Restaurant owners have been granted a reprieve on labour costs by the industrial umpire, after the Fair Work Commission agreed to slash the Sunday pay packets of some casual workers.
In a full bench decision last week, the commission acknowledged the link between high Sunday penalty rates and employment prospects. In a majority ruling, the commission lowered casual Sunday loadings from 75 to 50 per cent for workers on Level 1 and Level 2 pay-grades under the Restaurant Award.The change will take affect from July 1.
“It is accepted however that Sunday penalty rates may have a limited effect on employment, particularly in relation to owner-operators working on Sundays in preference to engaging staff for additional hours,” the commission found.
“Although a 50 per cent Sunday penalty rate is generally appropriate for employees under the Restaurant Award, for transient and lower-skilled casual employees working mainly on weekends, who are primarily younger workers, the superimposition of the casual loading of 25 per cent in addition to the 50 per cent penalty tends to overcompensate them for working on Sundays and is more than is required to attract them for work on that day.”
The ruling has been seized on by other peak industry bodies across other sectors as recognition that high penalty rates have acted as an obstacle to people obtaining work on weekends.
Executive director of the Australian Retailers Association, Russell Zimmerman, told Dynamic Business the ruling had “certainly opened the door” to running a case at Fair Work on penalty rates in the retail sector.
“This does give an opening and it would be expected that retailers would look towards whether they can make a believable case,” he said. “It is absolutely and utterly vital that these young people get an opportunity to get back into the workforce and an opportunity to be employed.”
Chief executive of Restaurant and Catering Australia, John Hart, told Dynamic Business that many restaurant owners would now rethink opening on Sunday. He said the ruling would be of benefit to those businesses located in tourist destinations.
“It’s purely and simply the cost of labour that’s the obstacle,” he said. “And 93 per cent (of respondents) in our benchmarking survey said the reason they weren’t open was because of labour costs.”
Restaurant and Catering Australia initially made an application to reduce the loading as part of the Modern Awards
Review Process in 2012. After its application was rejected, the Association subsequently launched its appeal to the full bench.
Workplace Relations Minister Eric Abetz has hailed the decision as groundbreaking because the commission had linked high wages to diminishing employment opportunities. The ACTU said the decision would hit the pay packets of society’s most vulnerable, including women, students and itinerant workers.