Our people are worth the penalty rates: JB Hi-Fi defiant

Electronics and home appliances retailer JB Hi-Fi has refused to pass on Sunday and public holiday penalty rate cuts.

‘We’re happy to pay penalty rates’: JB Hi-Fi chief executive Richard Murray. Picture: Stuart McEvoy

Electronics and home appliances retailer JB Hi-Fi has refused to pass on the Fair Work Commission-mandated Sunday and public holiday penalty rate cuts across its entire workforce, in the process passing up a potential boost to earnings of almost 10 per cent.

Following posts on social media by JB Hi-Fi staff, chief executive Richard Murray confirmed the decision, which was announced internally last month.

“As a customer-facing organisation, our people are our most important asset — they represent our brand every day and we believe­ are one of our key compet­itive advantages,’’ he told The Australian.

“As a leadership team we gave careful consideration to the ­potential impact of the Fair Work decision on the group and our people, and decided the best outcome for our existing team members was to maintain their current pay and conditions.”

While he declined to comment further, it is understood the management team didn’t want existing employees to lose a benefit.

Earlier this year the FWC’s ­review of penalty rates decided Sunday and public holiday rates would be reduced for those employe­d under the pharmacy industry and retail awards.

The decision was backed by the federal government but ­opposed by Labor. Since then, the commission has announced that the full impact of the cuts would be delayed until July 1, 2020.

As a result, Sunday rates fell from 200 per cent to 195 per cent on July 1.

JB Hi-Fi joins Chemist Warehouse and My Chemist pharmacies, cosmetics retailer Lush Australia and New Zealand and stationery retailer Kikki.k, which have all announced they will honour all existing penalty rate payments for current staff.

Like JB Hi-Fi’s Mr Murray, Chemist Warehouse group dir­ect­or Damien Gance said last month that, while the group welcomed the FWC decision, it ­believed its staff were its greatest asset. Mr Murray said JB Hi-Fi had recently reached 79 per cent participation in its workplace giving program, Helping Hands.

While the decision will be a boon for JB Hi-Fi staff, it could come at the cost of shareholders, with a recent Citi report issued after the FWC decision arguing the consumer electronics retailer was one of the biggest potential beneficiaries of the rates cut.

Citi analyst Craig Woolford estimated that JB Hi-Fi could have had an 8 per cent boost to its earnings per share. “The reality is that retailers will add additional staff on Sunday and may pass some back through lower prices,’’ Mr Woolford wrote.

“We expect the biggest benefici­aries to be JB Hi-Fi and Myer. Wesfarmers also has a meaningful benefit. The financial impact depends on the proportion retained.”

Among the nation’s biggest retailer­s, JB Hi-Fi is the only one on the general retail award, the Citi report said, with most retailers having expired enterprise bargain­ing agreements, in anticipation of the FWC decision.

Earlier this year Mr Murray signalled that he was happy to pay weekend penalty rates but wanted some “alignment’’ between the two weekend days.

“From our perspective we’re happy to pay penalty rates, we probably just (want to) see that Saturday and Sunday are more aligned,” he said in January.