Small business penalty rate trade-off delayed for another year

The Australian, September 1, 2017

Proposals allowing small businesses to trade penalty rates and overtime for higher base pay are unlikely to be trialled for another 12 months, two years after the plan was floated.

The Fair Work Commission is expected to wait for the results of further penalty rate proceedings before deliberating on the proposal to allow retail and fast-food small businesses to trade off con­ditions without the need for an ­enterprise agreement.

Hearings are unlikely to start before next year, and any decision piloting so-called “loaded rates” for small business is unlikely to be handed down before the second half of next year.

Small business will push to have retail and fast-food companies not pay employee penalty rates and overtime in exchange for a 25 per cent hourly rate rise.

The sector has long com­plained that small businesses are disadvantaged by the system, given major retailers have struck contentious enterprise agreements with the shop assistants union that apply “loaded” rates to tens of thousands of workers.

Under the commission proposal, the so-called “loaded rate” would be included in the award and would benefit award-covered employers who would be saved the cost and time involved in negoti­ating an enterprise agreement.

Council of Small Business Australia chief executive Peter Strong yesterday reiterated his support for smaller fast-food and retail employers paying a 25 per cent ­increase in the hourly rate in ­exchange for no longer paying overtime or penalty rates.

Under the council proposal, a single higher hourly base rate would operate across seven days as an alternative to the current system of penalty rates and overtime payments.

It says a potential model would be the hospitality industry award, which allows employers and ­employees to enter into an ­arrangement that pays 25 per cent above the weekly award rate in lieu of overtime and penalty rates.

Mr Strong said he expected the proposal to be resisted by unions and industry groups representing big employers who have done deals to trade off Sunday penalty rates for higher base pay.

A Senate inquiry is investi­gating whether these deals give big employers a competitive advantage over small business.

Former ACTU president Martin Ferguson this week attacked the ALP and unions after The Australian reported that 410,000 workers were covered by union pay deals with big employers that had zero or below-award Sunday penalty rates.

Mr Strong said unions and other employer groups wanted to keep the system complex so companies and workers needed to come to them for advice.

“They have a self-interest in keeping it complex,’’ he said.

“The simpler the system, the easier it is to understand. They want to keep people confused as a way to keep members.’’

The Fair Work Commission yesterday rejected a proposed agreement at Aerocare, an aviation service provider, because proposed weekend rates and other conditions did not meet the ­“better-off overall’’ test.

The agreement had been challenged by the Transport Workers Union, which said workers would have been paid more than a $1000 a month below the award.

ACTU president Ged Kearney said the belief by companies that they could get away with trying to secure such an agreements shows corporations “are out of control”.