Unions demand new wage theft tribunal as Labor vows to stop penalty rate changes

Labor will vow to pass new laws to cement penalty rates for 3 million workers despite industry calls for more flexible workplace laws, as union leaders prepare new demands on Prime Minister Anthony Albanese if he retains power on May 3.

The unions want Albanese to set up a new tribunal to make it easier for workers to reclaim funds feared lost to wage theft, establishing a simpler process than going through the Federal Court but risking wrapping employers up in claims, after a term of government in which Labor delivered a tranche of major union requests.

Australian Council of Trade Unions secretary Sally McManus confirmed the union demand on Friday, which it has not pushed during the campaign and comes on top of successful union campaigns to have Labor criminalise wage theft and regulate the gig economy.

Labor will vow to pass new laws to cement penalty rates for 3 million workers despite industry calls for more flexible workplace laws.Credit: Alex Ellinghausen

“It should be quick and easy for the victims of wage theft to get their money back,” McManus said. “The current system can be slow and expensive.”

The unions’ move comes as the Coalition steps up its appeal to small business owners with a pledge to ease their tax burden, heightening the contrast between the two major parties when early voting begins on Tuesday.

Prime Minister Anthony Albanese will issue his pledge on Saturday to promise that penalty rates cannot be cut, but the policy is certain to antagonise industry and small employers because they fear that high pay rates force them to limit their opening hours or could drive them out of business.

Opposition Leader Peter Dutton will outline his duelling plan as a way to encourage more people to set up their own companies, giving them a 75 per cent tax offset on their first year’s income and extending the benefit at a lower rate in the second and third years.

In a wider benefit for all small business owners, Dutton will also allow them to claim a bonus tax deduction of $2000 for technology upgrades that cost $4000 or more.

The Labor policy appeals directly to workers who rely on penalty rates – including on public holidays at Easter, where rates for retail workers can be up to 250 per cent of their base pay – and sets up a new election fight over workplace laws when cost-of-living concerns have dominated the campaign.

The new law would stop employers from scaling back penalty rates in workplace awards at the Fair Work Commission, a pivotal issue in a current case for supermarket workers and the subject of a divisive case eight years ago about hospitality and retail workers.

But union leaders including Australian Council of Trade Unions boss want Labor to go further after the next election by establishing an underpayment tribunal, which would mean workers no longer had to go through the Federal Court’s small claims division to get back underpaid wages.

Major Australian institutions, including national chains such as Coles, universities such as Sydney and Monash, and government agencies have confessed to accidentally underpaying workers in recent years, with many blaming the complexity of pay rules for the errors.

Union leaders expect the new tribunal to be a key feature of negotiations with the government after the election. The proposal was knocked back by Labor during this term of parliament, leaving it unclear if the government would back the idea if it is re-elected.

Sources within the union movement said its key objective at this election was to defend the government and cement the changes of the past three years, including the “right to disconnect” law that gives people more scope to refuse contact from employers outside working hours.

The unions also want to defend the “same job, same pay” law that lifts wages for contractors who do the same work as paid employers, as well as the multi-employer bargaining regime that gives unions more power to get a single wage deal across an entire industry.

Employment Minister Murray Watt will outline the new workplace commitment on Saturday, timing the news to coincide with the Easter weekend when thousands of workers are earning penalty rates, but the details of the draft law will depend on the outcome of the election.

“We will introduce legislation to ensure workers don’t have their pay cut and their penalty rates are protected into the future,” he said in a statement.

The legislation would only limit employers and unions in their disputes over awards at the Fair Work Commission, leaving it open to both sides to “trade away” penalty rates in return for higher wages in enterprise bargaining agreements.

Awards set the default base pay rates in the Australian economy and are used by major businesses such as McDonald’s and JB Hi-Fi, as well as many thousands of small businesses.

The Australian Retailers Association is seeking to amend the award for supervisors, including those at supermarkets, to include a voluntary option for staff to receive a higher salary by agreeing to changes to penalty rates.

“If managers work above a certain number of hours a week or on a public holiday, this would be paid on top of their salary – or they can choose to take time off in lieu,” the association said when it took the case to the Fair Work Commission.

Watt intervened in the case in February to say he would oppose the association at the workplace umpire, saying a victory in their case would hurt penalty rates in all other industries.

In the 2017 decision, the Fair Work Commission angered Labor and the unions by reducing Sunday penalty rates across the retail, fast food, hospitality and pharmacy industries.

The Coalition government did not oppose those changes, which were phased in over several years, on the grounds that the lower rates would make it easier for small employers to stay open on weekends.

The new commitment would amend the Fair Work Act to forbid changes to awards that cut penalty rates, effectively blocking industry groups from seeking the changes at the commission.

The retail association has hit back at claims that it was slashing pay, saying it was seeking more flexibility but was not removing penalty rates, overtime or paid breaks. The changes apply to those earning 125 per cent of the minimum pay for retail managers.

“No employee can be forced to agree to the salary absorption option,” the association said.

The Coalition policy, called the Entrepreneurship Accelerator, will be offered to new businesses during the first three years of their operation and limits the incentives to small companies with relatively low taxable income.

The tax offset applies to 75 per cent of the first $100,000 of taxable income for the business, and then falls to 50 per cent of the second $100,000. Any taxable income above $200,000 is taxed at the usual tax rate.

In the second year of their operations, the businesses would qualify for a tax offset worth 60 per cent of the first $100,000 and 40 per cent of the second $100,000.

In the third year, the tax offset falls to 50 per cent and 30 per cent of the two income tranches.

Dutton said that small businesses were struggling under Labor. “We’ve seen a record number of
insolvencies because of this government’s bad policies and economic management,” he said. “Today, I say to
small business owners and employees, help is on its way.”

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