Compliance spotlight: the Darwin hospitality industry under scrutiny

Over the course of three days, two regulators uncovered serious workplace law violations across more than 30 Darwin-based food and hospitality businesses. These breaches involved exploiting workers, dodging tax obligations, and neglecting superannuation responsibilities.

The Fair Work Ombudsman (FWO) and the Australian Taxation Office (ATO) worked together as a joint taskforce, conducting surprise inspections at food outlets, restaurants, and cafés to investigate suspected shadow economy activities, including worker exploitation and tax evasion.

Here, we delve into Operation Sentinel and what it entailed, explain the serious workplace law contraventions that were uncovered, and why this joint-agency operation serves as a timely warning for businesses across Australia.

Surprise visits uncover shadow economy activities

From 26 August 2025 to 28 August 2025, the FWO and the ATO commenced a joint series of surprise inspections following the receipt of valuable information and tip-offs regarding businesses failing to meet their employer obligations. These actions were part of Operation Sentinel, a collaborative effort targeting shadow economy practices such as worker exploitation and tax evasion. Over the three days, the two regulators inspected more than 30 businesses, including fast-food outlets, restaurants, and cafés.

The investigations uncovered various contraventions of workplace laws, such as:

• underpayment of wages;
• non-payment of superannuation;
• poor and improper record-keeping practices, including non-complaint pay slips;
• cash-in-hand payments to avoid legal obligations; and
• alcohol excise evasion.

Think you’re dodging the law? The FWO knows more than you think

Business operators who think their underhanded actions go unnoticed might want to think again. The data-driven approach utilised by regulators, including the FWO and ATO, enables them to detect fraudulent activity with incredible precision. The surprise inspections conducted during this operation found several instances of employers failing to pay the correct wages, neglecting to pay superannuation, not providing proper pay slips to employees, and underreporting of income to avoid taxes.

Fair Work Ombudsman Anna Booth stated that improving compliance in industries like fast food, restaurants, and cafés is a significant focus, given the high number of younger workers and visa holders in these businesses.

The warning for every business owner: “We will find out about it and take action”

The message from both the ATO and the FWO is crystal clear for businesses skirting their responsibilities. “We will find out about it and take action,” Tony Goding, ATO Assistant Commissioner, warned. These inspections serve as a stark reminder of the importance of compliance. Non-compliant businesses can face serious consequences, including severe financial penalties, back payments to employees, and irreparable reputational damage.

From hospitality to manufacturing, Citation HR can help your business achieve and maintain compliance

Navigating complex HR obligations can be daunting regardless of the industry your business operates in, but with Citation HR’s expert-backed services, staying compliant has never been easier. Whether you’re managing a full HR team or just starting, our award-winning HR solutions, including 24/7 HR Advice Line, HR Compliance Audits, and industry-leading HR software, are designed to support your business every step of the way.

Not a Citation HR client? To learn more about how Citation HR can support your business and streamline its people management practices, reach out to our friendly team for a confidential chat here.