Penalty rate cut for hospitality


Money, dollar, notes,pay, wagesIn a major decision that has potential implications for the retail industry, the Fair Work Commission has scaled back penalty rates for employees in the restaurant and catering sector.

In a split decision, three commissioners agreed to reduce the penalty rates for casual employees on Sundays from 75 per cent to 50 per cent, accepting industry arguments that the level of penalty rates is crucial to job retention and growth in the sector.

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Two commissioners opposed the reduction in the Sunday penalty rates and the union movement is adamant that it will fight the decision and vigorously defend any further attempts by employers in other industry sectors to extend the decision.

The Australian Retailers Association (ARA), the National Retail Association (NRA), and Master Grocers Association (MGA) have all been campaigning to reduce penalty rates in the retail industry, claiming that many retailers are required by leases to trade on Sundays but lose money because of staffing costs.

The associations claim that employment growth in the retail industry has been impacted by high penalty rates, a key issue that was pursued by Restaurant and Catering Australia in its successful application for a reduction in the rate for the hospitality industry.

Changes to penalty rates was one of the key issues that ARA executive director, Russell Zimmerman, raised with the Coalition Government last year.

“The current situation on penalty rates has turned into a bad joke with Sunday rates being gradually increased to double time, with many retailers simply unable to afford to open on Sundays,” Zimmerman told the Government.

“The ARA looks forward to the new Government undertaking needed reform with the Fair Work Commission to allow sensible and evidence-based arguments brought forward by the business community to see the light of day on penalty rates.

“If we don’t have some movement soon, more Australian retail businesses will have no choice but to close down.

“Retailers have been hit by rising superannuation costs, increases to the minimum wage, increases in penalty rates through the Labor inspired modern award and increased junior wage rates,” Zimmerman said.

In February, the Federal Government indicated that penalty rates should be reviewed as part of a broader evaluation of modern awards and the operation of the Fair Work Act.

The union movement claims the majority of Australians ‘overwhelmingly oppose’ the moves by the retail industry associations to have penalty rates reduced on Sundays, and regards the hospitality decision as a major setback, even though it only cut wage costs for casual staff.

The Fair Work Commission has retained a 50 per cent loading on wages for employees on Sundays compared with a 25 per cent loading on Saturdays.

Restaurant and Catering Australia and the retail industry associations pursuing a similar claim for reduced penalty rates are arguing for the same 25 per cent loading across both Saturdays and Sundays.

Trevor Evans, CEO of the NRA, said retailers are not calling for the complete abolition of penalty rates, but believe the level and times when they are payable should be open for discussion, as there have been instances where retail and hospitality businesses have been forced to close their doors on weekends because of the high costs of penalty rates.

Evans said the NRA supports a fair and flexible workplace relations system, where employers and employees are free to reach arrangements that suit their mutual needs and individual circumstances.

“Retailers operate in an increasingly international marketplace where overseas-based internet stores are able to operate around the clock without the additional cost of penalty rates for their workers.

“At the same time, Australians are demanding more flexible opening hours and the ability to shop at a time that suits their lifestyles.

“Taken together, these factors mean retailers must be more flexible in the way that they deliver services to their customers, and in turn that means they must have more flexible workplace arrangements,” Evans said.

Zimmerman supports the need for the minimum safety net in the retail industry to include compensation for work performed on weekends and public holidays.

“The ARA has never advocated for the complete abolishment of penalty rates. What the ARA wants to see is a fair and reasonable set of conditions in the retail industry that balance the needs of employees against the sustainability of retail business.

“The ARA strongly advocates for a change to the Sunday penalty rate applicable to the retail industry. Research commissioned by the ARA demonstrates that employees and employers both think the current double time penalty is too high.”

The research Zimmerman cited was undertaken by a Monash University team that surveyed almost 600 employees in the retail industry and found the balance between employment and remuneration would be made right through review and reduction of penalty rates.

“The research showed people relied on the retail industry to be able to work during hours that suit them. Reducing penalty rates would both increase and guarantee these hours,” Zimmerman said.

Key findings of the Sunday Trading in Australia Research Report were:

1. Retail is challenged by a range of consumer and marketplace trends including online retail, increased consumer desire for 24/7 convenience, consumer knowledge power and increased savings levels

2. Sunday trade is generally strong accounting for 10 to 25 per cent of weekly trade, however, this figure varies significantly depending on a range of factors, including store location

3. Sunday trading is not always profitable due to higher labour costs as the increase in trade for Sunday is not always sufficient to offset wage increases

4. While increased pay is the key benefit of working a Sunday, flexibility is also an important driver for Sunday work.  The research found one third of retail employees would not work on a Sunday, despite a double time penalty rate.

Retail industry associations are currently pursuing reduced penalty rate provisions in retail awards through the Fair Work Commission.


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