Penalty Rates

In recent weeks there has been extensive media coverage of the decision by the Fair Work Commission to reduce penalty rates in the general retail, hospitality, fast food, pharmacy and restaurant awards.

The ensuing public debate has been largely negative and sensationalised. NSW Business Chamber is keen to ensure that the benefits underpinning the penalty rates decision – including job creation, tackling youth unemployment, and relieving pressure on small businesses that are fighting to survive – are not jeopardised.

The Chamber is there to support small business, presenting them with the facts to help manage a positive conversation with employees if the need arises. We also encourage you to work alongside the Chamber as an advocate for the penalty rates decision, contributing to a strong, local voice for our business community.

To help guide constructive conversations, we have addressed the key points of contention below.

Responding to misconceptions

1.‘The Commission’s decision was biased.’

The Fair Work Commission is an independent body that acted on evidence.
The Commission’s decisions were based on evidence. The full bench heard evidence from more than 140 witnesses, the hearing went for 39 days, and resulted in a judgement in excess of 500 pages.

As an independent body, the Commission heard from both employer groups and trade unions.

2.‘Penalty rates have been abolished.’

Penalty rates have been put in balance.
The Fair Work Commission’s key concern was balance. It ruled that the award rates payable on Sundays and Public Holidays in hospitality, retail and some prepared food sectors were out of balance, and that they acted as a disincentive for business owners to employ more people or extend their trading hours.

Even under the Commission’s proposed changes, public holiday penalties at double time and a quarter or double time and a half would provide someone whose weekly rate is $20/hour at least $45/hour on a public holiday.

3.‘Sunday penalty rates will be phased in immediately.’

Amended Sunday penalty rates will be phased in over a period of time – possibly up to two years.

Media coverage has largely overlooked the fact that additional hearings will take place to decide how the rates will be transitioned in. The reductions will not occur in a single introduction. Instead, they will be transitioned over the next two years. This allows both employers and employees to discuss, plan and adjust.

4.‘The decision lines the pockets of big business.’

The decision focuses on small business in sectors with low survival rates.

The Commission recognised that the industry sectors subject to these awards are ones with some of the lowest business survival rates, including retail and hospitality. Most larger companies have entered into enterprise agreements with their employees and are therefore not impacted by this decision.

Small businesses in these sectors are operating with limited margins in a highly competitive work environment, and more commonly on a seven-day basis.

With the average taxable income of individuals earning income from a business being $53,268.06 in 2013-14, some small business owners earn less than the staff they employ!

The big picture

The decision by the Commission will help increase the capacity for our local retail and hospitality businesses to stay open. In many communities across Australia – including here in Western NSW – youth unemployment remains a chronic issue. If small businesses are not able to create entry-level jobs, our kids will struggle to enter the workforce and progress towards a life-long career.

Ultimately, the Commission’s decision will make it easier for small business owners to employ members in our communities, and to potentially expand the range of services.