Landmark decision by Fair Work cuts restaurant Sunday penalty rate by 25%

Restaurant and café owners around the country are celebrating today following a landmark decision by the Fair Work Commission to reduce the 75% penalty rate for casual employees on Sundays to 50%.

John Hart, chief executive of the Restaurant and Catering Industry Association, told SmartCompany this morning his association had been flooded by calls from its 35,000 members who said “loud and clear” they will now consider trading on Sundays when the reduced rate comes into effect on July 1.

Hart says many businesses have been waiting on the decision, which is the result of the association’s long battle to have the penalty rates introduced by the 2010 Restaurant Industry Award amended.

The association had made an application for changes to penalty rates, classification structures and payment of wages under the Modern Awards Review Process in 2012, which was rejected in October 2013.

The association subsequently lodged an appeal with the full bench of the Fair Work Commission, which accepted on Wednesday the association’s argument that there is a direct link between penalty rates and employment prospects.

“It’s a good first step and it’s enough for businesses to reconsider opening on Sundays,” says Hart.

“This decision really resets the operating environment for the weekend as we now have a penalty rate structure for casuals that is the same as for Saturdays.”

Hart says the majority of businesses operating in the industry are small businesses and the ruling “applies to them almost exclusively as the large companies have different arrangements”.

“This is great news for operators and for staff as there will now be more hours of work available,” says Hart. “And it is great news for consumers, who will have more restaurants to choose from on Sundays. It’s a win for everyone.”

Peter Strong, executive director of the Council of Small Business of Australia, previously told SmartCompany he heard several tales of businesses being closed on Saturdays and Sundays because they could not afford to pay penalty rates.