Short-stack pay at Vic Pancake Parlour

Popular Melbourne restaurant chain The Pancake Parlour has agreed to reimburse hundreds of staff about $22,000 in total after a mistake with Christmas Day pay.

The restaurant operator mistakenly believed it could declare Christmas Day a "shut-down", rather than pay its permanent employees for a day off on a public holiday, Fair Work Ombudsman Natalie James said on Thursday.

The chain, which operates 12 restaurants across Melbourne, avoided enforcement action after co-operating with Fair Work.

Fair Work didn't name The Pancake Parlour, but AAP confirmed the chain was the one in question.

The 246 employees were reimbursed $21,700, with the largest individual underpayment totalling $181.

Restaurants affected included those in Melbourne's CBD, Werribee, Maribyrnong, Preston, Ringwood, Glen Waverley, Malvern East, Narre Warren and Dandenong.

Employees at the Doncaster restaurant were not affected as that restaurant was open on Christmas Day.

Ms James said Fair Work inspectors believe the restaurant made a genuine error, adding the case highlights the importance that employers fully understand wage rates.

"It's important that employers who are unsure about their obligations contact the Fair Work Ombudsman for advice and information," she said in a statement.

A Pancake Parlour spokeswoman told AAP the underpayment error was made shortly after implementing a new industry award and rectified as soon as being brought to management's attention.