Penalty rates announcement has employers seeing red

by Stephanie Zillman20 Mar 2013

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.


  • by serious? 20/03/2013 8:10:27 PM

    Employer associations are no better than unions. They do not have their members best interests at heart. For a business to blame penalty rates as the biggest impact on their bottom line is clutching at straws. Any IR practitioner worth their salt knows full well that the penalty rates are a drop in the ocean compared to other influencing factors on the businesses bottom lines.

    Perhaps if the employer associations spent their members money a bit better and assisted them with on the ground support as opposed to continually flogging dead horses through courts and tribunals, the businesses and the economy in general might be in better shape.

  • by Employers need to appreciate staff 21/03/2013 5:59:41 PM

    This is a disgrace, Employers want staff to work shift work and on Sunday's and not have to pay them penalty rates, come on, this is Australia we need to look after staff who are prepared to work shift work and Sunday's, while the Employer takes the day off !! Penalty rates are not worth that much anyway

  • by employer 21/06/2013 3:39:27 PM

    I'm currently in the middle of updating my payroll and the new rates will be affecting my business, with all the other increases such as rent, insurance, gas and electricity, I will be forced to increase prices and or reduce staff,
    which will make it harder for the people working.

    I'm a owner operator and take time off when i can, Currently employ around 8 casuals but will have to employ juniors under 19 to be able to trade on a Sunday, which isn't compulsory but being in a shopping center are expected too.

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