Fair Work Commission denies changes to penalty rates: Hospitality industry, small business furious

The hospitality industry has been dealt a serious blow, with the Fair Work Commission denying an application to alter the way penalty rates are paid.

Both Restaurant and Catering Australia and the Council of Small Business of Australia have condemned the decision, saying more businesses will fail unless the penalty rate scheme is completely overhauled.

“The Commission is out of touch,” COSBOA chief Peter Strong told SmartCompany this morning.

RCA appealed to the FWC to allow penalty rates to be paid on the sixth and seventh consecutive days of work, instead of on all Saturdays or Sundays. The organisation also wanted penalty rates be reduced to 125% for working on Saturdays and Sundays.

Part of the RCA’s argument was that weekends are no longer as important as they once were. The FWC dismissed this, saying it wasn’t satisfied there had been a significant change in the difficulties in working “unsociable hours”.

Reducing penalty rates to being paid on just the sixth and seventh consecutive day of work would have a “significant impact” on take-home pay, the FWC said.

In a significant finding, the FWC said it didn’t necessarily accept the lower costs would improve productivity among businesses.

“The Commission found that the variations proposed would have a negative impact on the relative living standards and the needs of the low paid who would need to increase the hours worked simply to maintain their current income.”

RCA head John Hart was contacted by SmartCompany this morning, but no reply was available prior to publication.

Peter Strong told SmartCompany hospitality businesses are at risk if the current penalty rate scheme continues.

“They don’t seem to have any focus on people keeping a job,” he says. “They don’t seem to understand business, and just have a focus on the ideologues in the union movement.

“And there are people in the union movement who get this issue and understand it.”

Strong says he has heard several tales of businesses being closed on Saturdays and Sundays because they cannot afford to pay penalty rates. If current rates continue, he says, thousands of businesses could be at risk.

“That’s where we’re heading,” he says.

SmartCompany has heard reports of hospitality businesses organising with staff to pay lower rates or in cash to stay open on weekends.

RCA head John Hart told the Australian Financial Review a third of businesses have closed on Sundays, when they were open a year ago.

“We will continue to see businesses going to the wall,” he said.

Small businesses have lobbied the Abbott government to change penalty rates, but the Prime Minister has made no announcement on whether any changes will be pushed in legislation.

Employment Minister Eric Abetz told The Australian he understands parties are frustrated, but there will be a broader review next year “where parties will have an opportunity to raise any outstanding concerns with modern awards”.