Employers issue warning on changes to penalty rates

Employers call for changes to the Fair Work Commission’s approach to approving workplace arrangements.

Sally McManus warns that the proposal to investigate extending ‘loaded rates’ from enterprise agreements to award-only retail and hospitality employers should not be used to devalue weekend work. Picture: Jane Dempster

Employers have warned that a proposal to let small businesses trade penalty rates for a higher basic wage was likely to fail if the Fair Work Commission maintained its “excessively technical approach” to approving workplace arrangements.

The government, unions and business on Sunday cautiously welcomed the announcement by Fair Work president Iain Ross that the tribunal would investigate changes to the retail and hospitality awards that would allow ­employers to pay a higher minimum rate for all hours worked ­instead of penalty rates.

But ACTU secretary Sally McManus said the proposal to investigate extending “loaded rates” from enterprise agreements to award-only retail and hospitality employers should not be used to devalue weekend work.

Justice Ross, who first floated the “loaded rates” proposal in 2016, said he would convene a conference later this year to examine the issue, given the commission’s long-running review of awards had been largely completed and the last stage of phased-in penalty rate cuts would occur from July 1.

Under the proposal, the higher loaded rate would be included in a schedule to the award and would benefit award-covered employers who would be saved the cost and time involved in negotiating an enterprise agreement.

The Council of Small Business Organisations Australia supports a single higher hourly base rate as a simple alternative to the existing system of penalty rates and overtime payments. Chief executive Peter Strong said a “potential model” would be the hospitality industry award, which allows employers to pay 25 per cent above the weekly award rate in lieu of overtime and penalty rates.

“We support it (the Ross proposal),” Mr Strong said.

“It does go a long way to removing complexity. Congratulations to him because the people who don’t want this to happen are mostly unions and industry organisations and lawyers (who) make money from the complexity.”

Mr Strong said business should understand the proposal would not be compulsory and would best suit employers who traded on weekends and in the evenings.

Australian Industry Group chief executive Innes Willox said “loaded rates provisions in awards are an interesting concept that deserves consideration”.

However, he cautioned, “many employers have abandoned loaded rates arrangements in their enterprise agreements because of the FWC’s excessively technical approach in assessing these arrangements at the approval stage”.

“Unless a genuinely flexible approach can be devised for loaded rates provisions in awards, the idea is unlikely to succeed.”

Ms McManus said weekend workers were giving up time with their family and missed out on much that others were able to enjoy. “They deserve to be compensated for this; that’s what penalty rates are for,” she said.

Attorney-General Christian Porter, who is also Industrial Relations Minister, said he would be issuing a discussion paper shortly about the award system which was “aimed at assessing the significance of the problems and possible measures to address them”.

“The award system is not an ­excuse for major employers like we have seen underpaying staff,” he said. “It’s just not an excuse. Large, sophisticated organisations should be able to work out what they need to pay their staff.”