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Penalty rate reform will benefit business and workers – TAA welcomes Productivity Commission’s recommendations on workplace reform

December 22, 2015 Association No Comments Email Email

Australia’s peak hospitality and accommodation bodies, Australian Hotels Association (AHA) and Tourism Accommodation Australia (TAA), have welcomed the Productivity Commission’s recommendations for more flexible working arrangements, particularly involving penalty rates on Sundays and public holidays that are inhibiting both business and employment opportunities. 

The Productivity Commission’s report on Australia’s Workplace Relations Framework has recommended that Sunday work for hospitality and retail workers should attract the same penalty rates as Saturday, reflecting the fact that the industry operates under totally different conditions from when penalty rates were first introduced 50 years ago.

The recommendations are particularly relevant to the accommodation and hospitality sectors and their 24/7 operating conditions, with the report recommending consideration of individual flexible arrangements, rather than uniform penalty rates, because existing penalty rate provisions have prevented many businesses from opening and creating additional employment on weekends and public holidays. 

The Commission’s recommendations echo the results of a report commissioned by TAA and undertaken by Deloitte Access Economics, The Modern Face of Weekend Work: survey results and analysis (full study available on request), which concluded: 

“On the basis of the evidence gathered via the online surveys, this report concludes that a large portion of weekend workers have minor or no difficulty working weekends, that there is only limited special significance assigned to working Sundays, that penalty rates appear to reduce aggregate staffing and opening hours on weekends and that significant portions of society, especially weekend workers themselves, benefit from access to services on weekends. 

“Based on this evidence, this report suggests that reductions in penalty rates may improve the availability of weekend services and could create more employment opportunities for both existing weekend workers and the currently unemployed.” 

AHA and TAA represented the hospitality and accommodation industries at the Productivity Commission, as well as the ongoing Fair Work Commission review of the Hospitality Industry (General) Award 2010. TAA and AHA have argued that the current provisions of the Award are punitive to the 24/7 hospitality industry, creating additional labour costs on evenings, weekends and public holidays and leading to increased underemployment. 

TAA Chair and former ACTU leader and Labor Tourism Minister, Martin Ferguson, said that the Productivity Commission’s report was a welcome and refreshing contribution to the issue. 

“Industrial relations reform is critical for Australia’s transition to a services-based economy,” said Mr Ferguson. 

“We don’t support abolishing penalty rates, but we do believe that ‘premiums’ such as excessive Sunday and public holiday penalties should be reformed. The way forward is for parties to be realistic. It’s about incremental progress, not putting your head in the sand, thinking that shift penalties that were relevant in the 1930s and 1940s are still relevant. 

“Work conditions need to be adjusted to reflect changes in the industrial landscape so that both businesses and workers can benefit. No one gains from a hospitality business being closed because it is unprofitable to open, while thousands of workers who don’t see a vast difference between working on a Sunday or a weekday are missing out on employment because of the intransigence. 

“Unfortunately, while the Productivity Commission report reflects a victory for common sense, calls for a sensible debate on the issue have already fallen on deaf ears with reactionary forces predictably raising the spectre of ‘Work Choices’ rather than opting for constructive dialogue.” 

Mr Ferguson said that the recommendations of the Productivity Commission would hopefully flow through to the Fair Work Commission’s review of the Hospitality Award, which was expected in early 2016. 

Mr Ferguson said that AHA and TAA had presented a significant case, supported by evidence from across the sector, arguing for major reform. 

Reform measures included:

·        Penalty rates – ensuring employee pay and conditions are fair, but also remove the current major disincentives to open the doors on weekends and public holidays

·        Part-time flexibility – removing the current inflexibility to enable employers to employ people on a part-time basis rather than on a casual basis providing certainty to employees

·        Public Holidays – to establish a different penalty rate for the eight public holidays set out in the National Employment Standards, with a lower rate for all other public holidays set by the states. 

“We need to create the right environment for investors in the tourism and hotel sector, while growing employment opportunities,” said Mr Ferguson. “The hotel industry’s profile might have changed dramatically since international hotels arrive in Australia 40 years ago, but the operating conditions don’t reflect those changes. 

“The industry is a service industry and will always be reliant on high staffing levels, but the industrial relations environment hasn’t adapted to the demands of the new economy. 

“Current awards, under which some permanent staff receive 175 per cent of their normal rates for working Sundays and 250 per cent for working on public holidays, with even higher penalties for some casual workers, are unrealistic and a dampener on employment. 

AHA and TAA also welcomed the Productivity Commission’s finding that “procedure over substance” sometimes allowed an employee to “behave badly in a workplace, be dismissed, but get compensation because of an employer’s procedural lapses, even if no one disputes the misconduct.” 

“What is impressive about the report is the consistent call for commonsense to be favoured over procedure, especially in areas such as dismissals, where an employer might be forced to pay compensation due to a procedural lapse despite an employee being found guilty of misconduct,” said Mr Ferguson.

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