JB Hi-Fi commits to maintaining penalty rates for workers, but is it “all politics”?

Electronics retailer JB Hi-Fi has joined the growing ranks of Australian retailers choosing not to pass on lowered Sunday penalty rates decided by the Fair Work Commission earlier this year.

In a statement to SmartCompany, JB Hi-Fi group chief executive Richard Murray confirmed that penalty rates would be maintained for all team members employed at June 30 across JB Hi-Fi and The Good Guys businesses.

“As a leadership team we gave careful consideration to the potential impact of the Fair Work Decision on the Group and our people and decided the best outcome for our existing team members was to maintain their current pay and conditions,” Murray said.

“We are always transparent with staff. Existing staff would be losing a benefit that was already in their remuneration whereas a new employee makes a choice whether they feel the Group offers competitive remuneration under the award.”

From the start of this month, full-time and part-time workers in the pharmacy and retail industries saw their Sunday rates cut from 200% to 195%, with three and four year plans in place to reduce rates further in the pharmacy, retail, fast food and hospitality awards.

The pledge to keep rates the same sees JB Hi-Fi added to a list of other prominent Australian retailers refusing to pass on the commission’s penalty rates changes.

In March, cosmetics retailer Lush took a similar approach, pledging to not pass on the penalty rate changes in support of its workers, and with the hopes of attracting new customers.

“Lush decided not to cut penalty rates because we believe that the concept of fair trade is now not just needed for growers and small scale farmers, but also for employees of businesses as life choices become harder for those in lower pay sectors,” director of Lush Australasia Peta Granger told SmartCompany.

Additionally, other retailers like Kikki K and Chemist Warehouse are also choosing to not pass on the penalty rates changes.

However, experts and business leaders have expressed scepticism about the idea that maintaining pre-July penalty rates will attract new customers, with retail expert at Retail Oasis Jace Loh telling SmartCompany customers are unlikely to make the connection.

“I don’t think customers will make that differentiation, they’ll just go wherever they get the best service and price. Whatever brand best services their needs is where they’ll end up,” she says.

Council of Small Business Australia (COSBOA) chief executive Peter Strong agrees, telling SmartCompany any claims that customers would preference retailers who aren’t passing on penalty rates are “a furphy”.

“Not many customers are going to take much notice, they’re looking for price and this is all politics,” he says.

“The majority of customers wouldn’t even know unless the store put up a great big sign saying ‘we pay above award rates’.”

Strong is “not surprised” by the stance many retailers are taking, saying COSBOA supports the moves and says it’s up to businesses to “do what they want”.

However, Loh believes a focus on staff from retailers like JB Hi-Fi could put them in good stead with the upcoming launch of Amazon in Australia, noting that the customer interaction is a key point of differentiation for bricks and mortar retailers.

“What this does for JB Hi-Fi is give them a competitive advantage in the labour market which can be a key defence against online retailers like Amazon,” she says.

“Not cutting penalty rates means they can attract better workers and offer better services.”

“JB realises one of its best assets are its people and its personal service in store, so by protecting penalty rates they’re protecting that advantage.”

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