A leading employment law expert has warned that thousands of travel and tourism businesses will face additional costs during the upcoming long weekend. As SMEs increasingly call for changes to penalty rates, those changes are still a long way off, leaving many employers facing the question of whether to shut up shop for the weekend, or absorb the inflated cost of penalty rates.
Edward Mallett, Managing Director of Employsure, Australia’s largest employment relations consultancy for employers, says, “Many small businesses are faced with this catch-22 over public holidays. It is an outdated system that is skewed against employers. Compulsory penalty rates have fallen away in the UK, New Zealand and the rest of the developed world, yet Australia still clings to a system which fails to reflect current market conditions.”
He added that it is often the employees who in fact suffer, with thousands of workers being without work for the day, despite being willing to work at ordinary rates.
A recent Australian Chamber of Commerce and Industry survey revealed that small business conditions struggled in the March 2015 quarter, with many employers expecting the economy to deteriorate over the next 12 months. It also found that small business profits fell for the second consecutive quarter. Against this backdrop, the added pressure of penalty rates will further impact the confidence and profitability of small business owners.
Edward says, “The main concern for most travel business owners is making enough money to keep the business afloat. We frequently receive calls from employers asking whether it’s financially worth it for them to stay open on public holidays, due to penalty rates. Many end up deciding not to open, citing the additional costs as too expensive. Public holidays also give consumers an extra day when they can spend money, yet their options are narrowed because of unreasonable wage expectations. These factors collectively have a significant impact on the economy.”
Another issue worth noting is that not all penalty awards are the same. “Many of our clients aren’t sure which penalty rates apply to their businesses, and how to implement them. If an employer fails to pay penalty rates, or forces employees to work on public holidays unnecessarily, they could justifiably have a claim brought against them. The system is mind-bogglingly complex and just adds to the burden of red tape in running a business.”
Edward says the current system has a multitude of variations and technicalities that pose many traps for small businesses. It’s not one size fits all and, in order to protect their business, employers must ensure they have individually tailored advice.
Below are Edward’s five tips for employers during public holidays:
- Know your industry: Make sure you know which award applies to your staff. Treatment of public holidays can vary from industry to industry and it’s important to know what your options are.
- Understand your obligations: Even if you don’t know what your obligations are, there’s a good chance your staff will. It’s important that you know which penalties apply and from when, and whether the applicable award allows for substitution of public holidays.
- What are your options? Does your business have a mix of casual, permanent and part-time employees? Rostering options can help you can determine who would be most beneficial to have working on a public holiday.
- To open or not to open? Compare the costs of staying open versus staying shut before deciding to close, and remember your customers’ expectations. Not all public holidays are national – if it’s business as usual in WA, you risk losing business if you decide to close.
- The public-holiday sickie: Have a process for addressing unexplained absenteeism, and communicate clearly any expectations your business will have for employees to work on the public holiday.