Business groups “disappointed” over Fair Work penalty rates decision

The business community is outraged by the Fair Work Commission’s decision to deny any reduction in weekend penalty rates for retail and fast food workers, although leaders in the retail and hospitality industries say there is still hope of change.

The decision by the commission came just a few days after Prime Minister Julia Gillard said the government would enshrine weekend penalty rates in legislation.

Russell Zimmerman, executive director of the Australian Retailers Association and a prominent proponent of reducing weekend penalty rates, told SmartCompany this morning the decision was disappointing – but says there is hope of change.

“I think it’s good to point out this is a 2012 review, and it took 15 months. The case has been made in the context of this review.”

“A proposal to reassess the Sunday penalty rate in light of the level applying on Sundays was said to be not without merit, so if you look towards the 2014 review, that will have a broader scope.”

The decision is part of the Modern Awards Review, and not representative of current inquiries being held into penalty rates for the hospitality and retail industries – but it’s certainly not a good sign for those who want penalty rates reduced.

The commission’s judgment said while employers claim they will hire more workers on Sundays if penalty rates drop, any evidence given in that regard “is far from compelling”.

Business groups, including the Australian Chamber of Commerce and Industry, the Australian Industry Group and several industry-based organisations, have all argued penalty rates are hurting businesses by forcing them to close on weekends.

Infamously, celebrity chef George Calombaris said it was costing him over $40 per hour to have staff working on Sundays at the maximum penalty rate, and argued such high pay rates were unsustainable.

But the commission said despite any impact, there is evidence to support the continuation of penalty rates for work during “unsociable times”.

“We are not persuaded that a sufficient case has been made out to warrant varying the relevant awards in the manner proposed by the employers.”

However, employers say a specific line in the judgment could hold the key to change:

“While aspects of the applications before us are not without merit – particularly the proposals to reassess the Sunday penalty rate in light of the level applying on Saturdays – the evidentiary case in support of the claims was, at best, limited.”

Russell Zimmerman says this suggests the next review, to commence in 2014, will be more accommodating. The Commission specifically says it will be “broader in scope…and will provide an opportunity for the issues raised in these proceedings”.

“I still think there’s quite a good case for a penalty rate review.”

John Hart, head of the Restaurant and Catering Association, says while the review doesn’t actually affect restaurants (which will be dealt with in an upcoming judgment), the decision doesn’t necessarily bode well.

However, he again pointed to the line from the commission saying “aspects of the applications before us are not without merit”.

“The decision said there was some merit mounted by employers, but it wasn’t convinced based on the evidence,” Hart says.

“We [the Restaurant and Catering Association] have more substantial evidence than they did.”

In a statement, Australian Industry Group chief Innes Willox said the decision was “very disappointing”, especially as it relates to the fast food industry.

“Penalty rates increased significantly in 2010 when the modern fast food award was implemented and this is having a big cost impact on fast food businesses.”

This story first appeared on SmartCompany.