It’s also a question HR pros need to come to grips with when employing staff who sit outside existing wage arrangements, but who may have to work on weekends or outside regular hours. Is simply paying staff more for those hours the way forward, or are there other incentives available?
In an article in The Conversation, University of Canberra’s economics professor Phil Lewis argues penalty rates would increase staff turnover, reduce unemployment and ultimately benefit the business bottom line.
So what’s the answer? Last year, then-Prime Minister Julia Gillard moved to enshrine penalty rates in an amendment to the Fair Work Act, a tactic that was met angrily by employer groups.
“If implemented, the proposal would reduce the flexibility of the award system and poorly impact on a range of sectors, including the fast food sector that employs a significant number of people,” ” Ai Group CEO Innes Willox said at the time. “The proposal would put unreasonable restrictions on both employers and employees who trade off penalty rates for longer leave provisions.”
The implication for HR pros is clear – inflexible penalty rate arrangements nibble at the bottom line, and also reduce amenity to employees, who may wish to trade penalties for other, non-monetary incentives.
“Businesses would increase turnover and would be better able to manage in a more efficient way,” wrote Lewis. “There would be more employment as turnover increased. There would be greater choice of shifts available. There would be more employment opportunities for the unemployed.”
Are penalty rates compatible with modern business practices? It’s a question the government is set to grapple with, having asked the Fair Work Commission to investigate whether penalties are still relevant in the modern employment environment.