Sunday penalty rates slashed by Fair Work Commission

NEARLY one million workers will have their penalty rates slashed, with some facing losses of up to $6000 a year, unions warn.

Sunday penalty rates will be brought into line with Saturday.

UNION groups have warned some workers could lose up to $6000 a year after the Fair Work Commission agreed to slash Sunday and public holiday penalty rates for hospitality, restaurant, fast food, retail and pharmacy workers.

Up to one million workers across those industries will have their penalty rates cut by 25 to 50 per cent after the FWC handed down its long-awaited decision on Thursday.

Retail and business groups had been leading the case to reduce Sunday penalty rates from double time (200 per cent) to time-and-a-half (150 per cent), in line with Saturday penalty rates.

Fulltime and part-time hospitality workers will have Sunday rates slashed from 175 per cent to 150 per cent. Sunday rates for casuals will remain at 175 per cent.

Fulltime and part-time level one fast-food workers will have Sunday penalty rates reduced from 150 per cent to 125 per cent, but level two and three employees will stay at 150 per cent.

Fulltime and part-time retail workers will have Sunday rates reduced from 200 per cent to 150 per cent, while casuals will be reduced from 200 per cent to 175 per cent.

For pharmacy workers, Sunday rates for work between 7am and 9pm will be reduced from 200 per cent to 150 per cent for fulltime and part-time, while casuals will be reduced from 200 per cent to 175 per cent.

Public holiday rates have also been cut from 250 per cent to 225 per cent for fulltime and part-time hospitality, restaurant, retail, fast-food, and pharmacy workers. Casuals in those industries, except for restaurants, will have their public holiday rates cut from 275 per cent to 250 per cent.

Some early and late-night loadings for restaurant and fast-food workers have also been adjusted. Changes to public holiday penalty rates will take effect on 1 July 2017, and the variations of the early and late-night work loadings will take effect in late March 2017.

Will you be affected by the changes? Email [e-mail]

In its decision, the FWC said existing Sunday penalty rates in the Hospitality, Fast Food, Retail and Pharmacy Awards “do not achieve the modern awards objective, as they do not provide a fair and relevant minimum safety net”.

“[For] many workers, Sunday work has a higher level of disutility than Saturday work, though the extent of the disutility is much less than in times past,” the FWC said.

On the decision to keep existing Sunday penalty rates for level two and three fast-food employees, the FWC said such employees “are, generally speaking, regarded as ‘career’ employees with the major chains”.

FWC president Iain Ross said there would be a transitional period to mitigate hardship caused by the changes to Sunday rates. “Many of these employees earn just enough to cover weekly living expenses, saving money is difficult and unexpected expenses produce considerable financial distress,” he said.

“The immediate implementation of the variations to Sunday penalty rates would inevitably cause some hardship to the employees affected, particularly those who work on Sundays. We have concluded that appropriate transitional arrangements are necessary to mitigate the hardship caused to employees who work on Sundays.

“We have not reached a view as to the form of those arrangements.”

The reform was one of a number of workplace recommendations made by the Productivity Commission last year. The FWC had been considering bids from business and employer groups to lower Sunday rates since 2015.

A decision was expected at the end of last year but repeatedly delayed.

Opposition leader Bill Shorten said Australian workers had been “kicked in the guts” by the decision. The Labor leader said the decision meant no penalty rates were safe under the Turnbull government.

“We will do everything in our power in the parliament and the courts to remedy this bad decision,” Mr Shorten told reporters in Sydney on Thursday.

Employment Minister Michaelia Cash said it was an “inconvenient truth” for Labor that Mr Shorten, during his tenure as workplace minister, changed the Fair Work Act to require the Fair Work Commission to review penalty rates as part of a four-yearly process.

“Today’s decision by the commission to adjust penalty rates is, therefore, a direct result of the review process put in place by Bill Shorten,” Senator Cash said. “Any suggestion by Bill Shorten and the Labor Party that they do not accept this decision is highly hypocritical.”

She rejected suggestions the decision could flow on to other workforces, such as nurses and emergency service workers.

“The Fair Work Commission in its decision clearly states that they have no intention of this decision flowing on anywhere else,” she said. Senator Cash did not expect an “overnight” lift in jobs, but said many employers would find it easier to open on a Sunday and give their staff more work hours or put on extra workers.

The Australian Chamber of Commerce and Industry said reductions in “excessive” penalty rates would help retail and hospitality businesses create more jobs and offer more hours.

“Employers did not get everything we were seeking, but today’s significant decision makes some important progress in helping these businesses be open when people need them, and in delivering more jobs to more Australians, particularly young people,” ACCI chief executive James Pearson said.

