants. Calombaris’s comments (being reported in a Murdoch paper as “news”) are not actually about doing business or IR, this is merely a furphy. The real issue is the inability of the Tories and their allies to accept to the idea of a minority Labor/Gillard Government. Bottom line, the born to rulers are still bristling about not having their hands on the levers of power.
The facts are that the Fair Work Act is slightly, and only slightly, to the left of WorkChoices amendments to the Workplace Relations Act, but very much to the right of the Workplace Relations Act (as it was prior to WorkChoices). In other words, regarding minimum standards and right to strike, despite all the clamour and noise made by employers, the Fair Work Act is identical. Anyone who genuinely works in IR will tell you this.
My experience since the modern awards were introduced has often been one of employers complaining about a provision in the modern award but without realising that they were regulated by the same award provision prior to the Fair Work Act taking effect. It would be funny if it wasn’t so sad.
G’day Johnny
You rise some good points however i do take issue with your view that
“regarding minimum standards and right to strike, despite all the clamour and noise made by employers, the Fair Work Act is identical.”
Under WorkChoices the an employer was prohibited from paying a worker whilst they were taking any industrial action and they had to dock them at least four hours pay if they took any action. Under the Fair Work act a worker can participate in bans or limitations and still be paid, if not in full than at a rate that can be decided by FWA.
With regards to minimum standards I believe the National Employment standards (created by the Fair work act) are a much stronger safety net than has existed before and much more generous than anything that existed under WorkChoices.
Cheers
Thanks for this great piece. And am just reading the “What is the typical income” piece. Great research, and beautiful writing.
I am a little confused. The impression I am getting is that penalty rates did not apply before Fair Work Act.
Did not they apply to the food industry in the past. Surely they are not a new impost on the industry.
One has no right to expect cheap meals at the expense of the worker producing them.
All food outlets are in the same basket. It is a level playing field as to what wages have to be paid.
Something that may be worth an examination. The widely-acknowledged industry night-off is a Monday. Presumably Monday doesn’t incur penalty rates. Sunday custom with penalty rates vs Monday custom without penalty rates would be worth a comparison, especially at Colambaris’ establishments. A restaurant doesn’t need to be full to be profitable, and if penalty rates were the critical factor in tourism no restaurant would dare close on a Monday. Of course Colambaris can’t very well come out swinging against the public for not spending enough eating dinner, so the workers cop the criticism instead for sucking too much on his teat. The industry has long complained about penalty rates which target their centrally profitable days, as though they are all on a different time cycle which doesn’t abide by a week-day working schedule (do their children go to school on Saturday nights too?), however clearly profit on a Sunday can easily be shown up, as Matt has done, and shown to be disingenuous considering other industry customs, such us not opening on a Monday. Also he’s probably pissed off that high-profile restaurants & hotels are under greater pressure to provide penalty rates, since they have a public image to protect, while so many ‘lesser’ establishments feel they don’t have to bother. He’s obviously not generous enough to remember that his profits receive a boost by him having his mug on TV.
The industry is full of cowboys & there’s little thought given to the long-term sustainability of workers’ careers, helped by the fact that turnover is high because there’s little to stay for in the toxic environments. Unless you’re a massively successful chef on TV, I guess.
Do these numbers include super?
@Jeremy: so how is it working at daddy’s restaurant
Jeremy, it would appear you manage the hotel, you don’t own it so YOU don’t employ ANYONE. Nice one getting all outraged on behalf of some rich dude who employs you.
Wow serious writing here. But yeah, to be fair… Nothing wrong to still open the restaurants half day on Saturday and close them on Sunday. I mean, the workers also need days off. Time to spend time with their family and do their own stuff like we do. That’s normal… but what I don’t get is why its uneconomical to open restaurants on Sunday and full day on Sat ??! I mean, weekends are the best time to take your family out for lunch or dinner and get some quality time together and there are always a lot of people there eat in the restaurants. Surely, serious income in it I think.
But what a shame if GC does pay his staffs less. Like oh everyone knows GC… He’s a celebrity chef and lots of people would love to go and try his restaurants. He got the fame, he got cool restaurants, he got professional workers, his customers are there… I don’t know what he worries about!
Thanks to everyone for your comments
Few problems with this analysis:
- While it is only 75% loading on Sundays, it’s 150% loading on Public Holidays. It’s selective analysis to ignore that public holidays was part of the report (and who knows if the original, truncated quote was accurate). We still need to give him the benefit of the doubt that his quoted figure may have been referring to public holidays, not Sundays.
- (I haven’t looked, but:) Is the loading from the minimum wage, or from the base wage? I doubt a ‘fancy’ restaurant is paying minimum wage. To attract the level of talent in a competitive, talent-constrained market required to operate effectively, he probably needs to pay a higher-than-minimum wage. If he is paying a loading on his waiters’ base hourly wage (which I believe likely), then yes, he is likely paying $40/hr on Sundays.
- It assumes the mythical rational and informed individual on a few of his management and purchase decisions one too many times for my liking (personal preference this one). It’s easy for economists to sound a bit haughty when talking about *apparently* ‘irrational’ decisions.
To be fair: I don’t see these points being a problem with the analysis, but with your understanding of the issue. The 2nd point is easily looked up (yes, by you) and the third point is irrelevant.
Wouldn’t the 150% on a public holiday be only payable to permanent staff. So you work on the public holiday and get 50% loading and then get paid a days wage because it’s a public holiday.
