Industrial Relations Report MERV SALTMARSH IR & HR Manager
The Decision The Fair Work Commission’s recent decision to reduce Sunday and public holiday penalty rates has led to fairly predictable reactions from key stakeholders – employer associations, unions and political parties. The decision, assuming it survives any possible challenges, comes into effect on 1 July 2017 for the reductions to public holiday rates. A date is yet to be confirmed for the changes to Sunday rates, which gives businesses affected by the decision some time to consider their responses. Some reports may have given the impression that penalty rate changes apply immediately and across the board. This is NOT the case. The decision will vary some modern awards differently – there is no model clause for penalty rates as a consequence of this decision. This summary considers some of the practical implications and decisions those varying organisations, managers and in many cases IR/ HR practitioners will need to consider. The long and the short of it as it currently stands • The “technical” aspects of the decision, such as which industries and employees are affected • What the changes to specific rates are • How the changes will be implemented, are explained below Who is affected So how are penalty rates affected by the decision and when do the penalty rates apply under the affected modern awards? The relevant modern awards will be varied in the following manner:
• The variation to the early/late night loadings in the Restaurant Award and Fast Food Award will take effect from 27 March 2017 (although the relevant unions have submitted the reduction be delayed until 1 July 2017) The Reaction • Some media coverage of the decision quoted employees who claimed they would be significantly financially disadvantaged by the decision, while business owners claimed they could extend their weekend trading hours, employ more workers or roster more senior (higher base pay) staff at weekends or similar. • Some employer organisations have claimed that more jobs will become available if businesses take those steps, and unions have predictably focused on the “financial hardship for employees” claims. • Some business spokespeople have also suggested the decision will place small and larger businesses on a more even footing. This, it could be argued, is because employees in many large businesses, e.g. retail chain stores, are covered by enterprise agreements that have traded or reduced penalty rates, for example replaced by a higher base rate of pay, whereas employees in smaller businesses are covered by award provisions, the FWC decision will alter. • There is also some anecdotal evidence of a few businesses publicising their decisions to continue to pay employees their current levels of penalty rates. Some have placed notices outside their premises with comments such as “because our employees are worth it”. They appear to be promoting that public goodwill will result in more customers, as well as retention of employees and existing customers. • Some parties are broadcasting current estimates that about 600,000- 700,000 employees could be affected by the decision which is clearly not the case. • Currently for example, the hotel workforce is some 80% plus casual employment and so some members do not get the benefit of the Sunday penalty rate reduction for these casual employees. • It can also be said that on the publicised numbers impacted i.e. it is far less than some parties are portraying i.e. no change for penalty rates to those employed as a casual under the HIGA award. The Options Where employees are covered by the FWC decision, employers will have the following options: • Follow the decision and reduce penalty rates to the minimum set by the relevant award • Continue to pay employees the pre-decision penalty rates, in the hope of retaining employees, maintaining their morale and perhaps enhancing community goodwill towards the organisation. Before making this decision, organisations and those accountable should carefully consider the impact of the decision on the organisation, and the opportunities it may provide the business.
Other penalties The decision will also vary early/late night loadings in the Restaurant Award and the Fast Food Award. TheImplementationof thechanges • The variations to the Sunday penalty rates will be phased in by a series of annual adjustments taking place on 1 July each year . The full bench has indicated that this process will involve at least two adjustments, but less than five.
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Hospitality Review
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