what are penalty rates ?


The time you spend working on a Sunday is still worth more than it is on a Saturday, but not as much as it was in the past, according to the Fair Work umpire.

In deciding to reduce Sunday penalty rates for retail and hospitality industries, it found working on Sunday was more adverse to workers than Saturday work, but “much less than in times gone past”.

After trawling through 5900 submissions and hearing evidence from 143 witnesses, the Fair Work Commission decided to reduce Sunday penalty rates in varying amounts for workers in retail and hospitality with the exception of restaurants. The restaurant industry failed to make a strong enough argument to convince the Commission.

But the door is open for restaurants to ramp up their case, and the industry group that represents them says it will now make another submission later this year.

While the decision on retail and hospitality penalty rates sets a precedent for other industries, the Fair Work Commission went out of its way to say it would not open the floodgates to other industries.

It quoted the Australian Productivity Commission, saying it was not recommending reductions in penalty rates beyond the hospitality and retail industries and “there is no case for common penalty rates across all industries”. Any future cases would be decided on their individual merits.

It also admitted its decision would “inevitably cause hardship” to employees who include among the lowest paid in the country.

It not known if the Fair Work Commission will take its own penalty rates decision into account when considering whether it should increase base salary rates when it next reviews national minimum award rates.

The restaurant industry failed to make a strong enough argument to convince the Fair Work Commission.

The restaurant industry failed to make a strong enough argument to convince the Fair Work Commission. Photo: Supplied

Fair Work also agreed with the Productivity Commission that cutting Sunday penalty rates would create more jobs and more working hours, but said it was “difficult to quantify the precise effect”. On this point, it appears to be taking a bit of a punt.

Industry groups including the Australian Chamber of Commerce and Industry have repeatedly claimed that the cut in Sunday penalty rates will create more jobs at time when 725,000 people including 259,000 young people are out of work.

But workplace law academics including Professor Andrew Stewart from Adelaide University and Professor John Buchanan at the University of Sydney are sceptical and suggest the employment creation claim will need to be tested.

During its hearings, the Fair Work Commission heard from some business owners who admitted they would not hire more workers if Sunday penalty rates were cut. Analysis of big retailers including JB Hi-Fi and Myer by Citibank found the penalty rate cuts would benefit shareholders but said nothing about the creation of more jobs.

While it is clear some businesses do not open or restrict trading on Sundays, there is little evidence to suggest the decision to cut Sunday penalty rates will result in those businesses putting on more staff. Only time will tell.


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