PENALTY RATE TWEAK MORE POLITICS THAN FAIR WORK

In Payroll & Employment by Clyde Mooney

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After more than a year’s deliberation, the Fair Work Commission yesterday announced a mild and largely unpopular reduction to penalty rates for Sundays and public holidays.

The rules dictating workers get loadings for working weekends and holidays have been in place for nearly a century, through dramatic changes to the workforce and social expectations.

The Productivity Commission (PC) reviewed the workplace relations system in 2015 and recommended Sunday rates be reviewed, saying they were “anachronistic in the context of changing consumer preferences”.

This is of particular relevance to hospitality, given the length and lateness of hours often expected by patrons enjoying their leisure time. Australia’s increasing reliance on tourism finds licensed venues encouraged to be open early ‘til late every day.

The PC suggested that “Rates should be aligned with those on Saturday, creating a weekend rate for each of the relevant industries.”

The Fair Work Commission has been assessing the recommendations since they were handed down, and received many submissions from the general public, consumer and industry groups. Its key findings were released yesterday. The highlights for the hospitality sector were:

Sundays

  • the loading for full- and part-time workers to be reduced from 175 to 150 per cent. No change for casuals

Public Holidays

  • the loading for full- and part-time workers to be reduced from 250 to 225 per cent. The loading for casuals to be reduced from 275 to 250 per cent

Current and new Saturday, Sunday and holiday rates for Level 1 hospitality worker

Saturday penalty rates were also reviewed, but the Commission determined to not alter them.

A draft inquiry report by the PC published in mid-2015 noted that Australia’s Awards system gave birth to the concept of Minimum Wage: “a sum sufficient for a working man to support his family and settled by a Court”. Correspondingly, penalty rates were established due to the familial strain caused by working irregular hours, instead of spending them with family.

This context was examined by the FWC as part of its determination.

“Sunday work has a higher level of disutility, but much less than in times past,” reported FWC President, Iain Ross.

The arguments in favour of reducing loadings centred on businesses being unable to financially justify long opening hours and full staff on Sundays and holidays. Many small business owners report having to work themselves or not being able to open at all on these days, lest they actually lose money on the day after wages.

The Australian Hotels Association (AHA) national office and Tourism Accommodation Australia (TAA) led submissions to the FWC on behalf of the hotel sector, and report that although the decision may have fallen short in the eyes of many, their primary goal to encourage updating the system has made some progress.

“From the industry point of view we haven’t got everything we want,” relayed AHA CEO Stephen Ferguson. “Often neither side gets everything they want – that is the nature of the Fair Work Commission.”

“For us the objective was to modernise the award; not to abolish penalty rates, but to make it relevant to the 21st century as a means of employing more Australians.

“We are currently experiencing the largest ever expansion of accommodation hotels across the country, so it is imperative that workplace reforms support this growth phase.”

Brad Woods, CEO of the AHA WA, the state most impacted by the fall in the resource boom and more reliant on labour-intensive food & bev due to the absence of gaming, was similarly pragmatic about the modest changes.

“The decision does not go far enough to deliver changes that will see significant employment growth opportunities, [but] the changes will encourage our members to offer more shifts for workers and longer hours for customers.”

It is not yet clear when and how all the changes to various Awards will take effect. The PC recommended they occur at the start of July each year for at least two years, in a series of annual adjustments.

The new Public holiday penalty rates in hospitality and retail Awards will come into effect 1 July, 2017.