Debate continues on penalties

business, clock,A deal struck between the Shop Distributive and Allied Employees Association (SDA) and the South Australian Chamber of Commerce for reduced penalty rates is unlikely to be taken up nationally by retailers.

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While the Australian Retailers Association (ARA) says it is encouraging to see the union agree to reduce penalty rates on weekends, the Master Grocers Australia (MGA), Business SA, and the AI Group have all warned that

the breakthrough will be unlikely to reduce costs for employers and may actually result in higher wage bills.

The Australian National Retailers Association made no comment on the penalty rate deal which effectively reduces weekend penalty rates in exchange for a 12.6 per cent wages increase over 15 months, while the National Retailers Association (NRA) followed the ARA and welcomed the changes, saying the deal could “hopefully be replicated across other states”.

Russell Zimmerman, ARA executive director, said retailers are “relieved to hear that penalty rates in South Australia will be abolished on Saturdays and halved on Sundays in exchange for a higher base rate of pay and other improved conditions for employees”.

He said the ARA has been leading the penalty rates case for a long time and is open to working with the SDA as part of its case to Fair Work to facilitate the agreement and broaden it across the country.

“It is very encouraging to see that the SDA has recognised that the current Sunday penalty rate is too high.

“The ARA welcomes any move that better aligns penalty rates with the modern retail industry. Changes like this allow businesses to respond to their customers needs, rather than having to try to fit their allocation of labour to an antiquated system.

“There is a real opportunity here to support the struggling retail sector and stimulate jobs growth. In order to create more employment opportunities for Australians, retail wages need to be flexible,” Zimmerman said.

“We are hopeful that this agreement has a flow on effect across Australia.”

Jos de Bruin, CEO of MGA and Liquor Stores Australia (LSA), denied the advantages of the deal, saying it is simply a “buy out” of penalties, increasing the overall hourly rate to $20 with guaranteed three per cent annual wage increases over three years.

de Bruin said the deal is not “ground breaking”, as an agreement to reduce penalty rates can be done at any time provided a deal passes “the better off overall” test in the Fair Work Commission.

He said retailers will need to carefully consider any move to accept the SA wages and penalty rate template agreement because it will result in higher costs for employers than operating under the award.

The SDA and SA Chamber of Commerce template agreement will increase wages for full time shop assistants by 15 per cent from $703.90 a week to just over $800 within 15 months, make work on Sundays and public holidays voluntary, and provide permanent employees with two weekends off in every four, reducing flexibility for employers in rostering staff.

The South Australian template agreement, which pre-empts a Fair Work Commission review and a Productivity Commission inquiry, will also make small businesses with less than 15 employees subject to possible arbitration processes and orders by the Fair Work Commission.

de Bruin said the MGA wants to see the costs of employing staff reduced with a decrease in the Sunday penalty rate to 50 per cent, with no change to the wages base rate.

“This new agreement in SA is badly timed. It will not benefit most retailers and undermines the efforts of many retail organisations in their pursuit of reduced Sunday penalty rates, in the current Fair Work Commission four year award review.

“The MGA will continue to fight for a reduction in the Sunday penalty rate in the General Retail Industry Award that will assist members to lower their costs,” de Bruin said.

This story first appeared in Inside Retail PREMIUM issue 2039. To subscribe, click here.

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