To answer some questions here: Casual staff generally get 150% – 200% loading on public holidays; permanent staff generally won’t be rostered on. If they are, they get a day in lieu.
Loading is calculated, I believe by the permanent staff hourly rate, as opposed to the casual rate. So if a casual gets, say, $25/hour and a part-timer gets $18/hour, a public holiday rate at 200% loading would be $36.
[...] The debate continues on this blog here with this guy writing an interesting [...]
I thought it pertinent to cut and paste Jeremy’s abusive rant and send it to his employer (easily tracable through Google) along with a link to his comment. Such hateful language usually hides behind a pseudonym, so good on Jeremy for publically sticking up for his employer and his industry. Hopefully such passion leads to a promotion.
I was planning on doing the same thing, but went looking for the owner of the establishment rather than just send it directly (thinking that it would likely be intercepted by Jeremy himself.)
What a surprise it was to find that the owner is his father.
While I agree that Jeremy’s argument is rather weak, I’m not really sure that dobbing him into his employer makes much sense.
He’s not an ambassador for the hotel industry – he just works in a pub. It’s a different game for people actively engaged in representing industries, but I think it’s a pretty slippery slope when your employer is told when you’re being rude on the internet.
Abusive language is very uncool, but I’m just not sure it’s up to our employers to judge how we engage in the internet.
you are a legend, matt.
[...] }()); George Calombaris – would you like penalty rates with that? January 10, 2012 // 37 Economists usually think that people’s revealed preferences (what they do) are more important [...]
If Calombaris is correct, and penalty rates make Sunday trading unprofitable, I think he should be jumping for joy. Given the enormous equity he already holds across multiple restaurants, he has an extraordinary advantage over potential start ups and new competitors. New businesses struggling with cash flow as they open their doors would be unlikely operate on a Sunday if they were making a loss. They wouldn’t be able to afford this. This gives Calombaris an enormous advantage as he would be one of the few restaurant owners who could afford to open on a Sunday. This would have the effect increasing the market share of his restaurants. I suspect, however, that the assumption I’ve based this comment on (that wages make Sunday trading unprofitable) doesn’t actually hold true. Accordingly, Calombaris seems to instead be seeking to lower his fixed costs to maximise his profits. I’d be interested to see if there was any change in the pricing structure at his restaurant if this were to eventuate. I remain cynical that this would be the case.
Matt, you handled the heckler as deftly as those figures. Well done. I’ve wanted to say for some time now that your writing has a rare clarity. Wonderful.
Thanks Marty
N’awwwww
[...] and IR folk alike are chatting about Calombaris’s comments. Indeed, economist and trade unionist Matt Cowgill writes far better than I on the subject. But to paraphrase Matt, perhaps before a high-profile restaurateur makes such public statements, [...]
Three words – Employee Collective Agreement. It’s a LOT better than following an out-dated set of inflexible rules which limit employee participation more than it protects basic rights.
The basic awards are often so damn proscriptive, business owners are forced to hire professional HR consultants to help enforce these awards.
Most restaurant owners (I used to be one) take the wage table, average out the loading for holidays and overtime, add this into the base wage, add a few dollars on top, and get the workers to “do it all”. (By this, I mean employees help with food prep, cooking, serving, cash management, ordering supplies, cleaning, stocktaking, etc.)
All this being said, I still think Calombaris is out of line making these claims, but all in all – the award system sucks, so best create your own!!
Great work Matt. A simple, straightforward yet thoroughly incisive analysis of Calombaris’s amateur brainfarts.
Hospitality workers work some of the most horrendous hours under impossibly stressful conditions and deserve the rather modest award they are given.
The union movement thanks you.
Author quote: “let’s consider George Calombaris’ claim that the minimum wages he has to pay his staff on Sundays make it uneconomical to open his restaurant(s)”
George Quote: “The problem is wages on public holidays and weekends exceed the opportunity for profit.”
Did the author miss the public holiday reference as it doesn’t suit his agenda? Did he miss superannuniation? Did he miss George’s problem was not the award wage, but the loadings on base wage?
What is the relevance of the cost of a meal there and the average wage?
And where does said author work? The ACTU
Brendan, the fact that Matt Cowgill works for the ACTU neither makes or breaks the case he put forward. You are far better off directing your criticisms to the merits of his argument rather than attacking him personally.
In terms of super, it is paid on ordinary time earnings, which does not include penalty rates that are payable on public holidays, so super, which is payable by all employers, is not an additional factor to take into consideration.
In terms of the argument about public holidays, it was wrong of Matt to omit that part from his calculations and argument, not the least due to the fact that it left him open to criticism. The penalty rate for working a Public Holiday under the Modern Award is an additional 150% of the base rate of pay for full-time, part-time and casual employees. Thus, for a Level 1 Waiter on a base rate of $15.96 per hour the Public Holiday Penalty rate would be $39.90 per hour. For a Level 3 whose base rate is $19.19 per hour, the Public Holiday rate would be $47.97 per hour.
Finally, it is worth remembering that there are only 10 public holidays (in most states) a year. That is 10 days out of a total of 365 possible trading days (2.74% of all possible trading days).
It’s also worth noting that these days, most restaurants seem to apply a surcharge of 10-15% on a public holiday, something I’m sure the people on the months-long waiting lists for George’s restaurants would be willing to meet and save him from his sulking. And 15% when he’s charging hundreds of dollars for his meals is going to more than cover the extra expense.
These surcharges are not lawful. Inform the restaurant of this. The restaurant can be fined up to $6,600 for imposing a percentage surcharge. If they insist on surcharging, report the restaurant to the ACCC.
