Navigating the Restaurant Industry Award: A Plain-English Guide for Café and Restaurant Owners

For many café and restaurant owners, the Restaurant Industry Award 2020 (RIA) is a source of genuine anxiety. It's long, it's detailed, and getting it wrong creates real financial exposure. For a complete view of your hospitality compliance obligations, see our dedicated checklist. But the award doesn't have to be opaque. Once you understand the structure, the key entitlements become much more manageable.

This guide is written for café and restaurant owners who want to understand their obligations under the RIA without having to read the whole document themselves.

Who Is Covered by the Restaurant Industry Award?

The Restaurant Industry Award 2020 covers employees working in:

• Restaurants, cafes, and coffee shops
• Catering businesses where the primary activity is food/beverage preparation for immediate on-premises consumption
• Takeaway food businesses (above the Fast Food industry threshold)

If you run a pub or hotel, you're more likely covered by the Hospitality Industry (General) Award 2020 (HIGA). If you operate a fast food restaurant (pizza chains, burger franchises, etc.), the Fast Food Industry Award may apply instead. Use the Fair Work Commission's Award Finder to confirm which award covers your employees.

The Classification Structure

The RIA uses a classification system with levels from Level 1 to Level 6, based on skills, duties, and experience:

Level 1: Entry-level employee with no relevant experience or qualifications. Typically in their first three months.

Level 2: Employee who has completed a training period, can perform a range of tasks, and demonstrates basic competency. Most café and restaurant employees sit at Level 2 after induction.

Level 3: Employee with additional skills — may include certificate-level training, specialty duties (e.g., barista certification, wine service), or supervisory responsibilities over Level 1/2 staff.

Level 4: Experienced employee with more complex duties, including supervision of staff and training of newer employees.

Level 5: Coordinator or supervisor role — significant supervisory responsibilities, advanced skills.

Level 6: Management level — responsible for the overall operation of the venue or significant components of it.

Minimum pay rates for each level are reviewed and updated every 1 July. Always check the current pay guide on the FWC website — the rates in this article may have changed since publication.

Casual vs Permanent: The Key Differences

Casual Employees

Casual employees must be paid the casual loading of 25% on top of the ordinary base rate for their classification, in exchange for not having access to paid leave entitlements. Key rules:

• The casual loading applies to every hour worked — it cannot be applied selectively or withheld
• Casuals accrue no annual leave, personal/carer's leave, or parental leave
• Casuals do accrue long service leave under state legislation (rules vary by state)
• Casuals who work on a regular and systematic basis for 12 months can request conversion to permanent employment

Permanent (Full-Time and Part-Time) Employees

Permanent employees accrue paid leave entitlements:

• Annual leave: 4 weeks per year (pro-rated for part-time)
• Personal/carer's leave: 10 days per year (pro-rated for part-time)
• Community service leave (e.g., jury duty, emergency management)
• Parental leave (after 12 months of employment)

Part-time employees have their ordinary hours agreed in writing — they cannot simply be rostered for different hours each week without overtime potentially applying.

Understanding Penalty Rates Under the RIA

Penalty rates are the most common source of payroll errors in the hospitality sector. Under the Restaurant Industry Award, the key penalty rates are:

Saturday Work

Permanent employees working on Saturday receive a penalty rate — typically 125% of the ordinary rate for the hours worked on Saturday. Casual employees working on Saturday receive the casual loading on top of the ordinary rate.

Important: Check the current RIA pay guide for the exact Saturday rate for each classification level and employment type, as rates are updated annually.

Sunday Work

Sunday rates are higher than Saturday rates:

• Permanent employees: typically 150% of the ordinary rate
• Casual employees: typically 175% of the ordinary rate

Sunday work is a significant cost driver for café and restaurant businesses. Incorrect Sunday rates are among the most common and most financially significant underpayment errors. With wage theft now a criminal offence, getting Sunday rates right is critical.

Public Holidays

Public holiday rates under the RIA are among the highest in the awards system:

• Permanent employees: typically 225% of the ordinary rate
• Casual employees: typically 250% of the ordinary rate

If an employee is asked to work on a public holiday, they must be paid at the applicable rate. Permanent employees who are not required to work on a public holiday are entitled to the day off with pay.

