There is some doubt about whether the penalty rates template agreement negotiated between Business SA and the Shoppies – the SDA, the union representing retail workers – is good or bad.
My take on the issue is that, while the agreement is far from perfect, it represents a real change in the thinking of the union and an acknowledgement that the current structure of penalty rates is unsustainable.
Moreover, the agreement completely wedges Labor and other unions on the issue. They have fought tooth and nail to resist any changes to penalty rates, so this agreement really exposes them on what they would do about penalty rates (see Brendan O’Connor’s hysterical commentary below).
The agreement also puts pressure back on the Fair Work Commission to give serious consideration to altering the penalty rates that sit in awards.
We should completely dismiss Ai Group’s Innes Willox’s criticism of the agreement on the basis of the presumed dangers of an industry-wide agreement being manipulated by the unions. Business SA (part of the ACCI group) is a competitor of the Ai Group and all Willox is saying that it is a pity he didn’t get in first.
And bear in mind that it is not compulsory for a business to enter into the agreement with its workers using the template agreement. Indeed, a business can do nothing or attempt to modify the agreement.
But one of the advantages of the template agreement is that an employer knows that the SDA will not object to its certification. Unions have the habit of objecting to non-union agreements and, in any case, the FWC is likely to go over such an agreement with a fine tooth comb.
Now there are some who argue that there is a very easy solution and that is using Individual Flexibility Agreements, which are provided for under the Fair Work Act. Take a piece of paper, simply slash penalty rates, add a few bob to the wage (not too much) and there’s the solution.
The trouble with this advice is that IFAs must meet the BOOT – the better off overall test. And if this test is found not to be met, the Fair Work Ombudsman will ping the employer. Of course, an employer may take the view that the chances of this happening are low, but it is taking a big risk, including being caught up in a costly and time-consuming legal dispute leading to the payment of back wages and fines.
Here is the background to the agreement, which is yet to be certified by the FWC:
In exchange for a rise in the hourly rate of pay and agreed further increases, the penalty rates that currently apply under the award will be significantly reduced. On Saturdays, there will be no penalty and on Sundays, the loading is reduced to 50 per cent, from 100 per cent. For public holidays, the rate is cut to 100 per cent rather than the current 150 per cent. These are very significant reductions.
Moreover, workers who would prefer not to work on Sundays or public holidays will able to exercise this option.
Of course, employers who find it difficult to get the workers they need on the days where lower penalties will apply may find it necessary to up their wage offers. But that’s how markets work.
But my guess is that they will have no problem, because working on Sundays and public holidays suits very many people, including those combining their education with work.
We need to be a little cautious at this point because the Fair Work Commission has not yet certified any agreement made using this template. The Hours of Work clause may be problematic.
On Labor’s response:
It’s a bit rich of Labor’s environment spokesman and ex-union official, Mark Butler, to say that this development in his home state represents the end point of Keating’s industrial relations reforms.
Labor and the union movement have resisted virtually every attempt to modify penalty rates, including the union’s vehement opposition to the slight modification to the Restaurant Industry Award imposed by the Fair Work Commission last year. Note that the union in that instance was Mark Butler’s own United Voice.
And this year we have had Labor’s workplace relations spokesman and ex-union official, Brendan O’Connor, issue the following demented rant about penalty rates.
“So weekends matter because community matters. Family matters. Togetherness matters. And when the Abbott Government says it wants to take away penalty rates, it is attacking more than the wages of some of the lowest-paid Australians. It is also attacking those things that make our lives worthwhile.”
“Labor will stand against abolishing penalty rates because they are a fair reward for working unsocial hours. But we’ll also do so because going into bat for penalty rates means protecting the idea some parts of the week are for work, and others for doing things we enjoy.”