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A Safety Net of Terms and Conditions

Posted by Robert O'Neill on Mar 14, 2013 10:51:53 PM
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terms and conditionThe Fair Work Commission has pushed employers in the hospitality and retail sectors to initiate changes in the penalty rates system. The Commission though tried to convince the employers to adopt a more flexible change in the policies. The plan is to incorporate a new scheme of awards system into the Fair Work Act. Through the proposed amendment, it shall be mandatory for employers to consider overtime pay, penalty rates, public holiday pay and shift loadings, in setting the merit rates and conditions. This was greatly opposed by the business groups and the employers gave violent reactions, saying that loosening up on penalty rates would undercut ongoing legal cases for changing the penalty rates system.

The Australian Chamber of Commerce and Industry likewise contradicted the idea, accusing the government plan as a “kick in the guts” for small businesses that are already struggling against the burden of penalty rates. Employer unions have argued that traditional notions of the weekend have been replaced by consumer expectations of “24/7” services in industries. “It is one-sided barracking for the trade union movement on penalty rates, doing union bidding as if small business employers, shops, restaurants, cafes and tourism operators are constituencies that don’t exist,” said Peter Anderson, ACCI's chief executive.

The terms and conditions of the new rate system would allow some level of benevolence to staff workers, to educate them that doing shift work or working unsocial, unpredictable or irregular hours or even working on weekends, should be properly compensated with extra pay as explained by Prime Minister Julia Gillard. Recalling what Workplace Relations Minister Bill Shorten said last year, additional compensation should be paid for working "unsociable hours" and that employers had not proved their economic case. The penalty rates vary among industries but usually require time-and-half for Saturdays, double-time pay for Sundays, and a loading of 15% to 30% for night shift differentials. It's another way of saying that Prime Minister Gillard is promoting the notion of the traditional laid back Aussie weekend rather than coercing sudden changes on employers' wage system.

According to Prof. Andrew Stewart, a workplace legal consultant at the University of Adelaide, the plan to secure penalty rates was impossible to have any short-term effect. He said there was no suggestion the commission would step away from the policy that penalty rates should be rewarded in many industries for working unsociable hours. But given the broader perspective, the long term benefit of the proposed amendment, it already legislated the importance of penalty rates into the Australian wage system. However, Professor Stewart still believes that there are still gray areas that could trigger debates. The changes made in the Act did not indicate what penalties should be set. The objectives of the award system require that Fair Work Commission implement a “fair and relevant minimum safety net of terms and conditions” after taking into account a number of industry considerations.

For the record, working time lost to industrial disputes increased by 13% in 2012. Data from Australian Bureau of Statistics revealed 273,000 working days were lost during the year versus 241,500 in 2011. Approximately 55% of this lost time was the result of extensive bargaining period among teachers and nurses and state governments. NSW and ACT comprised 87% of the lost time. Master Builders Association of Victoria (MBAV) reported that time lost to disputes in construction went up to 85 days per 1,000 employees, up 25% which is a seven-year high. MBAV Industrial Relations Manager Lawrie Cross said, "The most objectionable feature of the announcement is that it unashamedly tilts the playing field and goal posts of the award arbitration system towards the union penalty rate agenda, as if there is no counter view.”

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