As for public holidays, why shouldn’t those serving us on these few special days of the year be rewarded for working on these days? Or should a public holiday be a holiday for only some of the public?
To George Calombaris and others complaining about not being able to afford paying staff due to wages etc, here‘s a tip:
If you are unwilling to pay decent wages for workers, forget owning a business.
A determination that was made in 1907, and is still as pertinent and relevant today as it was then. If you can’t afford to pay your staff a decent wage, you shouldn’t be running a business.
What about superannuation, workers compensation and payroll tax which pushes the hourly cost up by a further 10-20%?
No it doesn’t.
Penalty rates don’t attract Superannuation (it’s paid on the employee’s base rate so isn’t changed regardless of what day they work).
I don’t see how workers compensation changes when they work on a Sunday compared to, say, a Tuesday? Are they more likely to be injured on a Sunday? This is a fixed cost to represent possible liability for the company.
Payroll tax would be a fairly negligible increase.
You are totally wrong and don’t know a thing about employing / paying staff. You obviously have no idea about what it’s really like to run a business.
Superannuation is payable on all wages & salaries. Workers compensation (insurance premiums) are set as a percentage of wages and salaries of a business – it is not a fixed charge.
From First State Super FAQ:
“Question
Is super payable on overtime?
Answer
No. Employers are not required to pay your 9% contributions on:
overtime
annual leave loading
on accrued annual, long service or sick leave taken as a lump sum on termination of employment.”
http://www.firststatesuper.com.au/frequentlyaskedquestions/answer/29
Hrm, unless you just meant generally, as opposed to in relation to them being paid higher on certain days… In which case, this is a cost that every business in the country has to deal with, and has nothing to do with the hospitality award or the arguments George or Matt are making… Not really a relevant factor.
Great article!
GC should stop complaining, if he had staff on permanent salary he would not have to pay these rates. Also, there are many professional waitstaff who are excellent at what they do, with exceptional food and wine knowledge who deserve to be paid accordingly.
As a secondary school teacher with two degrees and postgrad qualifications I waitress at a one hat restaurant on my school holidays. It is a difficult, physically tiring job with a single maximum 1hr break in a 13 hr day, the award rates are definitely well deserved!
It’s a shame the mainstream media couldn’t have pulled together such a full analysis. Nice work MAtt.
I get paid $25.40/hr (casual) to do a zero stress data entry job for a major corporation. I think hospitality workers might be getting ripped off
Thank you! We work our arses off. Head chefs not only have to make sure the most important day of the brides life with her 400 guests goes off without a hitch. Their steaks are ALL cooked properly, vegetarians etc are catered for, plus all kitchen staff and waiters work together perfectly and all this when most humans are at home with their families or the guests themselves!
No air conditioned office for us!
But be sure not to forget the fact that even most head chefs must help clean down at the end of the night, and sometimes mop the floors. It’s a mighty tough job in the majority of restaurants and not all WOW factor as many non chefs think it is.
I would estimate maybe 20% of your average chef / cook has it easy.
(ie: a great position with great wage etc)
Then don’t forget the split shifts as well.
Working in this industry for both chefs and waiters (the trained professional ones) is bloody hard physical and mental work and we Definatly should be paid much better.
I am so disappointed in GC statement as I would have thought he was one of us but no the bright lights have him dazed. If I do eat at Hellenic republic or press club I will first be asking his wait staff if they are being paid properly and if not I will walk out.
I think GC is an idiot and he shouldn’t have bought such an expensive pasta machine!
George should be whinging about payroll tax, not wages.
Hire staff on salaries. You can then work them as much as you like, and your labour costs stay the same. To offset the entitlements, you give them things like “clothing allowance” for using tea towels. Worked in plenty of places that did this.
I wonder how the people who work for George Calombaris feel about being publicly put down by their employer? I’d hazard a guess here but I imagine low morale in his workplaces may well be his biggest current problem, not award wages. I’m a small businesswoman with both a food and communications business. Until my businesses grow more, I cannot afford to pay even minimum wage which is why I don’t employ anyone. If you can’t factor fair wages into your business costs without affecting profitability, then you shouldn’t employ anyone. Otherwise it’s called exploitation.
I’m not sure which bit I enjoyed reading more: the actual article, or all the comments, especially from one Jeremy Kilvington. Thank you for the education and entertainment.
It sounds like George would like to pay his staff UK minimum wage – less than £6.
Having worked in the hospitality industry on and off for ten years, discussion of penalty loading is mostly a hypothetical one – many establishments pay cash in hand and don’t offer loading.
Greeting to all,
Perhaps he may like to go abroad to a underdeveloped country as do our CEO’s… and turn his back on the Australian person. He seems rube his shoulders with the theory likes of Machiavelli come Hitler come Mao…
can someone tell her that he live, breaths and earns his living in a liberal free democracy. It could be that he prefers to go to Iran?
I find it surprising that he’s trying to argue that restaurants in Australia are too expensive due to labour costs.
I hate eating out in the USA because I know the people bringing me the food are earning bugger-all, even with the tips. The food may be cheap there, but in Australia it’s still often cheaper to eat out than it is to cook for yourself (food of a similar quality).
I personally have no problem paying what restaurants in Australia charge, and am happy to know that the people working there are paid a living wage for serving me.
But let’s be honest, in Melbourne there are a string of restaurants that you can get a feed at for around $10-$15 per person, and they remain viable while still employing staff under the same Award. How is it that George struggles while charging people $240?!