“With 725,000 people out of work, including 259,000 young people, we need to make it easier for employers to take on employees — and today’s decision does that.”

Australian Retailers Association executive director Russell Zimmerman said reducing Sunday rates would increase retail growth and reduce unemployment. “With retailers currently paying employees double time on Sundays, many retailers are forced to close their doors on this day, impeding on growth in the retail sector,” Mr Zimmerman said.

“Reducing Sunday rates from double time to time and a half will give employers approximately 4-5 per cent reduction on wages which they will be able to reinvest in employing more staff, increasing employment in the retail industry.”

But he said it would be “hard” to estimate how many jobs could be created. Council of Small Business Australia CEO Peter Strong said it would make it easier for businesses to hire more staff.

“University students, people who look after kids during the week and want their own money — now they have the opportunity,” he said. “There will be more jobs. It might not be a lot, it might be 10,000. We don’t know how many but we’ll find out.”

The main effect could be casual employees being offered part-time work and part- time workers offered fulltime jobs, he said.

ACTU president Ged Kearney said the decision would give almost one million Australian workers a huge pay cut. “No worker will be better off as a result of this decision,” she said.

“Retail, fast food, pharmacy and hospitality workers work extraordinary hours and deserve to be compensated for working on weekends and late nights when the vast majority of the Australian workforce does not.

“Families across Australia rely on penalty rates to put food on the table every week and to keep households afloat in difficult times.

“This decision now leaves the door open for pay cuts for all Australians who rely on penalty rates and public holiday pay to support themselves and their families, including nurses and all other frontline emergency service workers.”

Ms Kearney described the decision as a “game changer for industrial relations in Australia”. “The independent umpire makes decisions based on the rules they are given,” she said. “These rules are contained in our laws. We need the rules to change so penalty rates cannot be cut and our parliament must act now to protect working people.”

United Voice national secretary Jo Schofield said the union would “investigate all options to ensure the people who give up their weekends to serve the rest of us don’t suffer a pay cut they can’t afford and don’t deserve”.

“Let’s be clear that this has happened because the big business lobby made an application to cut the pay of the lowest paid workers in the country,” she said. “It didn’t happen by accident.

“Malcolm Turnbull could have intervened to prevent this. He could have fronted the FWC and said, ‘It is not in the public and economic interest to cut the pay of the lowest paid workers in this country.’

“Instead Malcolm Turnbull and many members of his government are on the record supporting cuts to penalty rates. The Commission took this step with the backing of the government at a time when wage growth is at a record low and inequality is rising.”

Dr Jim Stanford from the left-wing Australia Institute think tank said the decision would reinforce wage stagnation and further widen income inequality. “It’s painfully ironic that the Fair Work Commission’s decision was released just a day after the ABS confirmed the pace of Australian wages had already slowed to the worst in the history of their data,” Dr Stanford said.

“With household incomes going nowhere, and the economy slowing accordingly, now is the time to support the wages of low-income workers, not suppress them further.

“The economic argument that business will open longer, creating jobs has no basis. It will simply spread limited demand, and therefore jobs, over a longer period without increased employment.”

But Aaron Lane from the conservative Institute of Public Affairs think tank welcomed the decision. “Penalty rates are a penalty on jobs,” he said. “The higher the penalty, the higher the barriers are into employment — putting the job market further out of reach for the most disadvantaged Australians.

“Of course, a fairer way would be to let individuals decide their own penalty rates. A fairer work system would allow individual employees and employers to come to their own arrangements about pay and conditions.

“A fairer work system would allow employees and employers to make decisions that best suit them, rather than being beholden to a centralised industrial tribunal that, by design, can never take into account personal circumstances and actual business condition.”

Earlier, Prime Malcolm Turnbull said he would accept the decision of the independent umpire while Labor remained concerned it came at the wrong time for working families.

Labor workplace spokesman Brendan O’Connor warned pay packets are already under stress, growing at a record-low rate of 1.9 per cent. Mr O’Connor said instead of knuckling down to tackle the problem, the Prime Minister wanted to abolish or cut penalty rates.

In the December quarter, private sector seasonally adjusted wages grew 0.4 per cent. In the public sector, wages did little better, growing 0.6 per cent for the quarter. Annual wages growth has now been flat or falling since June 2014.

Business groups said the commission must balance the interests of employed people with those seeking work, as well as business operators and consumers. They argued adjusting penalty rates would allow small businesses to offer more work and better meet the needs of customers.

— with AAP

Originally published as Sunday penalty rates slashed by Fair Work Commission