WHAT THE FAIR WORK DECISION ON PENALTY RATES MEAN FOR YOUR BUSINESS


The Fair Work Commission recenty delivered a sensible adjustment to penalty rates on Sunday’s and public holidays. This decision recognises the extremely high cost of doing business on those days when wages bills can more than double. In these circumstances, it is often unprofitable for a business to open its doors, have adequate staffing levels or forces small business owners to work the additional hours themselves.  

The reduction in penalty rates is a win for South Australia’s 56,000 unemployed, 91,000 underemployed and particularly our youth, 17% of whom are without jobs and are the main employee base in hospitality and retail. 


The Fair Work Commission, an independent umpire, through an extensive and vigorous process over two years heard from 143 witnesses and received more than 5900 submissions to reach their decision.

Historically, penalty rates were set to compensate workers for work outside ‘normal hours’ and to deter employers scheduling work outside these hours. The Commission concluded that using penalty rates to reduce work being performed on the weekend is no longer relevant.

The Fair Work Commission agreed with the assessment of the Productivity Commission that there is likely to be some positive employment effects from a reduction in penalty rates.  

• Penalty reductions in the Restaurant and Café industry flowed on from the 2014 reductions which provided Sunday rates of 150% for all employees other than casual employees above level 1&2. The Commission delivered the same public holiday rates as the other awards and a slight reduction in span of hours late night penalties apply.

• The changes to penalty rates are moderate when you consider the fact that they will be phased in and the impact on incentivising increased work hours in the hospitality and retail industries. 

The final penalty arrangements have been decided (see industry breakdown below). The changes to public holiday pay will take effect as of 1 July 2017, but the implementation of the remaining arrangements has not been finalised - including how long this may take. 

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WHAT OTHER EMPLOYER REPRESENTATIVES ARE SAYING?

"Reducing Sunday rates from double time to time and a half will give employers approximately 4-5% reduction on wages which they will be able to reinvest in employing more staff, increasing employment in the retail industry"

Russell Zimmerman, Australian Retail Association

"The adjustment to the rate of penalty rates for franchise businesses in the retail, fast food and hospitality sectors is a positive step towards improving small business operations and their capacity to employ local people and compete with the many larger enterprises that have already secured adjusted penalty rates through union-endorsed enterprise bargaining agreements"

Bruce Bilson, Franchise Council

"Small Businesses in retail and hospitality are saying that existing excessive penalty rates are holding back job opportunities, and the decision of the Fair Work Commission will unquestionably help them hire."

James Pearson, Australian Chamber of Commerce

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