The Albanese Labor Government is preparing to table new laws to strengthen penalty rates this week, but some industry groups are ringing alarm bells, with one calling it a job killer.
The proposed bill is set to protect entitlements for around 2.6 million modern award-reliant workers.
This all comes after the ARA proposed to introduce a ‘salary absorption’ model in a submission to the Fair Work Commission’s enquiry into the General Retail Industry Award (GRIA). The model has since been considered a full attack on penalty rates altogether by the government and unions.
According to the ARA, its ‘salary absorption’ model was only intended for retail managers, offering them the choice to opt into an annualised salary, which reportedly would have provided for a 35 per cent increase to base salary. Those below managerial-level positions would not have been affected.
ARA CRA Chris Rodwell said this application is consistent with the government’s stated intent when it initiated the FWC’s independent review of Awards.
“Contrary to misinformed claims, it never sought to remove penalty rates from the award,” Rodwell said. “It simply provided a commonsense option to absorb them to provide a higher base salary and improved job security.”
Rodwell added that the Federal Government’s recent decision to intervene in the Fair Work Commission’s independent determination around penalty rate arrangements is “troubling”.
“It also overlooks that salary arrangements like this exist in most industries – in fact, the ARA proposal has more safeguards.”
The Minister for Employment and Workplace Relations, Amanda Rishworth, shared in a media release that the incoming legislation will ensure penalty rates and overtime can’t be rolled up into a single rate of pay.
“If you rely on the modern award safety net and work weekends, public holidays, early mornings or late nights, you deserve to have your wages protected,” Rishworth said.
“We want this law passed as a top priority, so workers are protected from the loopholes that see their take-home pay go backwards.
“Enterprise bargaining is the appropriate place to negotiate on entitlements – not eroding the award safety net.”
Meanwhile, the Australian Industry Group CEO Innes Willox called the new legislation a “job killer” that doesn’t represent a serious plan to revitalise the country’s struggling businesses and economy.
"The dust still hasn't settled on the recent waves of radical IR laws and Labor are unfortunately already rushing to announce further unbalanced and unnecessary changes in response to union thought bubbles,” Willox said.
"Our workplace laws are already ludicrously complex, outdated and restrictive and actively discourage business investment and employment, especially of young Australians who will be the main victims of this proposal.
"If Labor genuinely wants to assist with the cost of living pressures, it needs to spell out a pathway to addressing our failure to lift productivity so that businesses can afford to deliver the sustainable wage rises everyone wants to see.”
Willox added that Australia is currently suffering the lowest economic growth outside of Covid since 1991, with many businesses collapsing or exiting operations.
In FY24, the total number of businesses exiting topped just over 362,000 according to the Australian Bureau of Statistics (ABS). This is nearly 100,000 more than FY21 numbers, with total exits hitting 277,000.
Willox said the new legislation will signal the death knell for many more.
"Simplistically supporting higher wages without any mention of lifting productivity, recognition of the impost on business or the lack of flexibility it imposes for both employers and employees might be seen to be a popular play in the context of an election, but it isn't a responsible or considered plan,” he said.
"The proposal to tie the hands of what is supposed to be the independent umpire when it comes to determining appropriate penalty rates or wage structures is a sadly predictable sop to unions who remain stuck in a time warp.
"All this will do is further discourage businesses from opening on weekends and employing young Australians, and will further drive up the costs both for businesses who must open on weekends and their consumers.”
According to Rodwell, the retail sector employs around 1.4 million Australians or 10 per cent of the workforce. He said the GRIA underpins the employment of many of these people, “but it fails on so many levels, not least in providing workplace flexibility and job security.”
“It is profoundly complex and confusing, running to 96 pages and including 994 different pay rates,” Rodwell said. “Australia’s largest retailers find it difficult to navigate. Our smallest retailers find it near impossible to interpret. Importantly, it fails employers and employees alike.
"While enterprise bargaining may align with union objectives of expanding membership, it is not an easy or preferred vehicle for achieving productive and flexible workplace arrangements for small businesses. Instead, it imposes additional costs, complexity and administrative pressures, further straining employers already navigating significant challenges in today’s economic climate.”
Rishworth’s media release added that modern awards provide entitlements such as pay, hours of work, rosters, breaks, allowances, penalty rates and overtime. They form part of the safety net of minimum wages and entitlements for Australia’s lowest-paid workers.
People who are covered by awards are more likely to be women, work part-time, be under 35 and employed on a casual basis.