Should hospitality cut penalty rates?

by Cameron Edmond13 Nov 2013

Last month, the FWC rejected a push by Restaurant and Catering Australia (RCA) to cut penalty rates for employees in the hospitality industry. The cuts would see penalty rates only granted to employees if they worked six-to-seven consecutive days, The Australian reported.

Last week, the (RCA) appealed to the FWC over its decision. “The appeal will ask the Fair Work Commission to reconsider the adverse impact of penalty rates to the sector including the impact on productivity and employment costs that are forcing restaurants to close,” John Hart, CEO of RCA, said. “We believe the Commission has failed to take into account the operational requirements of the industry and its labour intensive nature.”

Angela Knox, senior lecturer at University of Sydney, warned of the strain it will place on the industry if penalty rates are cut.

“Weekends are often the busiest times of the week for the hospitality industry so more effort is extracted from workers during this time. Café and restaurant staff tend to have to work harder at these times and if they are not receiving the penalty rates that boost their low wages they are probably going to re-evaluate whether it is worth working on weekends or in the hospitality industry at all,” she told HC.

While chain restaurants and cafés may not be suffering a skill shortage, many specialist cafés are. Knox stated that the industry is rife in skill shortages, and with specialist outlets requiring more advanced and specific skills, they are feeling the strain the most. Removing the penalty rates will cause more workers to leave the industry, as well as decrease the amount entering.

In regards to the wages that hospitality staff are currently receiving, Knox revealed they are already low.

Waiters in Australia earn a median total of $300 pw, café workers $400. Full time waiters are likely to earn $700, and café workers $660.

Knox argued hospitality workers are able to live off this due to the compensation earned from penalty rates supplementing the otherwise lowly wages.

She added that the industry will be improved by formalised career structures and boosting training programs and skill development opportunities, as this will help incentivise that there is a future for those entering the industry.

“Our hospitality industry is strong and our café sector is the envy of the world. We should be protecting that reputation and investing in making it even stronger,” she said.

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