A luxury hotel group which reportedly exploited visa workers has allegedly threatened its staff not to speak out about the scandal.

An investigation by Australian paper the Herald found that the Escarpment Group of Blue Mountains hotels has been clawing back staff's wages in the form of overpriced accommodation and unpaid overtime, leaving them with around A$300 a week.

The Department of Home Affairs and the Fair Work Ombudsman have confirmed they are investigating the hotel group in light of the Herald's findings, which found that staff were being charged as much as A$480 a week for half of a small bedroom which they shared with a colleague.

Staff were reportedly lured to the hotel by the promise of training and a sponsored visa. Those who requested to move out and find their own accommodation were threatened with the cancellation of their internship contract and their visas.

Speaking to the Herald, Arindam Biswas said staff at the Hydro Majestic hotel had been threatened with legal action and fines if they spoke to the media. Biswas, from Kolkata, India, was a desk clerk at the Majestic until last month.

"I am concerned about the staff because they are trying to counter-sue them for revealing anything else to the media," said Biswas. "The management has said the staff have signed a contract that says they cannot speak to the media."

The Escarpment group has denied all allegations of exploitation or underpayment. It claimed to be co-operating with the Department of Home Affairs and the Fair Work Ombudsman's investigation, "and believes that it has acted in accordance with the applicable industrial laws."

Since publishing the investigation, the Herald has received at least 30 complaints from former and current staff, confirming that they were asked to sign false time sheets showing they worked 38 hours a week when their hand-written time sheets show they actually worked closer to 50.

The Escarpment Group has bought numerous properties nearby its hotels, and charges employees A$250 a week for accommodation without food, or A$480 with meals provided.