Well said.
LukeC and all,
The elephant in the room that they don’t want to acknowledge is that, for most eateries, the main cost is rent, not wages.
They can’t touch landholders, so let’s squeeze the workers.
Besides, people, I invite all to visit any smaller places, you know, the take away kind of place around any CBD in Australia. There is no way in hell to convince me half the staff are not cash in hand and paid $10-$15 an hour, tops.
Wow, seems I’ve offended a few people here.
Not necessarily what I was hoping for.
The article just seemed VERY one sided and frustrated me just a tad!
Yes, George was exaggerating a bit when he said he would have to pay close to $40p/hr for staff, but with the addition of super, he wouldn’t be far of it.
In no way am I knocking award rates at all. I have fantastic staff and pay them accordingly.
Another point to keep in mind is that hospo staff are in the industry because they want to be and the hours and pay works for them. Students, tourists and all sorts of part-timers find themselves in this industry because there really aren’t many other industries that support the hours and offers such flexibility.
George was saying it was un-profitable to operate on a Sunday paying award rates and for most places (not all) it really is. I know that if given the choice my staff would rather get paid their regular award time and a half (casual rates) plus penalties than have us close on the Sunday and lose the hours all-together. This work force relies on those weekend hours.
Just to clarify… I do pay my staff their entitled award rates and they deserve it. Rostering on a Sunday is performance based and it is considered a privilege to be given those hours.
Ian, Thank you for your invitation to get FWA here regarding my international employees. I welcome them with books wide open, I’m sure they would love to see my paper work… so that’s a yes, they all have their correct working visas which are checked on a regular basis with VEVO… thanks anyway.
Matt, your article seemed to attempt to rip shreds out of the hospitality industry and good operators (like George) that are doing the right thing and paying their staff what they’re entitled to.
I’m not saying the industry doesn’t have a few dodgy operators, of course it does!
But they’re not the ones you’re writing about… what about the ones that pay their staff crappy cash in hand wages, don’t declare anything and don’t pay super? You’re targeting the good guys… well it seems that way to me.
On another note, to those who said they wouldn’t want their children working for me, you’re wrong… seriously… I’m not that bad!
Cheers,
Jeremy
P.S if there is anyone else who would like to have a crack at me, let’s keep it on the blog. It seems I have copped a bit of shit for being stupid enough to post my real name.. not that it bothers me… anyway, as Matts Blog says.. these are my personal views, not necessarily those of my employer..
Credit Jeremy. Well done for coming back and taking a more reasonable approach. I still don’t necessarily agree with you, but I respect your latest response.
Cheers,
Tim
Classic
Well put. Finally an article stating the real facts!
Bravo, Hazchem. Bravo.
:)
What I love is the logic that he’s chosen to spend $45,000 on a pasta machine, therefore his workers should take a pay cut to help him pay for it.
Jeremy,
We have been patrons of your establishment on quite a few occasions. I have found the staff there to be as good as the best i have dealt with over many years.
Please relay our apologies to them that we no longer intend to patronise your establishment.
It is only “your” approach to this that has convinced us that you are a lost cause and don’t deserve support.
Not sure if drinking in a bar is about ‘supporting’ the bar staff and their political views. While I don’t agree with Jeremy, surely his approach to online debate has little to do with the bar he works at?
I used to work at Telstra Dome. If I was very rude would you stop going to sporting matches at the stadium?
the main problem with awards is the complexity. do there really need 6 levels of minimum wages? (8 in retail) awards are 40 to 100 pages of legal jargon covering every conceivable aspect of the employment relationship including ovetime, penalty rates, meal allowance, travel allowance tool allowance and heaps of other prescriptive rules about certain allowances and working hours etc its simply archaic. whats wrong with businesses having the right to offer pay and conditions which suit the needs of their business and wages and working conditions being set by markets rather than politicians bureaucrats and judges on a tribunal. we should have laws more like the uk its much better over there.
Hi Jeremy,
I presume Matt focused his attention on George and industry awards as a response to the article in which they both appeared. Also given his professional leaning is well equipped to deconstruct the issues as he sees it. I haven’t worked for any of Georges Restaurants but I have done business with them and found them to be very professional, efficient & precise. So while I find it a little unsettling to see them hung out a bit, I didn’t read any malice into the piece.
Cheers
David
I worked in hospitality for years. We had no penalty rates. I accepted this as the price I paid for flexibility with my shifts, and though I missed out on many, many gatherings and events on Saturdays and Sundays I sucked it up.
I was able to do this because I was young, and never intended to be there long term. If you are dining in a famous restaurant like one of George’s, or even just a nice place without the masterchef association to boost clintele, you are likely being waited on by career hospitality staff who are skilled, dedicated, and as good as what they do as someone who has ‘been to uni for 15 years’ (what does that even mean? Would someone who spent that long getting a degree have any hope of a professional job in their field? Anyway…)
Now I work in the community sector. Do I sometimes wish I had more money? Yes. How should I get it? I should change jobs. I won’t, because the work means a lot to me. If Columbaris is really suffering, why doesn’t he just do something else?
Bahahaha- thanks for the laugh, jez!!!! As if that second comment rings true to anyone Jeremy… especially now that daddy has been made aware of your grubby public rant and it seems, has forced you to pull your head in -without terminating your employment (cough daddies boy!), all while the public scoffs at the nepotism surrounding your empolyment …along with your maturity. Your feeling (mostly anger and abuse) is in black & white, & under your full name. We have all seen what sort of person you are, I for one will never visit the establishment for which you work, and you can guarantee everyone having read this forum has worked out the name of the hotel despite the kindness of the author deleting the name.
