Penalty rates under review

As part of its four yearly review of modern awards, the Fair Work Commission is due to consider proposals to vary penalty rates later this year.

Under the Fair Work Act, the Fair Work Commission must review all modern awards every 4 years. As part of the review, unions and industry bodies have the opportunity to make submissions on the changes they wish to be made to an award.

As part of the first four yearly reviews since modern awards were introduced in 2010, employer groups have called for a decrease in penalty rates, arguing that a reduction will ensure greater flexibility and lower costs in the face of tough trading conditions.

Likely to be most affected is the hospitality industry, which traditionally requires employees to work late nights, weekends and public holidays. In its submission, the Restaurant & Catering Association said:

“We are not arguing there shouldn’t be penalty rates, because the legislation says there has to be. It is now about arguing the quantum.”

Approximately one third of restaurant and catering businesses do not trade on Sundays due to high wages. Employers argue that a reduction in penalty rates will mean that businesses can be open longer hours, hire more staff and improve service. Industry groups and unions are due to produce evidence to the Fair Work Commission in over 100 hearing dates later this year. The Fair Work Commission will then issue a decision as to whether penalty rates should be changed and if so, by how much.