Penalty Rates Great Debate

Effective 1 July 2017, the Fair Work Commissions decision to reduce penalty rates will be implemented. The reduction of penalty rates is a win for small business struggling with overheads.

The Commission decided in February that that the penalty rate reduction would form part of its four- yearly review of modern workplace awards.  The decision will see penalty rates for workers who work on Sundays or public holidays decreased in the retailing and hospitality sectors.

It represents a landmark win for NSW Business Chamber members and small business, as it ensures penalty rates are in touch with the modern economy and growing consumer expectations of the weekend as an extension of core trading hours.

The commission’s change of heart will see businesses better able to meet the needs of their customers and offer additional hours to employees.

Welcome news for SMEs

The decision has been well received by small business who welcome the opportunity to open on the weekend without always having to work those hours themselves.

Nigel Ward from ABLA (Australian Business Lawyers & Advisors) says “You’ve got to remember this decision doesn’t affect the big players in town, such as Woolworths, because they have their own enterprise agreements”.  Ward goes on to say “Having spoken to business owners, the comment I’ve been receiving is that it will allow them to have Sundays off and afford to have two junior employees on instead”.

The decision ultimately encourages an environment where employers are able to create additional job opportunities for young people, especially in regional and rural areas.

Central to ABLA’s argument was the idea that society has moved on since penalty rates were first introduced.  Following extensive surveying of employees to find out how they valued different days of the week, a complex mathematical algorithm was used by key expert Professor John Rose from the University of South Australia.  The conclusion was that people don’t value Sunday as significantly different to Saturday.

The Fair Work Commission had to concede that Saturday and Sunday were the same, or nowhere near as different as penalty rates suggest.

If you have a business in the retail or hospitality sector and are choosing to adopt the penalty rate changes, be sure to update your payroll payment package to reflect this change from 1 July.  If you are unsure of these changes and seeking advice please contact Fortunity today on 02 4304 8888 to discuss further.