The End of Penalty Rates?

The End of Penalty Rates?

The Fair Work Act 2009 introduced Modern Awards, which prescribe minimum pay rates applicable to jobs in each industry. The Modern Awards (introduced in 2010) are subject to a four yearly review, and the Fair Work Commission is commencing that process.

In advance of the review program the Restaurant Industry Award has already made changes to Penalty Rates (additional payments for working evenings, weekends and public holidays). Entry level casual employees are now paid only 25% above their casual loading on a Sunday, making the penalty rates the same for Saturday and Sunday.

As yet this only applies to the restaurant industry, but could this be the start of the abolition of penalty rates, instead leaving it up to individual employers to set their own rates? In the past, and certainly whilst in opposition, Tony Abbott has been vocal about wanting to get rid of penalty rates. After one year in office, he has distanced himself from his earlier views, and is quoted as saying its not up to the government to have a go at penalty rates. Instead individual businesses and industries can take an application to the Fair Work Commission and the FWC will adjudicate.

Currently, under Individual Flexibility Agreements and Enterprise Bargaining Agreements, individual employers can vary penalty rates provided they can show the employee is better off overall. However, this is still a complex and bureaucratic minefield, particularly for small business.

The Productivity Commission is about to commence a comprehensive review of workplace laws, and it is likely that penalty rates and minimum wage rates in general will be part of that review.