HR Highlight: Penalty Rates Set to Change?
With the Modern Award Review in full swing and the Productivity Commission Submissions well underway there are many articles out in the media that are speculating on the future of penalty rates. This is not one of them. Like all HR Highlights this is a heads up to businesses to remain clear on the facts, particularly when there is such a volume of work being produced around penalty rates at the moment.
Have penalty rates changed?
The answer is no. Whether it is for drivers and warehouse staff, console operators and other petroleum retail staff or administrative staff, the penalty rates enshrined in the Modern Awards have not changed.
Are penalty rates likely to change?
This is a harder question to answer. There have been calls for change, and in other industries some enterprise level agreements have made it almost all the way to approval with penalty rates that are a complete departure from the status quo. An example of changing attitudes is included below for your information. Just remember, in this particular case it has not been approved and would not effect the downstream petroleum industry, other than as an example of what MAY be possible in the future.
Penalty rates are certainly on the table for review as part of the Modern Award Review and the Productivity Commission Review, with the requirement for flexibility, customer demands and the archaic underlying premise of ‘unsociable hours’ being the primary arguments for change, but change, if it happens, will be some time away.
So how do you achieve necessary flexibility?
There are options for achieving flexibility within the Awards, including varying Ordinary Hours for example. ACAPMA Members are encouraged to contact ACAPMAs Employment Professionals on 1300 160 270 or via firstname.lastname@example.org for assistance in navigating the flexibility provisions.
Example of Changing Attitudes
Extracted from The Australian 24/3/2015
Historic workplace deal cuts penalty rates
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.”