Labor’s Mark Butler has hailed a landmark deal to slash penalty rates as the realisation of Paul Keating’s economic vision, as the Abbott government said the complicated “machinery” of the penalty rates system could be further redesigned.

The Australian this morning revealed the country’s largest union has agreed to slash weekend penalty rates for the retail sector in a breakthrough deal in South Australia that could affect up to 40,000 workers and be replicated across the nation.

In the first agreement of its kind for small business in Australia, penalty rates will be abolished on Saturdays and halved on Sundays in exchange for a higher base rate of pay and other improved conditions.

Mr Butler, a senior South Australian frontbencher and candidate for Labor national president, said the bargaining process used to reach the deal between employers and the shoppies union is what Labor has supported for more than 20 years.

“This is what we envisaged when Paul Keating’s government put together the enterprise bargaining model,” Mr Butler, who worked for 15 years as a union official, said in Canberra.

“This is exactly the model that we envisaged and it’s in stark contrast to the idea that you would go up to the industrial commission and try to change – unilaterally – the penalty rates across the country.”

Labor national president candidate Mark Butler said the bargaining process used to reach

Labor national president candidate Mark Butler said the bargaining process used to reach the deal between employers and the shoppies union is what Labor has supported for more than 20 years.

Small Business Minister Bruce Billson said the template agreement, signed between the Shop Distributive and Allied Employees Association and Business SA, highlighted “the flexibility that’s in the current law”.

“There are mechanisms in the current law. Whether they are adequate, whether they’re responsive, whether one can navigate them, they’re important discussions for the Productivity Commission review,” Mr Billson told Sky News.

“Even this quite constructive and encouraging step forward, it still required a big industry association to navigate the procedural requirements and get to the point where there is a template agreement that a retailer in South Australia can discuss with their employees and see if it works well for all of them.

“How friendly is it to a smaller enterprise to navigate this machinery, which seems designed more for big organisations and representative organisations rather than for a small, nimble, agile smaller enterprise looking just to get ahead to create opportunities for themselves and their communities?”

“What’s Bill Shorten’s position? He sort of thinks we live in this nine-to-five, back-to-the-50s kind of economy; that’s not the case.”

Employment Minister Eric Abetz said the South Australian negotiators “should be applauded for taking a constructive approach”.

“It highlights the benefits of encouraging workplaces to sit down and negotiate terms and conditions that suit their specific needs,” Senator Abetz told The Australian.

“Setting penalty rates is a matter for the Fair Work Commission, but if workplaces can arrange a better deal on which they agree that complies with the law, they should be encouraged to do so.”

“The question is — will Bill Shorten and Labor support this deal?”

Labor deputy leader Tanya Plibersek said: “I’m not going to start commentating on individual agreements that employees and employers strike in particular workplaces or in particular industries. I think that this shows that there’s flexibility in the system but I’m not going to comment on it beyond that.”

Labor parliamentary secretary Matt Thistlethwaite said the South Australian deal was “by all accounts, a win-win for the employees and the businesses involved”.

“This deal proves that you can reach arrangements with them but you need to consult with employees and you need to make sure they’re better off over all. That’s the test in the system: they need to be better off overall,” he said.

Assistant Infrastucture Minister Jamie Briggs, a South Australian, said the deal vindicated the coalition’s position that penalty rates were a matter for the Fair Work Commission.

“If employers and employees work together for their best interests then we’ll get a better result,” he said.

Independent SA senator Nick Xenophon says Saturday and Sunday are now regarded as ordinary trading days for the hospitality and retail sectors.

“It’s always been my position that there needs to be greater flexibility for small employers,” he said.

South Australian Family First senator Bob Day said the deal marked “the long overdue fall of one of many remaining barriers to getting a job”.

NSW Liberal Democrats senator David Leyonhjelm said Australians who wanted to work weekends had been priced out of the market by penalty rates. He also described South Australia as an economic basket case.

“Maybe somebody there has finally woken up to the fact that they do need to change if they’re going to turn it around.”

First agreement of its kind

The country’s largest union has agreed to slash weekend penalty rates for the retail sector in a breakthrough deal in South Australia that could affect up to 40,000 workers and be replicated across the nation.

In the first agreement of its kind for small business in Aus­tralia, penalty rates will be abolished on Saturdays and halved on Sundays in exchange for a higher base rate of pay and other improved conditions.

