Sunday rate cut eases pay pressures

The FWA recognised that Sunday’s had a greater “disutility” for workers than Saturday’s. Source: The Policy Space

After 39 days of hearing, the Fair Work Commission (FWC) today handed down a decision that will see Sunday penalty rates cut from double-time to time-and-a-half pay.

The new move will ease overhead pressures on small business retailers who employ staff on weekends.

The full bench of the FWC has not changed Saturday penalty rates, stating it was satisfied that the existing Saturday penalty rates achieve the modern award’s objective to provide a fair and relevant minimum safety net.

The Full Bench also stated it did not reduce Sunday penalty rates to the same level as Saturday penalty rates, noting that for many people Sundays had a higher level of “disutility” than Saturday work, albeit that the extent of that disutility was significantly lower than for periods further in the past.

It was viewed as implicit in the claims advanced by most of the employer interests that “they accepted the proposition that the disutility associated with Sunday work is higher than the disutility associated with Saturday work”.

“If this was not the case then they would have proposed that the penalty rates for Sunday and Saturday work be the same, but they did not,” the full bench said.

Australian Retailers Association (ARA) CEO Russell Zimmerman said the Sunday rate cut would increase retail growth nationally and reduce the unemployment rate.

“With retailers currently paying employees double time on Sundays, many retailers are forced to close their doors on this day, impeding on growth in the retail sector,” Mr Zimmerman said.

“Given today’s decision to reduce Sunday Penalty Rates to 150 per cent, ARA members have said that they will look at employing more staff on a Sunday as it is their busiest trading day of the week.

“Sunday wages have previously been detrimental to Australian retailers, as many employers could only afford to roster one staff member on this day.”

Public holiday penalty rates have been cut from 2.5 times to 2.25 times normal pay for Full-time or part-time retail employees, while casual employee rates have been cut from 2.75 times to 2.5 times base pay.

The decision follows two years of lobbying by peak bodies such as the ARA, Australasian Association of Convenience Stores (AACS), the Master Grocers Association and the Franchise Council of Australia, to reduce the General Retail Industry Award 2010.

The ARA said it believed the wage reduction would increase employment of young people who are currently seeking weekend work, “as more stores will be able to open on Sundays and have more staff working at these times”.

Mr Zimmerman said that reducing Sunday rates from double time to time and a half would give employers approximately 4-5 per cent reduction on wages, a benefit that could be reinvested in employing more staff, which would in turn increase employment in the retail industry.

AACS CEO Jeff Rogut was cautiously optimistic, stating that the effects of this change wouldn’t immediately translate into new retail hires.

“People need to see the effects and do the numbers, and see what the longer term projection is,” he said.

“I think we’d be hugely optimistic if we suddenly saw a huge upswell in employment in our industry.

“As long as they see a positive effect, and the ability to employ more people, be it on a part time basis, I think it certainly is going to be a positive.”

Mr Rogut suggested the change would come as a relief to some employers, and encourage positivity in the P&C sector.

“We’ve needed something that would engender more optimism in small business, and with wages being one of the biggest costs, I think this comes as positive news, it’s something the industry has been waiting for quite some time,” he said.

“In our industry particularly, we’re open seven days a week, 24 hours a day, so our wages compared to other small businesses are disproportionately high, because of the hours that we’re open.

“I think it will be, I wouldn’t say a greater benefit, but it will certainly be a major benefit to our industry.”

SDA, the union for retail workers (formerly Shops, Distributive and Allied), put out a statement that expressed derision for the pay cut, saying the move would not create “a single extra job” and called on the Prime Minister to intervene.

“Today’s decision means retail and fast food workers could take a pay cut of over $2,000 per year,” SDA national secretary Gerard Dwyer said.

“This cut comes at a time when wages growth is at a record low – Australian workers need a pay rise, not a pay cut.

“Malcolm Turnbull is clearly Prime Minister out of touch, with a recent Essential Poll demonstrating that 82% of Australian’s [sic] actually support penalty rates.

“The Turnbull Government has sat on its hands as employers have fought to cut penalty rates – it can’t sit by now and allow those rates to disappear.”

“The Prime Minister must intervene before July to protect the take home pay of retail and fast food workers.”

“Today’s ruling has effectively created a two-tier working system, where retail and fast food workers are less important than other workers.”

“Economic analysis shows that this decision will not create one extra job or serve as a boost to small business.”

The union pointed out that an extensive McKell Report estimated that the cuts to penalty rates in the retail and fast food sectors would result in workers across Australia losing between $370 million and $1.55 billion each year.

Mr Dwyer said that it was appalling that the Turnbull Government was “soft on multinational tax avoiders, has called for cuts to company tax rates”.

“At a time when serious economists and world economic institutions like the IMF and USA Federal Reserve are all saying that increases for wage earners are critical to get our economies moving, the Turnbull Government does nothing while penalty rates for retail workers are slashed,” he said.

“The SDA will be reviewing this damaging decision and we’re calling on Malcolm Turnbull to stand up for our nation’s retail and fast food workers by intervening immediately to protect take home pay and then reviewing the laws that have led to this decision.”

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