Banning businesses from including penalty rates in base salaries, a plan by the Federal Government, will be detrimental to lifting labour productivity, the Australian Retailers Association (ARA) argues. 

In a statement, ARA CEO Chris Rodwell said the proposed ‘salary absorption’ model, as part of the ARA’s application to vary the General Retail Industry Award (GRIA), gave retail managers a choice to opt into an annualised salary, providing greater income and stability through the provision of a 35 per cent increase to base salary. 

“This application is absolutely consistent with the government’s stated intent when it initiated the Fair Work Commission’s (FWC) independent review of Awards,” said Rodwell. 

“Contrary to misinformed claims, it never sought to remove penalty rates from the award,” he said. 

“That the Federal Government has decided to intervene in the FWC’s independent determination around penalty rate arrangements is troubling. 

“It also overlooks that salary arrangements like this exist in most industries – in fact, the ARA proposal has more safeguards,” said Rodwell. 

Rodwell said the GRIA fell short in providing workplace flexibility and job security, and was confusing for both large and small-scale employers to comprehend. 

“The decision also runs contrary to the government’s stated ambitions to lift productivity in this term of government, dampening expectations and putting the conversation on labour productivity in reverse,” said Rodwell. 

“That’s a serious problem given Australia’s industrial relations environment fundamentally fails to support business investment and entrepreneurship.”

Rodwell said that although enterprise bargaining aligned with union objectives of expanding membership, it was not conducive to achieving productivity or flexibility. 

“Instead, it imposes additional costs, complexity and administrative pressures, further straining employers already navigating significant challenges in today’s economic climate,” said Rodwell.