Workers to swap penalty rates for pay rise

HUNDREDS of thousands of shop and takeaway workers would forgo penalty rates in return for higher hourly base pay under an option flagged by Fair Work Commission president Iain Ross.

Justice Ross yesterday told a summit, sponsored by the Australian Retailers Association, that it should be possible to develop a system that enabled employers to “load’’ the normal hourly rate in lieu of paying penalty rates for weekend work.

Such a move would give small businesses more flexibility, he said.

“There would need to be appropriate safeguards and interested parties would be given an opportunity to comment on any proposal.”

The suggestion was welcomed by the industry.

“We don’t have a cast-iron guarantee ... but we are encouraged,’’ Australian Retailers Association executive director Russell Zimmerman said. “We need to move with the times. The sector has changed.’’

The Commission is considering the future of penalty rates across a range of sectors. Mr Ross said it was on course to deliver its final report by January 20. It has been widely speculated that Sunday penalty rates could be dropped. But Justice Ross yesterday referred to a 2013 review which suggested that loading ordinary pay rates could replace penalty rates.

“It should be possible to develop a schedule to the award which provides that employees are paid a higher, “loaded”, hourly rate of pay in lieu of an entitlement to penalty rates,’’ he said. If applied to the retail award, the change would affect about 70 per cent of the country’s 1.2 million retail workers – those not employed by the two supermarket giants Coles and Woolworths.

“There are 140,000 retail businesses in Australia and only a very small proportion of those are big retailers,” Mr Zimmerman said.

But he expected any switch would be applied much more broadly by the Commission – including workers in fast food restaurants and some other hospitality fields.

A “loaded’’ everyday pay rate would benefit small businesses through simplified payroll processes, Mr Zimmerman said, provided it did not come with excessive administrative burdens.

The issue is an ongoing political debate with Labor and the unions staunch on penalties and the conservative parties long-time opponents.