Penalty Rate Cuts: who is affected? And who could be next?

Professor David Peetz

It has been less than a month since the Fair Work Commission’s (FWC) decision to cut Sunday and public holiday penalty rates for hospitality, retail, and fast food employees, and the Australian Council of Trade Unions (ACTU) along with the federal Labor party are still fighting against the ruling.

In a case that dragged on for more than a year, the FWC took in nearly 6-thousand submissions and evidence from various expert witnesses. The reasoning for decision is that it will allow businesses in those industries to increase employment overall on Sundays and public holidays, a conclusion that Professor David Peetz of the Centre for Work, Organisation and Wellbeing does not share.

“It’s a myth. There isn’t really a strong case being put there by the Commission”

Professor Peetz said that often studies like theses are measured in hours worked, but that is not the same thing as an increase in the number of jobs.

“If for example you’re working 6 hours on a Sunday, and your pay gets cut from 200 to 150 per cent, you’re going to have to increase your number of hours to 8 to get the same pay,” said Peetz.

“If all the increases in hours worked are taken up by existing employees, then they still won’t get enough hours to make up for it. They will be working longer hours for less total income.

“The main beneficiaries are the owners of the retails shops and businesses that will experience the cut in penalty rates.”

Insult to Injury

Dr Rebecca Loudoun has studied work injury rates during different times of the day and says the youth who predominately fill those work hours where penalty rates will be cut are the most at risk.

“Young people are more at risk of an injury at night than they are during the day, both compared to young people who work during the day but also compared to other people at night,”  Dr Loudoun said.

“Young people more likely to be scheduled outside [9 – 5] hours, and when they are they are rarely supervised appropriately. The hope is that nothing will go wrong, and when things do go wrong, there is no plan in place.”

Dr Rebecca Loudoun
Dr Rebecca Loudoun

Dr Loudoun adds that youth working late nights when they have to close up, come across the general public or try to get home adds to the risk factor when it comes to violence and harassment at work.

“They’re already the most vulnerable people in the workforce, and they receive a small compensation for working in increased risks and unsocial times,” Dr Loudoun said.

“The argument that this industry can’t afford to pay them compensation anymore, what we’re saying is we have to make our young people, our most vulnerable people in vulnerable jobs. To say they have to pick up the cost is really quite alarming for us as a society I think.

Looking Ahead

While politicians and unions continue to debate the merits of the FWC decision, Professor Peetz believes this is not the last we will hear of possible penalty rate cuts.

“This didn’t cut back rates as far as how much employers wanted, so they’ll come back for another bite at the cherry, there’s no doubt about that.

“Employers from other industries will work out, well what’s the next industry with the best case?” Peetz said.

For further articles on the issue featuring members of Centre for Work, Organisation and Wellbeing: