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Much ado about penalty rates

 

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Much of the commentary around the Fair Work Commission decision in February to rationalise weekend penalty rates has been ill-informed. According to National Retail Association (NRA) CEO, Dominique Lamb, returning penalty rates to a more reasonable, affordable level will lead to job creation in the retail sector.

The NRA made recommendations to the Commission last week, on behalf of its members after listening to their views on how this will affect employees. Lamb said many employees are likely to have believed many of the mistruths being spread about the decision, most notably that their pay packets are about to be slashed all in one fell swoop.

To ease these concerns, the NRA has recommended a two-step phase in, with half the changes to take effect on July 1 this year, and half to take effect 12 months later. Because these payments coincide with the annual wage review, the impact on employees’ take-home pay will be minimised, Lamb said.

However, phasing in the change over two years, as opposed to three or four, will have the added benefit of unlocking additional employment opportunities and business profitability in a shorter period.

“We believe this will result in longer trading hours, extension of services and increased work hours for employees on Sundays,” said Lamb. “Extra work will arise not only from the reduction in labour costs, but also from the fact that small business owners will financially be able to take time off on Sundays where once they’d have worked in their businesses to reduce wage costs.”

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A longer phasing-in arrangement would restrict employers from reaping these benefits, and prevent the Australian economy from growth. The Commission also asked for submissions on whether a longer period of adjustment was required for the Retail Award in particular.

The NRA has argued that having inconsistent transitional arrangements for different modern awards would lead to more complications for employers, negating the likely job-creation benefits of the original decision.

“No doubt opponents of the original decision would use any uncertainty about the phase-in period to create even more fear and misunderstanding among workers,” Lamb said.

 

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