The Federal Government’s Protecting Penalty and Overtime Rates Bill has been passed into law, with the Australian Retailers Association (ARA) and the National Retailers Association (NRA) claiming this undermines the independence of the Fair Work Commission.
According to Minister for Employment and Workplace Relations Amanda Rishworth, the legislation preserves penalty and overtime rates as fundamental entitlements within the modern awards safety net by ensuring these rates cannot be reduced or substituted in a way that workers lose out on their take-home pay.
ARA CEO Chris Rodwell said it is concerning that the Federal Government chose to intervene in the determination by an independent body by creating legislation that overrides the Fair Work Commission process.
“The bill is yet another layer of regulatory burden which creates more problems than it solves,” Rodwell said. “It effectively forbids businesses and their employees from negotiating the incorporation of penalty rates into base salary, an option which could lift that salary by as much as 135 per cent.
“This is a further reflection that Australia’s industrial relations system is not fit-for-purpose. Its rigidity undermines efforts to lift labour productivity.”
These comments come as the Federal Government held an economic reform roundtable, with productivity a key part of the agenda.
Rodwell added that the premise on which this bill is based is a fiction. “There has been no effort to abolish penalty rates. The focus has been on giving employees a choice around their salary, allowing them to opt for a higher base salary in lieu of penalty rates, and to improve job security,” he said.
“Time and time again, during the debate of this bill, there has been a complete misunderstanding of the penalty rates application before the FWC. We even saw union testimony at the August penalty rates hearing,= where case studies put forward were unrelated to the case, including statements of junior employees who would not be impacted, given this aspect of the application would only have applied to more senior employees.
At the same time, Rodwell said the Federal Government is aspiring to genuine productivity growth and reduction of red tape, but “the continued heavy-handed regulation of workplaces has the effect of tangling businesses, especially small retailers, in cost and compliance.”
“It undermines efforts to improve productivity and lift living standards. It also undermines confidence in the system without improving outcomes for workers.”
Rishworth said every modern award-reliant worker deserves protection of their penalty and overtime rates as part of a fair and relevant minimum safety net.
“If you work during hours when most Australians are spending time with family, you deserve fair compensation for the sacrifice you make to keep the country running,” Minister Rishworth said.
“Penalty and overtime rates are not a bonus or a luxury. They are a core entitlement to help those important workers in our society who work weekends and overtime hours.
“For many Australians, penalty and overtime rates mean the difference between getting by and falling behind. This legislation guarantees their earnings are no longer at risk.”
The ACTU also welcomed the passing of the penalty rates bill.
According the union group, this bill means that large employer lobby groups can no longer seek to win so-called “exemption rate” clauses in modern awards, which pay employees a higher base rate of pay, but scrap their penalty and overtime rates, leaving them worse off overall.
The ACTU claimed that clerical workers stood to lose up to $7,000 a year in entitlements, while individual retail workers were at risk of being $5,000 a year out of pocket if employer group attempts were successful.
The ARA had tabled a ‘salary absorption’ model during a review with the Fair Work Commission, which it confirmed was only intended for retail managers, offering them the choice to opt into an annualised salary, which they said would have provided for a 35 per cent increase to base salary.
“This means retail managers could be on average $5,841.65 better off annually under an annualised salary option, providing greater income and financial stability,” ARA chief industry affairs officer Fleur Brown said in March this year.
“The enhanced proposal also provides a higher rate of 150 per cent for any hours of work over 43 in a week for both retailers with, and without, extending trading hours.”
Those below managerial-level positions would not have been affected.