Holy Cow, Award Penalty Rates New Sacred Scripture

3rd April 2017

Penalty rates have swiftly become the new sacred cow of the perpetually aggrieved. The Senate, true to form has got on board.

Passing its own sacred text, the Fair Work Amendment (Protecting Take Home Pay) Bill if enacted simply entrenches inequitable pay for employees and anti-competitive costs on employers. Someone should inform the Senate.

Australia is unique in the world in that almost every one of the 122 modern awards include additional penalty payments for work performed in the evenings, early morning, overnight, weekends and on public holidays. Just seven hospitality and retail industry based awards containing seven different penalty arrangements were reviewed by the Fair Work Commission. The process was torturous but eventually the Commission correctly decided on more consistent and equitable rates across five awards sharing similar workforces and competitive environments.

Last year I explained the ridiculous array of penalties applying to Australian hospitality and retail businesses and the disparity with major retail enterprise agreements. Currently under modern awards when you work in a fast food store you will be paid an additional 10% after 9pm on a Monday unless you are a casual who receives an additional 35% loading on your ordinary hourly pay. However, a person working in a clothing store receives an additional 25% if they work beyond 6pm on the same Monday. Casuals in that store are paid 25% penalties whether they work before or after 6pm. Hairdressers don’t receive any evening penalty rates for cutting your hair on Thursday evening. Waiters in a restaurant are paid no additional loading unless they work after 10pm, but a waiter working in a licensed club or restaurant attached to a hotel receives 10% penalty after 7pm. Full-time and part-time staff working in pharmacies are paid a minimum penalty of 25% for working after 7pm mid-week.

Weekends are no less confusing. Right now a fast food employee is paid a loading of 50% on Saturday and 75% on Sunday. However, her friend working casually in the retail fashion store next door is paid 35% extra on Saturday and 100% extra on Sunday. Hairdressers receive a loading of 33% on Saturday and 100% on Sunday. If you are lucky enough to work in the pharmacy in the same shopping strip you are paid 125% casual loading for work on Sundays.

If you sit down for lunch at the local restaurant you may be served by someone that is paid a loading of 50% whilst the food and wine that you consume is prepared by an employee that is entitled to 75% loading on their ordinary wage. Go figure that one?

Ninety-five per cent of retail businesses employ less than 19 staff and are more likely to apply minimum modern award wages than larger competitors. Evidence presented to the Commission showed that 42.7 per cent of hospitality industry employees relied on the award for their wages.

Coles and Woolworths supermarkets dominate approximately 40% of the Australian food retail market. It’s workforce under enterprise agreements negotiated years ago and renewed several time over pay higher ordinary wages but not any additional penalties for work on Saturdays (save for casual loading) and an additional 50% loading for work performed on Sunday (70% casuals). Similarly Myer and David Jones pay no Saturday penalties to permanent staff. Casuals at Myer receive 80% loading and DJ’s 70% loading for work on Sunday.

Contrary to views of the Australian Small Business Council and the Australian Newspaper’s Grace Collier, the problem is not the enterprise agreements, but the the Better Off Overall Test under the Fair Work Act. The Act reinstated minimum conditions in 2010 that had been legislated away during the Work-choices era. That left hundreds of Work-choices era agreements still in operation that had sensibly reduced or eliminated weekend penalty rates. Ironically, if Peter Strong and Grace Collier had their way, everyone would be paying double time on Sunday. In a bizarre move One Nation Senators attempted unsuccessfully to achieve this with an amendment to the Senate Bill.

The Fair Work Commission examined the issue from top to bottom and mugged by reality, concluded that existing Sunday penalty rates are neither fair nor relevant. It made it perfectly clear that in its decision fairness was assessed from the perspective of the employees and employers covered by the modern award in question.

However, all you need to do these days is parade some poor soul complaining they can’t make ends meet in front of the Canberra press gallery and bingo, emotional victory as the dumb journalists dutifully report on the heartless decision sending victims to the Poor House.

One final issue that has not received any attention is the treatment of Ian Ross, appointed President of the Fair Work Commission by Bill Shorten, and the former Assistant Secretary of the ACTU.

The Labor opposition has thrown Ian Ross and the Fair Work Commission under the bus. Ross shouldn’t have bothered spending three years and 550 pages of paper writing his decision. Notwithstanding the changes in Australian society, notwithstanding the blatant inequity, notwithstanding the distortions to industry competition, notwithstanding the need to boost growth, penalty rates are to be preserved, sacred and unchanged circa 1979 in perpetuity if the dills in the Senate had their way.

I suspect Ian Ross won’t make the same mistake again. Keep your eye on the Award Minimum Wage Decision this year to see how he handles another sacred cow. Maybe the government should up the ante and strip the Fair Work Commission of its responsibility to set wages as has been recommended by the Productivity Commission.