Be Careful What You Wish For, Lest It Come True

7th June 2016

Criticism of a dodgy deal to reduce weekend penalty rates in Coles Supermarkets reminds me of the old adage ‘Be careful what you wish for, lest it come true.’

The flaw that brought the deal undone at the Fair Work Commission presents the same dilemma if the application to reduce Sunday award penalties succeeds. Not everyone can be a winner in the transition to more sensible penalty rates. There will be losers.

There are plenty of flaws in the Coles Supermarket agreement, but let’s at least give kudos to Coles and the union for attempting to construct an agreement that better suits the retailers trading patterns than the so called modern award. Similar deals have been struck with the major retailers since 1998 with steady wage increases for all employees.

The problem today is the Fair Work Act does not allow anyone to lose, not even the people that aren’t yet employed by Coles. The better off overall test (BOOT) and modern awards are so rigidly designed to protect the status quo it would require an increase of around 33% to the base award rate of pay to compensate the supermarket employee working on Sunday were penalties reduced to 50%. Do small business employers really want to pay $25 per hour versus $19 per hour every other day? If so, good luck to you and go right ahead. If not, then the case being argued before the Fair Work Commission is equally dodgy. Increase the base rate or someone has to lose under the employers’ proposal.

You can’t have it both ways, or is there another way?

The business of retail, fast food, restaurants and hospitality increasingly occurs during weekends and evenings. These industries are large employers of young people and casual workforces. Turnover of staff is usually high. Employment costs are also significant for both industries.

Harmonising disparate weekend and evening penalty rates and casual loadings makes business and economic sense as it would eliminate the distortions in award minimum wage levels, stimulate competition, growth and employment. So, the dilemma is not whether to restructure award rates, but rather how to transition the regime of award minimum wages, penalties and loadings to reflect the reality of our modern lifestyles and economy (dare I say it) fairly.

The solution does not lie in enterprise bargaining. The BOOT only allows higher wages built on an ever increasing award minimums. It seems to me there is a much simpler answer for the Fair Work Commission available now.

How about deciding on a reasonable percentage of each award standard rate to compensate employees for working ‘unsociable’ hours, say 50% on Sunday (which is consistent with fast food, hospitality and restaurant penalties). Next quantify the difference between that amount and the current amount in dollars and cents e.g. $9.50 per hour for a retail employee. Treat that amount as an allowance that may be off-set against higher wages and set an expiry date of one to two years.

Not a perfect solution, but at least this method would deliver a more coherent framework of penalties linked to single award rates, whilst allowing a reasonable transition period to new levels for employees mindful of the high rate of turnover of casual staff in these industries.

Dodgy or food for thought?