I’m not entirely certain that the second comment was actually written by Jeremy. The writing style is very different to the first one – far smoother and more educated.
I suspect daddy got someone else (perhaps Jeremy’s sister, who also works at the same establishment) to write the ‘apology’.
Hi Stephen,
Yes it’s true, ‘Daddy’ employs me.
You say it like it’s a bad thing.
Should I work for Coles or Woolies instead?
In no way was my last comment an apology.
Well ok, I do appologise for the language, it was a little heated! But everything else is what I believe…my views…my opinions
Your beef isnt with my daddy, sister or workplace, it’s with me… so lets keep them out of it.
Regards,
Jeremy
Nepotism *is* a bad thing Jeremy. In most cases it means that someone got their position because of their connectiona, not because they were the best person for the job. Reading your original comment, my opinion is that this is almost certainly true in your case.
I find it illustrative that you equate not working for daddy to mean that you would have to work at Woolies or Coles. Perhaps you subconciously realise that if daddy hadn’t given you a job that’s all you might be good for, since the obvious alternative of working in a restaurant owned by someone else doesn’t seem to have occurred to you.
I spent 10 years of my early life working in restaurants, both in the kitchen and on the serving floor. During that time I met far too many people just like you, who considered abuse and intimidation to be leadership and management. It saddens me to see that nothing appears to have changed in the twenty years since then.
As an alleged professional in the hospitality industry, one thing that you should know implicitly is that first impressions are extremely important. And most people know that things said in anger often reveal more of the true character of a person than a more considered, structured statement might. I find myself believing that we saw the real you in your first statement, rather than the image you have been trying to build since.
Stephen,
You’re right.
I’am a fiery, passionate restaurantuer with a dirty mouth.
I have my own views and I expressed them, love them or hate them.
thanks for the chat, its been fun.
wanna do it over a beer sometime?
-Jeremy
Distance unfortunately precludes it. But thank you for the offer.
It’s worth noting to spare a thought for most apprentice chefs who slave away in the hot kitchens for sometimes 60-70 hrs p/week. They are paid a pathetically low hourly rate to begin with BUT only get paid for a standard 38 hr week. Apparently it is law to pay apprentices by the hour including any overtime, but this is rarely the case. So i’m sure kitchen’s everywhere may be paying wait staff what they feel is an unfair hourly penalty rate, but they’re also most likely making big savings by underpaying and overworking their apprentice chefs!!
It is well overdue that this sector was provided a better framework to prevent owners exploiting staff. Chefs in particular receive crappy wages, for crappy work, in usually crappy and often unsafe conditions. That George would bemoan this is appalling, especially since his kitchen probably has turn over of kitchen hands “volunteering” to gain experience of working for George!
Agree 100% Anti-social hours should equal penalty rates, especially for casual workers.
I’d guess George was happy to receive his pay loading when he was an apprentice. We all know the pay is very low for struggling apprentices and trainees.
Matt, did you offer George a right of reply here? Though I guess he can respond just like I have.
Hi Denis,
I think Calombaris has plenty of ways to make his voice heard on this or any other issue, I don’t think he needs a ‘right of reply’ on this little blog!
While wages are obviously a concern of yours Matt, it’s interesting that Calombaris hints at other costs which aren’t really examined in pursuit of the theme of IR as The Big Story in 2012.
In the article I read (in non-News Ltd media), Calombaris hints at shifting costs in alcohol and other inputs to his business, including but not limited to wages. They should have been examined more closely rather than just zeroing in on wages. Yes, he could have really damaged his business had he gone too far into his supplier relationships, but I don’t think he does himself many favours with the journo focus on wages costs. If I were working for Calombaris I’d be looking for a more appreciative employer.
Hi Andrew, I didn’t notice that. Interesting. Similarly, the recent Productivity Commission review of the retail industry pointed out that retail rents are high here, much higher than in comparable countries, yet the media coverage focused on wages & labour productivity.
Thanks for your comments, everyone. Sorry I haven’t been able to respond to each of you. I will when I’m able. Cheers.
Was George paid Penalty Rayes when appearing on Masterchef and Junior Masterchef ? And did he raise the subject wioth Julia Gillard when she appeared as a guest on the latter ?
who ever is complaining about Penalty Rates you are a moron
seriously why would i work 6pm till 6 am without them Friday, sat ,sun night is mandatory in restaurants thats why we get extra try telling boss i need Friday off
some people only get 20 hrs a week
i get payed $20ph before Penalty Rates work every hour i can from thu – sun and i do OK
if there where no Penalty Rates weekend P/H id work day shift screw you go to
Mac,s buy a big mac
you could hire cheaper labor but as you say pay peanuts get a monkey
a tight ass boss always is first to blame workers , taxman ect for loss of profit usually they do this whilst driving $50,000+ company car letting family and friends eat for free showing off look im the big restaurant owner the only way past it is to screw the tax man share the if you get 150 before tax ask for 125 cash rather than 115 after tax
One word: bravo!
