Prime Minister Julia Gillard has controversially announced that the Fair Work Act will be amended to include a new modern award objective which aims to enshrine an employee's right to be paid penalty rates.
The announcement has been angrily received by employer groups, who have long since lobbied for reductions in the current penalty rates. Speaking at an ACTU work summit in Canberra, Gillard indicated that a specific provision will be inserted into the Fair Work Act that guarantees that workers covered by a modern award will receive higher rates of pay for work performed outside of normal hours. “We will ensure that penalty rates, overtime, shift work loading and public holiday pay are definite, formal considerations for the Fair Work Commission when it sets award rates and conditions. We will make it clear in law that there needs to be additional remuneration for employees who work shift work, unsocial, irregular, unpredictable hours or on weekends and public holidays,” Gillard said.
While the announcement represents a victory for unions in their campaign for legislative protection of penalty rates, the as-yet proposed change has attracted criticism from business groups. “The Federal Government's proposals to enshrine penalty rates has significant and damaging implications for businesses across Australia,” Ai Group CEO Innes Willox said. “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. The proposal would put unreasonable restrictions on both employers and employees who trade off penalty rates for longer leave provisions,” he added.
The Ai Group principally takes issue with the fact that some awards covering professional employees do not include penalty rates because these employees are paid a salary which takes into account their working hours. Other awards do not include penalty rates where employees are paid annual salaries. “Most of the professionals and senior staff covered by these awards would not want it any other way,” Willox added.
The question of penalty rates is currently before a Full Bench of the Fair Work Commission as part of the Award Modernisation Review. The announcement also follows the recent rejection of Senator Nick Xenophon's proposed bill to exempt small businesses from paying penalty rates.