Fair Work Commission plan: higher pay for penalties trade-off

EWIN HANNAN

The Australian

FEBRUARY 29, 2020

Tens of thousands of retail and hospitality employers could be able to trade off penalty rates for higher hourly pay without the need for a workplace agreement as the Fair Work Commission ­revives a contentious proposal designed to deliver increased flexibility to small business.

Commission president Iain Ross announced on Friday the tribunal would use its powers to investigate changes to the retail and hospitality awards allowing employers to pay a higher minimum rate for all hours worked ­instead of penalty rates.

Justice Ross, who first floated the “loaded rates” proposal in 2016, said he would convene a conference later this year to examine the issue, given the commission’s long-running review of awards had been largely completed and the last stage of phased-in penalty rate cuts would occur from July 1.

Under the proposal, opposed by unions when originally floated three years ago, the higher loaded rate would be included in a schedule to the award and would benefit award-covered employers who would be saved the cost and time involved in negotiating an enterprise agreement.

About two-thirds of businesses in the hospitality sector and over half of the businesses in the retail sector are small businesses.

The ACTU has previously warned the proposal risked weekend workers becoming “scapegoats” who subsidised their colleagues working Monday to Friday. It said loaded rates should be limited to enterprise agreements between unions and employers.

The Council of Small Business Organisations Australia supports a single higher hourly base rate operating across seven days as a simple alternative to the existing system of penalty rates and overtime payments. It says a “potential model” would be the hospitality industry award, which allows employers to pay 25 per cent above the weekly award rate in lieu of overtime and penalty rates.

Justice Ross cited data showing that more than 30 per cent of small business employees were award-only and less than 10 per cent were covered by agreements.

He reiterated his previous comments that “loaded rates” would allow small businesses to access additional flexibility without the need to enter into an ­enterprise agreement, and could also have “a positive effect on award compliance”.

Small businesses have complained they were disadvantaged by the current system, given major retailers had struck contentious enterprise agreements with the shop assistants union that applied loaded rates to tens of thousands of workers. The union says those agreements included loaded rates and penalty rates.

The “loaded rates” announcement was part of an eight-page statement by Justice Ross that commission observers saw as his attempt to rebut criticism by ­employers that the current award system remained overly complex for users.

In another attempt to help small business, Justice Ross ­revealed the commission would develop short summaries of awards in the aged-care, clerical, retail, hospitality, restaurant and hair and beauty industries.

He said the awards were selected because they had a high proportion of employees paid at the award rate and substantial small business coverage.

While not legal instruments, they would provide an easy to understand summary of key rights and obligations.

Justice Ross noted the commission had twice invited interested parties to identify any award term that was “ambiguous, uncertain or confusing” so the term could be considered for plain language redrafting.

He said no union, employer organisation or government had sought such a change but the invitation remained open and any party wishing to pursue such a change should email his chambers.

Justice Ross said simplifying the language and structure of modern awards had been a central focus of the review.

“The objective has been to produce redrafted modern awards that can be read by an employer or employee without needing a history lesson or paid advocate to ­interpret how the award applies in the workplace,” he said.