Penalty rate cuts won’t be fully implemented until 2020

05 June, 2017 by
Danielle Bowling

The cuts to penalty rates announced earlier this year won’t be completed until 2020, according to a ruling by the Fair Work Commission (FWC).

The FWC announced that the reformed penalty rate conditions for part-time and full-time hospitality employees working on Sundays would be phased in over three years, commencing from 1 July 2017. Sunday penalty rates would be reduced from 175 percent to 170 percent in 2017-18, from 170 percent to 160 percent in 2018-19, and from 160 percent to 150 percent in 2019-2020.

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Public holiday penalty rate reductions for both Hospitality and Restaurant Awards will take effect from 1 July 2017.

Sunday rates for casual employees will not change.

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In a joint statement released by Australian Hotels Association CEO Stephen Ferguson and Tourism Accommodation Australia chair Martin Ferguson, they said that while both sectors would have preferred the reforms to have been phased in over two years, the decision would at least provide certainty to employers and employees, which will allow for better future planning.

“Hotels will now be able to make long term decisions about the future operation of outlets on Sundays,” said Ferguson. “The reform could lead hotels to increasing trading hours and services and employing more staff.”

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Martin Ferguson added “The hotel sector is going through its largest-ever expansion period and given that tourism is a 24/7 industry it was important that rates on Sundays and public holidays reflect the modern working environment.

“We have always supported workers being remunerated extra for working on weekends and public holidays, but the compensation needs to be fair and sensible. It’s now time for all parties to accept the FWC decision and transitional arrangements and ensure a smooth transition.”

According to SMH, trade unions and the business community have been at odds over how quickly the penalty rate cuts – first announced in February– should be introduced.

Russel Zimmerman, head of the Australian Retailers’ Association, said the delayed roll-out has angered retailers.

“Retailers wanted this phased in much more quickly so we can get on with the job of employing more people,” he said.

“What this will do is create an incredible amount of extra work for retailers, who won’t be able to employ more people as quickly as they would like.”

By and large, industry association, Restaurant & Catering Australia (R&CA), is happy with the FWC’s announcement, especially its decision to implement the adjusted public holiday penalty rates on 1 July 2017.

The FWC’s original decision recommended a reduction in public holiday penalty rates for full time and part time workers covered by the Restaurant Award from 250 percent down to 225 percent on public holidays.

“The prohibitive cost of wages associated with penalty rates has long acted as a powerful disincentive for restaurants opening on public holidays,” CEO John Hart said.

“R&CA’s 2017 Benchmarking Survey identified reduced public holiday penalty rates as one of the leading factors in operating a restaurant more successfully.”

The Association also welcomed the decision of the Full Bench to reject the union’s proposal to set aside the decision relating to the Hospitality Award.

“Whilst we are pleased with the transitional arrangements for penalty rates that the FWC has recommended today, we are disappointed that the implementation of this decision may be delayed due to the Union instigated appeal process,” Hart said.

Finally, Hart praised the FWC’s decision to grant the R&CA the opportunity to submit further evidence regarding reductions in weekend penalty rates for the Restaurant Award.

“We were unable to provide the evidence that it is now clear the Commission wanted as the 2014 changes had not been implemented for 12 months when these hearings started.

“R&CA is committed to seeking further penalty rate reforms in the Restaurant Award and will be providing the Commission with further evidence as to the additional jobs that can be created in the Australian economy as a result,” Hart said.

 Image:University of Sydney Union