An investigation by the Fair Work Ombudsman published today reveals workers in restaurants, cafes and catering companies throughout Australia have been underpaid over $1.2 million.

Spot checks by the FWO found a total of 456 businesses were found to have short-changed 2752 employees with one worker owed more than $40,000.

The FWO asked 1066 employers to supply their 2012-13 time and wages records for assessment and found only 42% were fully compliant, with a total of 879 errors identified.

Almost 20% of the mistakes related to weekend penalty rates.

“The majority of errors related to wage entitlements,” Fair Work Ombudsman Natalie James said in a statement.

“Employers were paying flat rates for all hours worked, which was often not enough to cover penalties, loadings and overtime.”

James said the contravention rate showed an ongoing need for intervention by the FWO in the food services sector.

“According to recent data, this is an industry with a vulnerable workforce comprised largely of young employees and low-skilled employees,” she said.

But Restaurant and Catering Association chief executive John Hart told SmartCompany the breaches recorded were actually a “very small amount” averaging $16.77 a week.

“What is really difficult about this is the audit was done two years ago when we were in a transition phase to new awards, where there were 36 different rate scales,” he says.

“It is very unsurprising to see breaches in an audit that was undertaken at that time, it was just a nightmare.”

Hart also says the large number of people employed in the hospitality industry is also a factor.

“When you have half a million people employed in a sector it’s not surprising you have that number of breaches,” he says.

“It’s an industry going through transition and through employment growth at unprecedented levels.”

Hart says the FWO is trying to “create a storm” with the investigation.

“What it does do is demonstrate the absolute complexity of this system,” he says.

“We were dealing with 36 rate scales and across those rate scales 17 different rates an individual might be paid depending on whether it was Saturday, Sunday, evening or late night”

Hart says compliance with award rates has increased in the industry but would improve further with a simplified system.

“Now if you look up the award you can pay the rate in the award, two years ago if you did that you would have been breached because you weren’t paying the transition rate,” he says.

“There would be a higher rate of compliance now but we could be doing better by making the system simpler.”

The Restaurant and Catering Association has been pushing for a move to two penalty rates: a weekend rate and a weekly rate.