Can i name the big gold coast hotels that sign staff to minimum wage contracts,hours, time of day,day of the week,no meal breaks,no pay for extra hours worked on daily shifts,owe workers thousands in long service & super,sack them for some trumped up reason & just don’t pay the compulsory payments,take us to court is their stock answer,that’s pretty hard to do on $17 an hour,after you have been dudded for heaps.This george low life in this Forum must be from Canberra,where all the pigs that eat his crap, are politicians, public servants & other freeloaders with their snouts in the trough,at tax payers expense,I worked 3 Queens Birthdays in a row in Canberra,with no Degrees as such,but cleared over $700 for every one of them,we had them by the curlies, & they had to pay our entitlements,workers united we’ll never be DEFEATED,wasn’t MAXINE MC HUGH a great result,cheers you wankers in this forum.
Are meals in these so called “cheap” countries really cheap? You can not compare prices of goods unless you also compare wages.
I lived in South Korea for one year where the minimum wage is 4,580 won (about $4.50 per hour.)
The average meal at a small take away store is about $6.50. A big Mac meal is around $4.90 (over one hour of work for a minimum wage earner!!!!!)
This is bloody expensive, the minimum wage in Australia is around $15.50, yet a meal at a cheap take away joint is around $10.00 and a meal at McDonalds is $8.00.
If we were to compare “cheap” Korea with “expensive” Australia we must take wages into account. Imagine if you had to pay $15.50 for a meal at McDonalds?
Anther place that is mega expensive is the Philippines.
Awhile ago I calculated the price of a meal at McDonalds with the local wages. It came out that it would take a Filipino labourer 5 hours of work to be able to afford a meal in McDonalds.
Sure lower wages may reduce prices, but after living in these low wage countries I must say that prices do not go down in proportion to wages.
Thanks for the detailed post. Appreciate it.
take away my penalty rates and ill spit on your food
penalty rates are fair if hes not making money its his fault seriously change the menu or give Gordan Ramsey a call i could just imagine that
id pay to see Gordan Ramsey scream at George Calombaris
try offering value for money sundays or what ever it takes
i poses if we use George Calombaris solution we can fix the health system to by screwing doctors and nurses (sarcasm) or public transport
Chefs should stay in the kitchen
Hi There,
I disagree with your article, because it is not correct. I enjoy reading your comments, but I do stress to you the vast gap between the reality of what actually happens in the day to day running of a business like a restaurant, and the theory of your presentation. I would respectfully present to you that in separating the components of your argument into small chunks like that can be seen as pedantic and petty by those of us who work in this industry. There are also some omissions in your argument that do not reflect the Award properly, once the loadings are taken into account. For a true representation, you would need to include the loadings, as well as the administration costs incurred executing these details. (This is not taking into account the cubersome reporting necessary for equal opportunity and the like) I think most of us who work in this industry are extremely passionate about what we do, and this is our profession. It is rather demoralising to see someone decontextualising our lives into a series of numbers and figures that have no reflection of the physical and hard realities we face as employers.
For example, if we employ more than 100 people, we pay 4.5% “payroll tax”. I am still mystified as to why I am being taxed for employing people. Since when is providing jobs a crime worth taxing? Smoking? Sure, Gambling? yep, get in there and tax these things, as they kill and destroy lives. Last time I looked, employment is a good thing.
In addition, every salary induces a further 19.5% in taxes, surcharges and super. So a %50k wage is actually $60K. Wirh admin costs, it hits 20%.
In addition, I must point out that our wage cost peak at a scratch under 50% of total revenue. This is an untenable number in ANY business. It is unsustainable. We have considered closing on the expensive days, but in order to provide the service expected of us, we open on the surcharcge days, and consider them “loss leader” days, where we are “treading water” for little or no gain.
I am an employer of about two hundred people, in two of the most respected restaurants in the country. I am proud of our achievements, and I am proud to say that we strive to be an employer of choice. We spend 4% of revenue on education and training for all executive and staff. With the high revenue generated per year, that is a good slice of money, and it is used to great benefit for our executive and staff, and in the long run, for us and for the industry as a whole.
I might also point out that we work on a “ten day week’. This is COMPLETELY illegal and breaks the rules of the Award, but it suits our staff fine, as they work four days in a row, then get three days off in a row. I could be sued for it, but my staff are EXTREMELY happy with this arrangement, as they can actually have a life outside of their profession. As a result, we have extremely low accident rates, and extremely low sickness rates. We do not pay the penalties and all that, by agreement with our staff, and they prefer this arrangement, as they earn good money, AND have a life outside of work that is rewarding.
In other words, it is all about balance. This is not a negotiable factor with the govt, or the unions.
So I am breaking the law, but my model woks better than the Award rates and guidelines.
I must point out here, and this is extremely important, that I could not provide this quality of life ifor our executives and staff if we paid overtimes and penalties.
And some of these penalties are not too smart. For example, the initial Award had us paying overtime to waiters who worked after 7pm on any given day. Perhaps I should point out that a waiter’ standard hours are during dinner time! We presented this to Gillard, and she relented by saying that we should only pay loadings after 10pm. The logic behind this is that waiters should be at home in bed by 10pm at night, as no one would be in a restaurnt at ten at night.
There is a very important factor not included in this data provided and presented by the writer of this blog. This is that Australia has a very small hospitality industry, and we all know each other, and what goes around comes around. I am proud to say that the lion’s share af this country’s hospitality professionals have passed through our doors, and they return!
Another factor included in this discussion is two points that need to be laid out clearly.
1. The average bottom line profit percentafe for the hospitality industry is a svratch over 3%. This is less than CPI. If a restaurant is operating at 5%, people think this is a winner. i will not name names, but I know extremely well known restaurants, with high profile chefs, such as Colambaris, who are producing less than 5% profit on their efforts. To contextualise this, if you took the same revenue and put the money in the bank, a business person can earn more by just accruing interest with the money sitting in the bank.
