Business comes off second best on penalty rates

Fair Work Australia rejects application to stop businesses from having to pay two lots of penalty rates over Christmas period

Business comes off second best on penalty rates
Business comes off second best on penalty rates
By Brad Gardner | December 7, 2010

Businesses operating over Christmas will be forced to pay two lots of penalty rates after an application to amend wages for public holidays was rejected.

Fair Work Australia threw out the Australian Industry Group’s (Ai Group) bid to streamline the inconsistent penalty rate structure that currently exists across borders.

It means companies open on Christmas and December 27 in Western Australia, and Christmas and December 28 in NSW and Queensland will need to pay two lots or penalty rates.

The three states have an additional public holiday on a weekday if Christmas falls on a weekend.

Victoria, South Australia, Tasmania, the ACT and the Northern Territory impose penalty rates on a substitute day if Christmas falls on a weekend. It means businesses pay one lot of penalty rates.

The Ai Group wanted Fair Work Australia to alter the system by imposing substitute days, meaning businesses in all states and territories would only pay one lot of penalty rates.

"The decision will increase the costs for many employers who need to operate over the Christmas/New Year period," Ai Group CEO Heather Ridout says.

She labelled Fair Work’s decision "regrettable" and says the cross-border inconsistencies on penalty rates will still stand.

Unlike Queensland and NSW which impose a substitute for Boxing Day if it falls on a weekend, Western Australia and Victoria require two lots of penalty rates by setting an additional public holiday on December 28 this year.

Victoria, Western Australia, NSW and Queensland all have an additional public holiday for New Year’s if it falls on a weekend.

However, South Australia, Tasmania, the Northern Territory and the ACT substitute New Year’s on January 3 next year, meaning employers only need to pay penalty rates on that day.

The Australian Council of Trade Unions (ACTU) welcomed Fair Work’s decision and accused businesses of trying to "steal Christmas" by denying workers two lots of penalty rates.

"It’s only fair to adequately compensate workers for giving up time with family and friends on Christmas," ACTU President Ged Kearney says.

However, Fair Work also rejected a push by four separate unions to increase the wages paid to employees working on Christmas.

The Australian Manufacturing Workers Union (AMWU) wanted 50 percent loading on top of the normal Saturday and Sunday pay rates if Christmas fell on a weekend. The AMWU sought a ruling that workers must be rostered on for a minimum of three hours.

The Australian Nursing Federation wanted similar conditions but called for a minimum of four years, while the Liquor and Hospitality Union wanted 50 percent loading on top of the weekend rate.

The Financial Sector Union applied for double the rate on Christmas if it falls on a weekend and half a normal day’s pay on top of the existing rate for substitute days.

Fair Work Australia ruled that it did not have the power to impose a 50 percent loading, prompting the ACTU to pressure governments to reform the system.

"Pleasingly a series of union claims for higher penalties for those who work on 25 December were rejected by FWA," Ridout says.

She says Fair Work’s decision to dismiss Ai Group’s application shows the need for a consistent approach to public holidays.

"It is extremely unfortunate that so many different approaches have been taken this year creating widespread confusion and uncertainty," Ridout says.

Queensland previously substituted a day for Christmas and New Year but in October this year it amended the Holiday Act to require two lots of penalty rates for both holidays.

Under the changes, Queensland businesses will now need to pay penalty rates on December 25 and 28 and January 1 and 3.

"Potentially the big losers of the fallout of this will be business—the employers—and in particular small business who always struggle to absorb additional costs where no revenue is applied," LNP MP Jarrod Bleijie said when the reforms were introduced.

"This addition will have a negative impact to a certain extent on business owners. They will be paying penalty rates for two additional days."

The Government expects the changes will benefit employees across a number of sectors, including mining, retail, hospitality, tourism and emergency services.

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