What penalty rate cuts mean for Sunday surcharges

THE decision to slash penalty rates on Sundays and public holidays has disappointed workers, but others have seen a silver lining.

THE Fair Work Commission’s decision to slash penalty rates on Sundays and public holidays has disappointed up to a million workers, but another group has seen a silver lining.

They’re the consumers who live for the weekend, who don’t have to worry about losing pay thanks to cuts because on Sundays they don’t work — they dine.

The feeling among this group is the decision to reduce hospitality staff wages on these precious days off, alleviating costs to employers, should signal the end of the dreaded Sunday surcharge.

That’s the extra 10 per cent (or similar rate) that cafes and restaurants tend to charge on these days to cover the extra expense of paying their staff up to two and a half times their regular wage.

But if you’re getting set to celebrate a reduced rate on your Sunday morning avo smash, hold the applause.

According to Restaurant and Catering Australia chief executive officer John Hart, that holiday levy isn’t going anywhere.

Mr Hart told news.com.au the restaurant industry is still waiting on further decisions from the FWC to change their award. Even if Sunday and public holiday rates were further lowered, he said, they still would not meet the costs of staffing.

“To be honest, the rates going down won’t alleviate the need for a surcharge on public holiday,” he said.

Under the new rules, fulltime and part-time hospitality workers will have Sunday rates slashed from 175 per cent to 150 per cent and Sunday rates for casuals will remain at 175 per cent.

If they’re on the national minimum wage, $17.70 per hour, an eight-hour Sunday shift will earn them about $248.

Under the changes that drops to $212. It’s a difference of about $35 for the shift, but it’s still significantly more than the $141 the boss would have to fork out for their shift on a weekday.

On public holidays, rates for fulltime and part-time workers have also been cut from 250 per cent to 225 per cent, and casuals will remain at 250 per cent for public holidays.

Hospo workers will be paid less on Sundays, but don’t necessarily expect that saving to be passed on. Picture: iStock.

Those rates cover the hospitality industry award which takes in hotels, motor inns, private hotels, guests houses, wine bars and some restaurants. They don’t apply to workers covered by the restaurant industry which include reception centres, night clubs, cafes and road houses, and restaurants where employees aren’t employed under the hospitality industry award.

The restaurant award, however, is expected to undergo similar changes too.

Mr Hart said in businesses covered by both of these awards, the money employers spend on staff accounts for around half of everything they make, so even with the reduced rates, they’re still likely to charge a little extra to get by.

“At 225 per cent (on a public holiday), you’re still paying more than double time,” Mr Hart said.

“As it stands at the moment, wages are nearly 50 per cent of turnover. Even with these changes you’re still in a place where there is an extraordinary amount of additional cost, which isn’t met by any sort of surcharges.”

Not everyone shares Mr Hart’s gloomy view.

Herron Todd White’s research director Rick Carr has said he believes the changes mean surcharges should eventually disappear, giving a boost to local economies, particularly in high-traffic and tourism areas.

“The dreaded Sunday surcharges should disappear, tourists and locals will have more choice on where to go each Sunday, and the overall economy should benefit,” he told the Cairns Post.

“At the same time economic theory says that if Sunday penalty rates are cut then fewer people will be prepared to work on a Sunday as the financial reward for doing so is no longer there.

“Businesses could find it harder to recruit staff for Sunday work, make fewer businesses actually able to operate on Sundays, and have a net economic disbenefit.”