The Australian Chamber of Commerce and Industry said the agreement reached between the shop assistants’ union and the state chamber of commerce could help reboot the struggling retail sector and stimulate jobs growth.

ACCI chief executive Kate Carnell said she was pleased the Shop Distributive and Allied Employees’ Association (SDA) had acknowledged that penalty rates were an “obvious” problem for small businesses and said the agreement provided scope for an agreed national template.

“We are pleased that the SDA has focused on what is a very real problem and we would hope that sort of focus happened more broadly across Australia,” she said.

“This template approach gives these smaller retailers a real ­opportunity to compete better with larger retailers, and also look at how they can grow their business and employ more people, particularly the significant number of youth that are unemployed.

“We are hopeful that this would flow across Australia.”

Amid a political impasse on changing industrial relations laws, the deal has also highlighted the ability of business to use the enterprise bargaining framework to win ground on penalty rates.

The government has asked the Productivity Commission to undertake a public inquiry to examine the workplace relations framework, but has ruled out making any changes before the next election.

The template agreement signed between the SDA and Business SA can be adopted by small businesses if agreed to by employees, and would apply to about two-thirds of the state’s 60,000 retail workers employed in small and medium-sized businesses.

It reduces penalty rates for Sundays from a 100 per cent loading to 50 per cent, cuts public holiday rates from 150 per cent to 100 per cent, and abolishes penalty rates on Saturdays and weekday evenings.

In exchange, workers will ­receive a higher base wage than under the award, a guaranteed 3 per cent annual pay rise, and an unprecedented right to refuse to work on Sundays and public holidays. It also gives permanent workers the right to every second weekend off.

For a full-time shop assistant, the base rate of pay would jump by 8 per cent from $703.90 a week to $760 a week.

Each workplace would still need to submit a signed agreement to the Fair Work Commission to pass the “better off overall” test to come into effect.

Rhett Biglands, a former AFL footballer who owns Nike Rundle Mall in Adelaide, said penalty rates on public holidays had previously made it uneconomic for him to open. The template model was a positive move for small business, he said, and would allow ­employees such as 22-year-old Danielle Pipicella to benefit.

“Anything that would help me open on those public holidays and Sundays would help me out and help my customers out, and would provide more employment for young people,” he said.

Business SA chief executive Nigel McBride, who negotiated the deal after being approached by SDA state secretary Peter Malinauskas, said the state’s busin­esses were “suffering” under the national award system.

He said given the absence of political will from the Abbott government to tackle unaffordable penalty rates — particularly while SA suffered the country’s highest unemployment rate of 6.9 per cent — business needed an urgent ­solution. “We want a fundamental overhaul of penalty rates, but we have to have a pragmatic alternative because it is clear to us that nothing is going to change,” Mr McBride said.

“This will be a first in Australia. It is the leading national example of a peak chamber and a peak union getting together and saying we are unhappy and let’s have a compromise.”

He said the union movement had been in “utter denial” about the impact of penalty rates on jobs growth nationally, which he believed would pick up if business adopted the new agreement. “This is an important acknowledgment by the country and the state’s largest union that penalty rates have got to be addressed, and that in the SME sector, penalty rates are really having a negative impact.”

Mr Malinauskas said the union had not conceded penalty rates were a problem, and had instead demonstrated the current enterprise bargaining system worked. “If employers want to address the issue of penalty rates, they should do it by negotiating with employees and their representatives, not by unilaterally cutting entitlements via the Fair Work Commission,” he said. “The penalty rate structure that exists within the award should be maintained and should not be taken away, but if employers are wanting to do something about penalty rates, they need only negotiate with their employees.”

He said the big win for workers was securing the right to refuse to work on Sundays and public holidays.

“The political argument from employers and conservative commentators on this issue is that there are all these people who are working on Sundays because they want to work on Sundays — this puts that principle to the test.”

Restaurant and Catering Industry Association chief executive John Hart said the hospitality sector would welcome a similar deal. “I am sceptical that positivity towards negotiation is widespread among unions,” he said, “but I am very pleased that at least in South Australia, and at least in retail, they have seen the light.”

SDA national secretary Gerard Dwyer said penalty rates were an important issue for workers, but the right to refuse to work weekends and public holidays was a significant achievement of the agreement. “Voluntary work on a Sunday in the retail industry in this country is an amazing step forward. I wouldn’t be surprised if other branches might be interested in doing something similar.”

Extracted in full from The Australian.