MP David Leyonhjelm proposes scrapping all weekend penalty rates but small business group says that would be “a bridge too far”

Liberal Democrats Senator David Leyonhjelm has advocated scrapping weekend penalty rates but retaining higher wages for public holidays and overtime, in a proposal that Australia’s peak body for small business says is too radical.

The New South Wales senator wants an overhaul of the industrial relations system to tackle youth unemployment.

The bill Leyonhjelm will put to the federal parliament would remove penalty rates for Saturdays and Sundays but retain higher rates of pay on public holidays.

The crossbench senator wants penalty rates paid when people work more than 10 hours in a single day or more than 38 hours in the one week.

However, the proposed changes would only to apply to small businesses with fewer than 20 employees.

In an opinion piece for Fairfax this morning, Leyonhjelm argues the current penalty rates system belongs in the past.

“The original reason for penalty rates was to penalise employers for requiring employees to work outside the standard Monday to Friday working week, or conversely, to reward employees who agreed to give up traditional working days,” Leyonhjelm writes.

“However, we no longer live in the world that existed when penalty rates were introduced. Pubs used to shut at 6pm; dining choices were limited; shopping ceased at noon on Saturdays; and sporting events were held almost exclusively on Saturdays. Today’s world operates 24/7.”

Leyonhjelm says he is furious that a “significant number” of businesses are restricting their trading hours because if they open they will lose money thanks to penalty rates.

“Any business, other than a sole trader, that restricts trading hours is closing off a job opportunity for someone,” he writes.

“It is ludicrous that business owners are being forced to restrict trading hours, and therefore job opportunities, because regulated pay rates deny profitable trade. Any business should be at liberty to trade according to the preferences of its customers, not according to out-dated laws.”

However, Peter Strong, chief executive of the Council of Small Business of Australia, told SmartCompany he does not agree with Leyonhjelm’s proposal.

“That’s a bridge too far,” Strong says.

“We’re saying penalty rates are too high on Sundays and public holidays. That [Leyonhjelm’s bill] is not going to get anything but a fight and it sends the wrong message. The unions and others want to hear that stuff. Weekends are still weekends whether we like it or not.”

Strong says while society has no doubt changed over the years – particularly in how we regard Sundays – he wants a “proper debate” with an outcome most people are likely to accept.

As for Leyonhjelm’s proposal applying to businesses with fewer than 20 employees, Strong says small businesses just want certainty across the board.

For example, a business with 21 employees is likely to think of Leyonhjelm’s proposal as unfair.

“We just want a simple system where everybody understands it,” Strong says.

“Let’s not make it more complicated.”