People in this industry should be paid good money for the work they do, I don’t argue that one bit. What I disagree with is the way the Accord has been written. The hours indiginous to the hospitality industry are nights and weekends. These should not be penalty rates, but a normal part of the workaday week for the hospitality industry, because this is what it is in real life and practice. Please note, the benefit of this is that the hospitality worker can enjoy their time off while everyone else in in the office! I have always seen this as a personal benefit. Especially when you like the beach to yourself!
If a person wants a weekend off, they can apply for it, and negotiate it with their manager.
Finally, I would like to point out that I employ too many peo[;e so I can provide the best service possible. This is to the detriment of my business’ nbottom line in a considerable manner. We provide a great experience, and I would like to employ more people, but I cannot, it is just too expensive.
To put it in a nutshell, how would you feel if you went to Coles and found that a 450gm cut of beef cost $80? You would not be too happy, and you would not buy too many of them. I think this is the best analogy for the state of our hospitality wage system at present.
[...] Penalty rate claims hard to swallow: "To believe that Mr Calombaris would open his restaurants on Sundays only to have them run at a loss is to believe that he’s running some sort of altruistic quasi-charity, an impression he attempts to give by suggesting that he opens on Sundays for reasons of ‘tourism’." Matt Cowgill. [...]
Great work here. Really well done. I’m spreading it far and wide!
Ok, I’m not going to weigh in on the Merits of GC’s comments or this Blog’s. I’d like to clear up a misnomer made in the comments earlier in regards to paying staff and conditions of employment.
Superannuation paid on Weekend penalties and shift loading was stated earlier that it it not necessary. A section of the SGR(Super Garantee Ruling) was quoted where Overtime does not attract Super. This is true. However, Shift loading and weekend penalties are not Overtime.
Overtime is over and above a certain amount of hours per week or Day depending on the Award or agreement. Not knowing the Hospitality awards I do not know these amounts normally around 38 hours a week or 8-10 hours in a day, sometimes both.
Ok here is an excerpt from the latest Super Ruling.
221.
A payment in addition to the ordinary rate of pay made to a shift worker by reason of compensation for working outside the span of hours which is designated for day workers, for example, early morning, late at night, weekends or public holidays, is a shift-loading. Such payments are therefore included in the definition of OTE in subsection 6(1).
OTE means Ordinary Time Earnings and Super is paid on all OTE.
In a nutshell I’m just showing that Super is payable on the weekend and Public Holiday Work.
With a %150 loading on Public Holiday plus %9 Super
on a $17 hour rate you are looking at $46+ an hour add on %25 of the $17 loading for a casual you are looking at $50+.
Lets Say Sundays are a %75 Loading you are looking at $32.42 well short of the $40 GC mentioned. However, in our industry which is unrelated we also pay a 4.5% Workers Comp Levy. There i also Payroll Tax for each state and then Admin costs e.g. Payroll and HR costs Training per Employee. I suspect it is well above $40 per hour on a Sunday. Most likely $60 on a public holiday.
Hope that clears some facts up for you in hiring and employiing staff. And if anyone out there is not paying Super on the loading for shifts and weekend work you are short paying your staff and are liable to backpays and fines. Look into it.
I’ve been a payroller for 16 years and am confident in my info, though this stuff can change and has over the years in regards to Super. So if anyone can point me to a ruling post 2009 re this please do.
Footnote:
ATO references
NO:
2008/7486
ISSN:
1038-7463
ATOlaw topic:
Superannuation Guarantee Charge
Document:
SGR2009-002.pdf
Pretty Dry Huh!
Personally I like the Idea for a surcharge. It means if you want a meal on a Sunday or Public Holiday you can pay for it. I would have thought the market would dictate prices and therefore Profit margins. A premium product means a premium profit maybe. Though it is the black market of employee payments that some operators indulge in with there employees that legitimate employers need to compete against and that would make it hard. I was under the impression that the cash in hand payments for the Restuarant industry was on the wain and only practiced by a rare few due to sricter policing and stronger and more innovative survelliance methods by the ATO. What am i saying, I’m a bit lost here, i would have thought that it was like most service businesses the market dictates how much money you make. You compete against Joe Blogg down the road who has to employ people and has costs with the same conditions as you. Maybe you can convince the customers to pay more because you make a better product or have your head on the Telly.
a few things- there’s no way (i dont reckon) that you could pull the ‘holiday surcharge’ gimmick (like taxis do), and expect customers to turnup en masse to pay…what, 5%,15%, 25% extra from the exact same menu from the day before and after.. for the same exact food? also, ive worked in this industry for a while (25yrs- as up to level 3- on the award) and i cant remember having ever been paid anything near $40/hr, certainly not $60/hr ever for anything. i wonder where some people get their info (not u) in this discussion..not to mention the absolutely miniscule number of public holidays that a) exist..b) fall on weekends requiring a double-up on wages. and whats with ‘all these employers’ whineing about their lot in life…purleese, dont get me started..for example..whats with the disgustingly vulgar markups on wine that ; a) has been open for 5-7days already (for ‘by the glass’) b) the staff have neither tasted, nor have they any clue what it is c) it has a stelvin (screwcap) and isnt decanted nor served at the right temp in anything resembling decent glasses- yet there is a 100% to 250% markup, where a bottle of $25 chardonnay now costs $70-( more than the 28 day old (aged) steak you just picked from the menu) d) you continually have to wait to ‘get a drink’ bcos the waiter ‘has to’ pour the wine and its busy!
to be clear, a large-ish % of restaurants are overpriced, understaffed and serve rubbish..yet somehow think they deserve michelin status and that they cant/shouldnt fail- nor pay their staff adequately! time for a reassessment of the hospitality industry in the same way as wine- THERE ARE TOO MANY WANNABEE’S THAT HAVE TO GO before equulibrium is reached. rant completed, thankyou for your time.
