The Penalty Rates case: What this means for your business

Following on from our recent update, a Full Bench of the Fair Work Commission has issued its long awaited decision in the Penalty Rates case for the Retail and Hospitality industries. FCB Group, the firm behind HR Assured, conducted the case of behalf of the Australian Retailers Association and the wider retail industry.

The Full Bench determined that FCB had made the case for change, deciding to reduce the penalty rates for work performed on Sundays and Public holidays for the Retail, Fast Food, Hospitality and Pharmacy industries. In handing down its Decision, the Full Bench emphasised evidence presented by FCB that, whilst working Sundays involves a higher level of disutility than working Saturdays, the extent of the disutility is much less than in times past. The Full Bench found that a reduction in the penalty rates would allow employers to provide more employment opportunities, both through additional hours and new employment, and that employees in the affected industries were willing to work for a reduced penalty rate.

The Full Bench Decision means that the following changes to the penalty rate structure will be made:

General Retail Industry Award 2010

CategoryCurrentNewOperative Date
Sunday(Permanent Staff)200%150%TBD – transition
Sunday(Casual Staff)200%175%TBD – transition
Public Holiday(Permanent Staff)250%225%1 July 2017
Public Holiday(Casual Staff)275%250%1 July 2017

Hospitality Industry (General) Award 2010

CategoryCurrentNewOperative Date
Sunday(Permanent Staff)175%150%TBD – transition
Public Holiday(Permanent Staff)250%225%1 July 2017
Public Holiday(Casual Staff)275%250%1 July 2017

Pharmacy Industry Award 2010

CategoryCurrentNewOperative Date
Sunday(Permanent Staff: 7am to 9pm)200%150%TBD – transition
Sunday(Casual Staff: 7am to 9pm)200%175%TBD – transition
Public Holiday(Permanent Staff)250%225%1 July 2017
Public Holiday(Casual Staff)275%250%1 July 2017

Fast Food Industry Award 2010

CategoryCurrentNewOperative Date
Sunday(Permanent Staff – Level 1)150%125%TBD – transition
Sunday(Casual Staff – Level 1)175%150%TBD – transition
Public Holiday(Permanent Staff)250%225%1 July 2017
Public Holiday(Casual Staff)275%250%1 July 2017

Restaurant  Industry Award 2010

CategoryCurrentNewOperative Date
Public Holiday(Permanent Staff)250%225%1 July 2017

Why was FCB Group successful?

A key reason for the success of this case was the funding that various employer groups contributed. Union groups have historically dedicated significant resources to defending changes to Awards and have consistently out-spent employer groups. The other key factor was strategy.

FCB Group put it to the Australian Retailers Association and other employer groups that the existing penalty rate structure would be entrenched unless we were able to fund a single, unified case with high quality

What are the next steps?

This case represented an unprecedented win for employers. However, there are a number of matters to be resolved before the case is finalised.  There is the matter of how and when the Sunday rate changes transition, the question of whether Take Home Pay Orders, which were available but rarely used when the Modern Awards came into effect, are available and the issue of how to respond to any appeal that is lodged by the SDA, or any other union or body.

The FWC has called for further submissions and Hearings will be conducted in May 2017.

For more information on the recommendations and what this means for you, clients should contact the HR Assured team. If you’d like more information about the benefits of becoming an HR Assured client contact us today for an informal chat.