A recent decision of a Full Bench of the Fair Work Commission
has, for the first time in a long series of cases, accepted a claim
for a reduction in penalty rates, in this case affecting the
Restaurant Industry Award.
Employers in the hospitality, retail and restaurant and
café industries have, for some time, been arguing that
weekend penalty rates inhibit businesses operating, and limit
opportunities for additional employment on Sundays especially.
Weekend penalty rates have been a feature of Australian
industrial regulation, and the award system, for many years. Sunday
rates in particular were intended to compensate employees for the
disadvantage of having to work on Sunday, which was seen as a day
of religious and sporting commitments. Penalty rates were developed
in an age when standard employment involved a single male
breadwinner working 5 days a week, so that working Sunday as well
would involve significant disadvantage.
In this case, the employers contrasted this with a 21st century
situation in which:
religious observance and active participation in sport (as
opposed to viewing sport by "audio visual means") was
typical employees engaged in weekend work in restaurants and
cafes were not career employees in the industry,
these employees often preferred to work on weekends as they
were involved in caring responsibilities or education during the
the penalties applied to many employees who had not already had
5 days employment so that they potentially had opportunities for
family and social time at other times in the week
Sunday was now not much different to Saturday, so there was no
justification for higher Sunday penalties.
On the other hand, the union argued that many of the employees
affected were amongst the lowest paid, and relied on penalty rates
as a significant component of their income.
The Full Bench split 3-2, with the majority deciding that while
Sunday was still a day for much family and social activity, a case
had been made out for some reduction in some penalties to achieve
the modern award objective of encouraging participation in
employment, but that the impact should be restricted to the two
lowest levels of classification (therefore excluding career
employees), and should take effect by reducing a 50% Sunday loading
to 25%, so that it would not exceed a total 50% loading in
combination with casual loading of 25%. (The minority decision
favoured a slightly smaller reduction, implemented in 2 stages so
as not to immediately prejudice current employees, but applying to
all classification levels.)
As employers have had a difficult process to obtain this limited
reduction, this case does not foreshadow broad-based reduction to
penalty rates. This was expected to be an area of interest to the
Abbott Government, but whether that is politically possible (in
light of the memory of Workchoices, the reaction to the budget, and
the situation in the Senate) remains to be seen.
However, with the ACCI and other business groups gearing up for
a campaign on the issue, and raising the issue in, for example, the
pharmacy and retail award reviews, and with the ACTU in the
opposing corner, it seems that this is an issue which will get a
higher profile in the next few months.
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