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From 1 July, retail, hospitality, pharmacy, and food businesses will see a drop in penalty rates following the Fair Work Commission (FWC) decision last year.
This will be the second year of penalty rate changes by removing the variance between Sunday and Saturday rates. The first round of penalty rate cuts occurred in 2017, which saw Sunday and public holiday work rates slashed by five per cent. The full penalty rate reduction rollout is expected to be completed by 2020.
According to workplace relations firm Employsure, representing close to 20,000 SMEs, the reduction in penalty rates are welcomed and needed to reflect the 24/7 economy. Senior Employment Relations Adviser from Employsure, Andrew Spiteri, said, “Sunday hours are no more ‘unsociable’ than Saturday, which will progressively shift in line.”
Spiteri added, “An overwhelming number of employers we have consulted with have reported they would increase employment and operating hours on Sundays and public holidays if penalty rates were reduced.” The view was also reflected in Australian Industry Group surveys which was a key body of evidence used by the FWC in reaching its decision.
He said that the reduction in penalty rates has helped many small businesses remain trading on Sundays or public holidays, offer more jobs, and increase overall hours worked. “The small reduction will have a big impact on small businesses in industries operating on thin margins,” he said.
While employers in the restaurant, hospitality, pharmacy, fast-food and retail industries receive some relief in the form of reduced penalty rates, also kicking in from 1 July is the increased National Minimum Wage by 3.5 per cent. “Millions of employers, across all industries will need to come up with an extra $24.30 per week per employee, paid at the expense of their bottom line,” Spiteri said.
Having witnessed many SMEs frustrated by the increasing wages Spiteri said, “Small business employers feel the pinch during the peak season and increasing consumer demand for longer operating hours.” To afford the increases to minimum wage, many SMEs have to adjust their business models. “Some simply need to reduce their profit targets and take their extra payroll costs from their profits.”
He encouraged employers to start getting prepared for the 1 July changes. “It’s so important to be across these changes and check if the new reduced penalty rates in addition to the increased minimum wage applies to your business. Get the right advice to avoid paying too much or too little.”