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Issue #1697      August 12, 2015


Hands off penalty rates!

As expected the Productivity Commission’s draft recommendations for a Workplace Relations Framework included an attack on penalty rates, recommending that Sunday penalty rates that are not part of overtime or shift work should be set at Saturday rates for the hospitality, entertainment, retail, restaurants and café industries. It calls on the Fair Work Commission to introduce new regulated penalty rates as part of its award review process.

The Fair Work Commission did not wait for the Productivity Commission’s call to begin rolling back penalty rates. In response to the Australian Industry Group’s submissions it has agreed to extend provisions for time off in lieu of payment for overtime throughout the award system. It means that thousands of workers will no longer be automatically entitled to penalty rates for overtime. Instead they will be entitled to one hour off for every hour of overtime and haggle with their boss as to when they will take the time off.

As the Australian Industry Group chief executive Innes Willox put it: “The decision is an important step in the right direction of freeing up the award system to remove barriers to employers and employees agreeing on workplace flexibilities of benefit to both parties.”

The benefit to the employer is clear – lower wages means more profit. Willox doesn’t expand on the benefit to the worker. Presumably it is that he or she gets to keep their job, for the time being at least. Even that is not certain. When it comes to agreeing on the time to be taken off, Willox has a take-it or leave-it approach. “If you don’t like the offer that’s given, then you don’t decide to work for that particular employer.” He should add “you don’t get the dole if you walk out”.

The right-wing Shop Distributive and Allied Employees’ Association (SDA) in South Australia laid the groundwork earlier this year for cutting retail workers’ pay. Initiated and signed off by the union, workers’ penalty rates have been exchanged for a rise in their base wage rate. It will hit the pay of more than 40,000 workers in that state.

The agreement reduces penalty rates for Sundays from 100 percent loading to 50 percent, cuts public holiday rates from 150 percent to 100 percent. It abolishes penalty rates on Saturdays and weekday evenings. The increase in the base rate might compensate some workers for now but for the many part-timers and casuals who work mostly weekends or do night shifts, the loss is immediate. More importantly, the principle has been established and the agreement will be used as a precedent.

Over at Tourism Accommodation Australia (TAA), the Tourism Minister in the Rudd and Gillard governments and a former ACTU president, Martin Ferguson, is campaigning to cut penalty rates, calling for a new “industrial vision”.

“It’s about trying to develop a modern package for the nature of society in the 21st century,” said Ferguson, echoing Treasurer Joe Hockey on the 24/7 nature of commerce. The Victorian office of the ACCI’s submission to the Productivity Commission said that penalty rates should be scrapped because they “no longer reflect community standards”. We are supposed to believe that Saturdays and Sundays are no different to week days.

The workers in the hospitality, retail and tourist sectors rely on their penalty rates to get by. Take the example of a cleaner Olisa, whose annual income is $44,000. She has two children. Her husband is on a disability pension. She works at a shopping mall in Melbourne and often has to ask utility companies for extensions to pay the bills. With penalties, she earns $27 an hour for a 4pm to midnight shift on Saturdays and $34 an hour for the same hours on Sundays. Her family could not survive without those penalty rates.

Employers want to abolish penalty rates for one reason – to increase profits.

Penalty rates are just that, a penalty imposed on the employer for keeping a worker for longer hours, for being away from their family on weekends, for the inconvenience and detrimental effect on health of shift work, on families and so on. They were fought for and won by workers and their unions. The future of penalty rates depends on the strength of the struggle to keep them.

Next article – Party members in SA say no to nuclear

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