Gillard’s penalty rate promise a “kick in the guts” to small business, industry leaders claim

Irate business groups across Australia have slammed Prime Minister Julia Gillard’s announcement yesterday confirming penalty rates are here to stay.

Gillard said the Labor Party will legislate to protect penalty rates for weekend, overtime and public holiday work. The push comes as her public support has begun to slip ahead of September’s election.

Penalty rates are a big issue for small business, with Fair Work holding reviews into penalty rates in the retail and hospitality industries. Both sectors complain stores and restaurants are closing on weekends because they cannot afford staff.

Council of Small Businesses of Australia executive director Peter Strong told SmartCompany the issue isn’t about the existence of penalty rates, but just how expensive they can be.

“At the moment penalty rates are so high they are costing the disadvantaged in our community jobs. People who can only afford to work on weekends can’t because the penalty rates are too high,” he says.

Strong says if the penalty rates were lower, around $24 an hour for weekend work, businesses could afford to hire.

“It’s just stupid and irresponsible. People could still have a job if they earned $24 an hour on weekends.”

He says the move is just an attempt to please unions in the lead up to an election.

“They’re just pandering to the unions. What is put in by legislation can always be removed by legislation.”

Speaking at the Australian Council of Trade Unions jobs summit in Canberra, Gillard said Labor would make provisions in the Fair Work Act to ensure the high penalty rates remain.

“We will ensure that penalty rates, overtime, shift work loading and public holiday pay are definite, formal considerations for the Fair Work Commission when it sets award rates and conditions.

“We will make it clear in law that there needs to be additional remuneration for employees who work shift work, unsocial, irregular, unpredictable hours or on weekends and public holidays,” Gillard said in her speech.

Australian Chamber of Commerce and Industry chief executive Peter Anderson said in a statement following the speech the legislation is a “kick in the guts” to small service industry businesses.

“Agree with penalty rates or not, entrenching this big labour cost into national law is foolhardy and calcifying for our economy and labour market.”

“The government’s decision delivers a double blow – having set up a process that increased award penalty rates in 2010 despite promising no labour cost rises from award changes, the government now changes the law to prevent those small employers having a fair day in court to try and undo that damage,” he says.

Anderson says the government move “looks and feels political, with the industry picking up the expensive bill”.

Australian Industry Group chief executive Innes Willox says the changes would negatively impact a range of businesses.

“The proposal would put unreasonable restrictions on both employers and employees who trade off penalty rates for longer leave provisions,” he says.

Willox says the push would damage the current Fair Work investigation into penalty rates.

“The question of penalty rates is currently before a Full Bench of the Fair Work Commission as part of the Award Modernisation Review.”

“The parties to that review have at considerable cost spent time and resources in preparing and presenting their cases. This proposal changes the goal posts for the review and leaves parties in an unfair position,” he says.