Note that the public holiday rate applies to the specific public holiday designated in your state or territory. Regional public holidays (e.g., Melbourne Cup Day in metropolitan Melbourne) are public holidays in the relevant area.

Overtime

Overtime provisions under the RIA apply when an employee works beyond their ordinary hours:

For full-time employees: overtime applies after 38 ordinary hours per week (or after the ordinary daily hours in some circumstances — check the award clause).

For part-time employees: this is where many employers get confused. Overtime may apply after an employee works beyond their agreed ordinary hours — which for a part-time employee is likely fewer than 38 hours. If a part-time employee is rostered for 20 hours but ends up working 30 hours in a week, overtime may apply to some of those additional hours.

Overtime rates are typically:

• First two or three hours of overtime: 150%
• Thereafter: 200%

Allowances Under the RIA

The RIA provides for various allowances. The most relevant for café and restaurant businesses are:

Meal allowance: When an employee is required to work overtime and has not been given prior notice, and works for more than one hour beyond the ordinary finishing time, they are entitled to a meal allowance (the dollar amount is specified in the award schedule and updated annually).

Split shift allowance: When an employee works a split shift (two separate periods of work in a day with a break of more than one hour between them), an allowance applies.

Uniform/laundry allowance: If the employer requires employees to wear a specific uniform and does not provide or launder it, a laundry allowance applies.

Vehicle allowance: If an employee is required to use their own vehicle for work purposes, an allowance applies based on the ATO cents-per-kilometre rate.

These allowances are not discretionary — they are minimum entitlements under the award.

Annualised Wages and Salaries

The RIA allows employers to pay some employees an annualised salary that is intended to cover all award entitlements — base rate, penalties, overtime, and allowances. This can simplify payroll for employees whose hours are relatively predictable.

However, annualised salary arrangements under the RIA carry strict compliance requirements:

1. The arrangement must be documented — with the employee's agreement in writing, setting out the annualised salary amount and the entitlements it is intended to satisfy.

2. The salary must be sufficient — the "better off overall test" applies. The employee must receive at least as much under the annualised salary as they would under the award for the hours they actually work.

3. An annual reconciliation is mandatory — at the end of each 12-month period (or when the arrangement ends), you must compare the salary paid against the award entitlements the employee would have earned based on their actual hours. If the award entitlements exceed the salary, you must pay the difference within the next pay period.

4. Records of actual hours are required — to conduct the reconciliation, you need records of actual start/finish times.

The reconciliation requirement catches many businesses off guard. If your employee's hours change — more Sundays, more public holidays than assumed — the annualised salary may fall short, and you're required to make up the difference.

Leave Loading

One of the most frequently missed entitlements in the café and restaurant sector is annual leave loading.

Under the RIA (as with most modern awards), permanent employees are entitled to annual leave loading of 17.5% on top of their ordinary pay when they take annual leave. So when an employee takes a week's leave, they should receive their ordinary weekly pay plus 17.5%.

This loading is easy to overlook, especially in payroll systems where leave is processed automatically without the loading being added. Check your payroll system specifically for this entitlement.

The Annual Wage Review

Every year on 1 July, the Fair Work Commission's Annual Wage Review takes effect, increasing minimum award wages. You must update your payroll to reflect the new rates from that date.

Failure to apply the new rates from 1 July each year results in underpayment from that date onwards. If your employees have been receiving the old rate for months before you notice, you have a backpay liability for the difference.

Keeping Records

Under the Fair Work Regulations, you must maintain employment records for 7 years, including:

• Employment classification and dates
• For casual employees: the start and end time of each engagement
• For all employees: actual hours worked each day (if receiving overtime or shift penalties)
• Pay rates, gross and net amounts, and all deductions
• Leave balances and leave taken
• Super contributions

How Reguladar Helps

Tracking award rate updates, annualised salary reconciliation deadlines, leave loading compliance, and the full range of RIA obligations is exactly the kind of ongoing compliance management that Reguladar handles for café and restaurant owners.

Reguladar gives you a single compliance dashboard showing all your employment, tax, WHS, and licensing obligations in one place — with alerts before deadlines, not after them.

Start your free compliance check at Reguladar →