The government’s solution to Fair Work debate over retail and hospitality penalty rates and holidays? Do nothing

Business leaders in the hospitality and retail sectors have attacked the Federal Government’s  submission to the Fair Work review on penalty rates and public holidays, saying its do-nothing approach will not help SMEs remain competitive.

The government’s submission to the review says the current penalty rates and public holiday provisions are sufficient and don’t need to be changed.

“I’m somewhat disappointed,” Australian Retailers Association executive chairman Russell Zimmerman told SmartCompany this morning.

“We’ll have to see what Fair Work has to say in due course, and then see what the government’s response to that is, but I’ll most definitely want to talk to the minister (for workplace relations) at some stage.”

John Hart, chief executive of the Australian Restaurant and Caterers’ Association, says while it’s important to understand this review is separate from a review into the Restaurant Award, it is still a blow.

“The submission makes an argument that there is no economic argument to reduce the pay of weekend shift workers. Well, we think there is an economic argument.”

“Our view is that the debate about casual workers and other workers in the restaurant sector is still yet to be had.”

The debate over penalty rates has ensnared some key personalities in Australian business, including Myer chief Bernie Brookes who called for a reduction in penalty rates last week, along with celebrity chef George Calombaris who made a similar call last year.

The government has made two separate submissions to Fair Work, one on potential changes to penalty rates, and the other on public holidays.

In both submissions, it has recommended making no changes to the system. SMEs have been calling for cuts in penalty rates for some time, saying the downturn in retail makes paying staff extra on weekends unviable.

Hart points to businesses that are shutting down on Sundays because they cannot afford to pay staff.

Both industries want to change the system so workers are not paid penalty rates automatically on weekends, but rather when they surpass a set amount of hours for the week.

But the government has said it will not support any move that would reduce pay for the lowest-paid workers.

“We want to see modernised penalty rates reflect prevalent conditions across jurisdictions,” the submission said.

“The government does not believe extended trading hours and a greater incidence of weekend work diminishes the need to compensate people for working weekends, late nights, early mornings.

Workplace Relations Minister Bill Shorten said in a statement workers should be compensated fairly, and also on public holidays when the majority of Australians are taking time off.

In the submission on public holidays, the government said the current approach “should continue and that work arrangements and additional payments for work on public holidays be set through modern awards”.

Employers want penalty rates for public holidays reduced, and for the elimination of an obligation to pay public holiday rates for two days when a holiday falls on a weekend.

The submission on penalty rates makes a similar claim, saying it does not accept the argument put forward by employers that staff would be willing to work less on certain days.

“Such an approach does not address the policy rationale for the provision of penalty rates and the disadvantage to other employees also working those hours who would see their safety net protections reduced.”

The government also said employers have economic opportunities through extended trading hours, and that, given the economic stimulus provided through penalty rates, it is “not persuaded” that reducing penalty rates would lead to any positive outcomes.

While the Fair Work review will hand down its recommendations in due course, Zimmerman says the submission doesn’t bode well.

“At the moment we are not competitive to the rest of the world, and we’re working in a global environment. We need to remain competitive.”