The following steps are suggested for consideration only • Calculate the total cost savings of reduced penalty rates. The savings are not confined to reduced direct employee remuneration there may be other savings such as lower superannuation contributions, leave loadings, workers compensation premiums (if based on payroll cost) and payroll tax etc. • Evaluate the likely impact on employees if you implement the decision. Is it a “buyers” or a “sellers” market for hiring employees to work at weekends? Are employees likely to become resentful or disengaged, with negative impacts on productivity, job performance and employee turnover if their pay is reduced? Or could the cost savings provide an opportunity to offer them more work shifts and thus at least maintain their overall remuneration? • Are there opportunities to reorganise rosters, etc. that give affected employees a fairer deal and may benefit customers as well? For example, it may be possible to roster some more experienced employees at weekends (which may improve customer service), but compensate the current weekend employees by offering them more work at other times such as a swap with the other employees. Evaluate the potential • Evaluate the potential to expand business operations at weekends. Can cost savings be fully or partly passed on to customers and the number of customers or volume of business increased? Or will there be little or no increase? For example, people may not frequent the business or dine in restaurants more often than they currently do. • If costs come down at weekends, customers may be more likely to do business then, but business on weekdays may fall by a similar amount. On the other hand, if a large volume of the organisation’s business is transacted at weekends and this is not going to change, e.g. for businesses located near beaches, sports grounds or entertainment districts, or “specialist” restaurants and food shops that struggle to compete on cost with nearby fast-food chain stores, there may be good opportunities for expansion. • If the business operates for longer hours, e.g. starts trading on Sundays, other overheads, such as electricity and wear and tear on equipment used, will also increase. Estimates of these costs must be included in your cost/benefit calculations. Some major expenses, such as paying rent for business premises, will remain unchanged and may even increase. • Evaluate what potential competitors are likely to do. If many of them also decide to expand their weekend business, the result may be the same or even a reduced market share for everyone. This is a matter of studying and predicting customers’ behaviour – would the overall volume of business increase if more places were open and their prices were lower, or would it probably stay at much the same level? Casual Demographics Whilst it may be considered disappointing in many circles in not getting a reduction in the Sunday casual penalty rates in the HIGA FWC Penalty Rates decision, what has been achieved however is the ability to transition based on respective business modelling and taking into account the penalty rates structure going forward: • 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 impacts on the publicised numbers as it is far less than some parties are portraying given the high number of casuals employed. • The industry awaits the part time flexibility decision from the FWC and all indications are that they will grant the HIGA workable flexible part time employment arrangements.
• With flexible part time arrangements within the HIGA, a view exists and we believe opportunity to work with member organisations to educate on the benefits of the utilisation of part time employment over casual employment where it makes business sense. • The gradual move from casual to part time employment will enable members to gain the benefit of the reduced Sunday penalty rate, appreciating that there will always be casual employees but a significant move of casuals to part time is envisaged over the next few years. The accommodation hotels will be the immediate beneficiaries of a favourable flexible part time decision. What about your customers? • Evaluate your customer demographics. If many of them are in jobs where penalty rates apply, they too may suffer a loss of remuneration, which may put pressure on them to tighten their budgets. Instead of gaining more customers, you could end up with fewer of them, or many lower-value purchases. Going it alone may have some merit? • Is there a potential competitive advantage in “going it alone”, by continuing to pay employees at current rates because you believe it is the right thing to do, and/or you believe it will attract more business and greater loyalty from supportive customers? • It may work in a small community or region where word gets around quickly, but the impact may reduce over time when penalty rates are no longer in the media spotlight and people have forgotten what the fuss was about. Also, once again the actions of competitors will affect the impact of such a decision. • Some employers depending on size and nature of various work locations may elect to grandfather existing employees at current work places where as a new site within same company provides the new rates for new employees as a standalone Franchise. This approach is not new in many industries and is lawful and would attract potential new employees. The possible impact on each individual organisation and its employees will be different, so careful evaluation of all the above factors is recommended before making a final decision. Ultimately it is a business choice for respective organisations. THA will continue to communicate with members and provide advice and support where requested and over the next 4 to 6 weeks will be conducting member information sharing forums around the state.
April 2017
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