Help small business boost jobs

Small retailers, their staff and national productivity have much to gain from a proposal by Fair Work Commission president Iain Ross to allow tens of thousands of retail and hospitality employers and their workers to trade off penalty rates and overtime for higher hourly pay. In a new statement on Friday, the commission said it would examine the introduction of a “loaded rate’’, after discussions between businesses and unions later this year. A loaded rate, as Workplace Editor Ewin Hannan writes, would give workers on retail, fast-food and hospitality awards higher hourly pay for all hours worked, regardless of the days or shifts. In return, employers would not pay weekend or evening penalty rates. They would be saved the time and trouble of calculating complex payrolls each week.

The Council of Small Business Organisations Australia has argued for at least three years for smaller fast-food and retail employers to be allowed to pay a 25 per cent ­increase in workers’ hourly rate in ­exchange for overtime or penalty rates. Australian Small Business and Family Enterprise Ombudsman Kate Carnell has also supported loaded rates.

Replacing penalties and overtime with a higher hourly rate makes eminent sense. In the modern workplace, especially in 24/7 industries such as hospitality and retailing, businesses need to open to meet consumer demand. A more straightforward system would reduce time spent on administration, which is a problem for many business owners. Red tape is also a disincentive to hire extra staff at peak times in restaurants, cafes and shops. Loaded rates would also help address the problem of bosses inadvertently underpaying staff. The fact that a retailer as large as Coles could underpay staff under the current system underlines the potential pitfalls faced by small retailers with few, if any, accounting staff.

The announcement by Justice Ross on Friday paved the way for unions and employers to discuss the concept. The statement made it clear that workers would not be disadvantaged by any changes. “Any such loaded rates would need to recognise the application of the existing penalty rates regime and apply fairly across the range of employees and working hours patterns that might be considered as applicable to the concept,’’ the review said. Subject to safeguards, loaded rates could make awards simpler and easier to understand. They would provide small businesses with additional flexibility, without the need to enter into enterprise agreements with staff.

The Weekend Australian is in favour of the commission drawing together employers and employees to develop the concept. From the outset of the Rudd government’s passing the Fair Work Act in 2009, we have argued in favour of greater flexibility between employers and workers in setting wages and conditions. Loaded rates would be a step in the right direction, albeit one tightly overseen by the Fair Work system. Mr Ross will convene a conference later this year to consider inserting loaded rates into retail and hospitality awards. About two-thirds of businesses in the hospitality sector and more than half of the businesses in the retail sector are small businesses.

Trade unions, which would be in a position to argue for the best possible hourly rate for their members, resisted the concept in 2016, when the then ACTU secretary Dave Oliver said unions would be “very cautious about any proposal like loaded rates because the potential for individual employees to be worse off is very high”.

Before dismissing the idea, unions should consider the fact that the strength of the small business sector, which is already battling online competition and soaring shop rents, is beneficial to jobs for union members, including young workers.