Sunday penalty rates to be phased down

The planned reductions in Sunday penalty rates will be phased in between July 1 this year and 2020, with the initial cuts being small ones, the Fair Work Commission (FWC) has decided.

The commission rejected calls – including from Labor – for the cuts to be set aside, and also ruled out having rates protected for existing workers.

The decision to reduce Sunday penalty rates, announced in February by the commission, covers the fast-food, hospitality, retail and pharmacy awards, with reductions implemented on July 1 each year and the transition completed by 2019 or 2020.

For the fast-food award, the present 150% Sunday rate for full- and part- time workers will come down to 145% on July 1, 2017, reaching to 125% by July 2019. For casual employees, the fall will be from 175% to 170% on July 1 this year, reaching 150% by mid 2019.

In hospitality, the rate for full-time and part-time employees goes from 175% to 170% on July 1 this year, reaching 150% on July 1, 2019.

The rate for full- and part-time workers in retail will fall from 200% to 195% on July 1 this year, phasing to 150% on July 1 2020. The casual rate declines from 200% to 195% in July this year, reaching 175% in July 2019.

The full-time and part-time rate for the pharmacy award falls from 200% to 195% on July 1 this year and reaches 150% on July 1, 2020, while for casual employees it will go from 225% to 220% in July this year, down to 175% by mid-2020.

The commission said the reductions in rates were more significant in retail and pharmacy than in hospitality and fast food – “this was a factor that favoured a longer transition period” in the former two.

There will be no phase in for the reduction in rates for public holidays, which will take effect from July 1 this year.

Rejecting “red circling” existing workers, the commission said this would “create significant potential for disharmony and conflict between employees performing the same work at the same time but receiving different Sunday penalty rates”.

The commission also dismissed “take-home pay orders” to compensate a worker for the pay reduction. It said these were not an available option and the federal government had no intention of legislating to give the power to make such orders.

Employment Minister Michaelia Cash said adjusting the rates “will even the playing field for Australia’s small businesses, which have to pay more for staff on Sundays than big businesses who do deals with big unions”.

“It is important to note that the commission’s decision does not affect all workers – it affects 3-4% of Australia’s workforce,” she said.

Opposition Leader Bill Shorten and Labor employment spokesman Brendan O'Connor described it as “an appalling decision”. It “comes at a time when wages are falling in real terms. It doesn’t matter if the cuts are phased in over two or three years, the damage is the same – people will be losing real money.”

The Business Council of Australia said the transition outlined was “sensible”, adding that it was “important to remember that the commission’s decision adjusts rather than abolishes penalty rates. In all cases except fast food, workers still earn a higher rate on Sunday than on Saturday – up to 175%.”

But the Australian Chamber of Commerce and Industry was critical that the extended phase in “means it will take longer for the benefits to flow to consumers, small business operators and people seeking more work opportunities”.

ACTU secretary Sally McManus said half-a-million Australians and their families “have just been told that they face a wage cut” in less than a month. “And it’s a pay cut this year, the year after, the year after that and the year after that.” She said parliament could stop this if it voted for a Labor private member’s bill that had already passed the Senate.

A report from the progressive think-tank the McKell Institute, released on Monday, said more than 350,000 workers in metropolitan electorates across Australia would lose a total of A$760 million from the cuts in penalty rates. These workers would lose more than $2,000 each on average, according to the report, with the largest losses in urban NSW and Victoria.

The commission said interested parties would be given a week to make comments on the draft determinations.