Senate inquiry rejects penalty rate cuts

time sheet, pay, wageThe Senate Committee tasked with probing the Fair Work Commission’s Sunday Penalty Rate reductions has officially recommended that the government legislate to overturn the decision, deriding it as a pursuit of retail sector profits.

In its report the ALP majority committee, chaired by Labor Senator Gavin Marshall, rejected the argument that a reduction in Sunday penalty rates would increase employment and outlined its concern that the decision will have a broader negative effect on the economy.

Citing information provided by unions, government departments and economists, the committee said that no evidence had been presented to show that a cut to Sunday penalty rates would create jobs.

“Not a shred of evidence has been presented to the committee supporting the government’s targeting of workers who rely on penalty rates as a means of creating more jobs,” the report said.

“Quite the opposite, the overly simplistic logic of driving down wages to enable businesses to employ more workers was irrefutably discredited by evidence to this inquiry.

“The concept of unbridled pursuit of private sector profit as a social virtue is based on the erroneous premise that soaring profits always benefit the economy. This is simplistic and has been proven not to be the case.”

The Fair Work Commission decided in February that Sunday Penalty Rates will be cut by 200 per cent to 150 per cent for full and part-time retail workers, and to 175 per cent for casual workers by 2020.

The committee’s recommendation that the decision be overturned is unlikely to be adopted by the Coalition, but Australian Retailers Association executive director Russell Zimmerman, who presented evidence to the inquiry, said it could add steam to opposition leader Bill Shorten’s campaign to change the Fair Work Act to amend the rules guiding the FWC.

“This government is not going to be around forever, and I can see Bill Shorten coming out and saying that the Senate committee has said that the Sunday Penalty Rate decision should be overturned – and that desperately worries me,” he said, expressing the ARA’s opposition to the recommendation.

There’s currently a pending Federal Court decision looming over the FWC’s Penalty Rate decision, with a full-bench of judges having heard testimony from stake-holders last week.

Zimmerman expects the Federal Court to hand down its decision in the next 6-8 weeks, but whatever the outcome a High Court challenge remains on the table for both sides.

An SDA spokesperson has told Inside Retail that “all cards are on the table” if the Federal Court upholds the FWC’s decision, which could run a court-battle over the reductions into the proximity of the 2019 election.

However, Zimmerman believes that if the High Court subsequently upheld the decision it would be difficult for the ALP to build a public case for overturning the reduction through legislative measures.

Changes to BOOT may be on the horizon

Zimmerman said the ARA had not been asked a single question about the penalty rate reduction by the committee, which also touched on the Better Off Overall test (BOOT), finding but not officially recommending that the test be strengthened to ensure better outcomes for workers and remove ambiguity.

“[There’s a] need for an improved, more robust BOOT to be developed in order to safeguard optimal outcomes for workers,” the report said.

Currently BOOT represents a condition for enterprise agreement approval if the commission is satisfied that employees would be better off overall if a prospective agreement was applied over the conditions of the modern award, at the time the test is conducted.

The committee outlined concern that this did not require the FWC to consider each employee individually in all cases, which could result in some workers being left worse off by approved agreements.

Both the unions, including the Shopfront, Distributive and Allied Employees Association (SDA), and the ARA believe BOOT should be changed, with the Department of Employment signalling concern at the decline in approved Enterprise Bargaining Agreements (EBAs) in recent years.

Zimmerman has called for a meeting of stakeholders to explore a suitable compromise for improving the BOOT, something that the SDA also supports.

“The SDA has always bargained in accordance with the rules as determined by the Commission of the day. We are currently working toward negotiating new BOOT complaint enterprise agreements to deliver strong wages and good working conditions for all retail and fast food workers,” SDA national secretary Gerard Dwyer said.

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