Just quickly, no the employee will not get $40 or $60 directly. I was putting together the cost of the employee per hour for the restuarant.
I was also using the wrong loading rates as i do not know the Hospitality loading rates I do payroll in different industries.
I think it is possible for GC to claim it will cost him $40 an hour for employees on Sundays. just clearing this up. retail can be similar and I’m sure Coles won’t start charging more on Sunday though.
FYI super will also increase over the coming years to %12.5 you’ll never pay off the Pasta Extruder GC.
Why should George’s employees have to take a pay cut and his customers pay more because he wants to pay off his shiny machine quicker?
Being a competent businessman (I seriously question his acumen) I assume he’ll also claim his noodle extruder as tax deductible item yeh? Makes paying off his shiny new machine a pathetic excuse.
If he can’t pay his staff then he really shouldn’t be in the business of employing people. There are so many restaurants around the place charging less than George’s fancy place, selling good food at half the price and making money, if he can’t make a proft without exploiting people then he shouldn’t be in business. He’s competing with people are paying the same award wages so why aren’t these places going bust? Let someone else take over who knows how to run a business.
FYI all re the surcharge issue, a comment on a Facebook thread discussing this post might be of interest:
“Yes you can charge a surcharge, but the menu on that day must show prices inclusive of the surcharge (no asterisk at the bottom saying x% applies on certain days). As your consumer lawyer I advise you to read the ACCC’s surcharge infosheet: http://t.co/LBeYsjL “
What I find interesting is that GC didn’t bother to whimper at all when Ted Baillieu scrapped Brumby’s payroll tax cuts.
Apparently paying more money to a Liberal Goverment is ok but paying workers their legal entitlements isn’t.
im the 999, 999th visitor here … woohoooooo
I have media and corporate communications background and when I saw the very first article about penalty rates, loads of disagreements over GC’s comment innit. But look! if GC thinks its uneconomical to open restaurants then it is not… for him.
We all have own perspectives right ?? its his restaurants and business after all. He probably thinks more people to come on holidays and weekends, the income might get way higher but the tax also gets higher which is probably the reason why he said there wont be much profit to do it.
But I get it why people react way much over his statements. I was surprised too to just find out GC stated “It’s not like they (staff) have had to go to uni for 15 years. Wages on public holidays and weekends greatly exceed the opportunity for profit.”
It sounds like he underestimates his staffs or something. How could someone ever spill that out ? Because I’m sure everyone knows that without your staff, cleaning service people, waiters etc… You can’t run a bloody restaurant or any business you want to run. You need people to help you. Despite of all economics and marketing comments you all have been said here, one thing that GC forgotten is you have to prioritizing your employees’ prosperity and safety instead of his own business. You and your staff are synchronized to each other after all. Its like a car without a full 4 wheels, it can’t go. Employees also represent what your company is all about.
I also just read Herald Sun (http://tinyurl.com/7kgyfjm ) and it says that GC doesn’t wanna talk about it anymore. I think he needs to clarify everything because it is about human, a sensitive thing to talk about I think. However, bad news is good news for the media. He needs to clarify so people won’t speculate even worse than now about this because sometimes if you keep quite, it doesn’t always work at all. Hopefully he’s aware with that?
.. we assume from the grammar presented in your offering that you have a secretary- onto whom the weight of such trifles is normally loaded- who does all the ‘writing’ for you? [what business is it again..so i can avoid it!]
I mean open restaurants on weekends and public holidays
I mean for him to open restaurants on weekend and public holidays.
I’ve done some calculations on the cost of penalty rates on Saturday, Sunday and Public Holidays.
There’s a heavy impact on restaurants, that have wages as a much higher proportion of costs than pubs and clubs. Most just don’t open on Sunday, and even more close on a Public Holiday. Don’t forget pubs and clubs often have poker machine profits – these make penalty rates much easier to absorb.
Please watch the video and you’re welcome to download the spreadsheet to do your own sums http://www.profitablehospitality.com/public/Effect-of-Weekend-Penalty-Wage-Rates-in-Australia.cfm
[...] comments regarding it being uneconomical for him to open his restaurants on Sundays here. The comments are even more entertaining: one of my favourites is by Sash Ivanov: “Take away [...]
It makes me sick when a multi millionaire says he needs to reduce the wages of some of the lowest paid people in the country. Why? So he can increase his profit. Who died and made him king? His bill when dining out is probably more than he pays his staff for a whole weeks work. Sorry George, I think you are great on Master Chef but these statements are a real eye opener. Obviously you believe you’re worth a whole lot more than the rest of us.
This is an awesome post. This should be on the Sydney morning herald. Have you thought of submitting it to be published in the national times?
[...] George Calombaris may not know about the calculation of penalty rates for his waitstaff, but he does know how to run a good quality restaurant. PM24, Hellenic Republic, The Press Club [...]
[...] and IR folk alike are chatting about Calombaris’s comments. Indeed, economist and trade unionist Matt Cowgill writes far better than I on the subject. But to paraphrase Matt, perhaps before a high-profile restaurateur makes such public statements, [...]