Penalty Rates Decision to Open the Floodgates?

The Fair Work Commission has released a decision reducing penalty rates on Sundays for certain workers on the Restaurant Industry Award.

Penalty rates reduction for some restaurant workers

The 50% Sunday penalty rate for full time workers was considered appropriate, but not the additional 25% casual loading for transient and lower-skilled casual employees. The Commission found that the combination of the loadings resulted in a pay rate that was more than was required to attract employees to work, which it noted was the modern awards objective.

From 1 July 2014, the Restaurant Industry Award 2010 will be varied for workers in the Introductory, Level 1 and Level 2 pay grades such that the Sunday penalty rate and casual loading should not exceed 50% in total. An additional requirement is to be added that no existing Level 3 employee should be moved down to a lower job level as a result of the change.

The Restaurant and Catering Association of Victoria (RCAV) did not receive its desired reduction from 50% to 25% (which is the Saturday rate) because the Commission found that employment growth in the restaurant industry had been strong despite the introduction of the restaurant award and it believed that working on Sundays was not the same as working on Saturdays.

Importantly, however, the Commission accepted that Sunday penalty rates “may have a limited effect on employment”. Commentators consider that this admission will provide support for employers in the recently commenced four yearly review of modern awards.

“To actually get some concessions that in fact penalty rates have an effect on employment and are maybe over-generous in some cases is quite remarkable,” University of Canberra industrial relations professor Phil Lewis told the Australian Financial Review. “I would expect there will be a significant push from employers. I think if you were going to do something you should do it now.”

The decision was handed down following an appeal by the RCAV on a Commission ruling in October 2013. That ruling rejected business’ owners applications to cut penalty rates on weekends, saying it would have a significant impact on the take-home pay of low-paid workers.

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