An In-depth Analysis on the Effects of the Sunday Penalty Rates Cut in Australia 2017

Sunday penalty rate is the minimum pay rat paid to employees working on a Sunday.

Background Information
On Monday, 5 June 2017 at 2pm, The Fair Work Commission Australia’s national work place relationship tribunal decided to slash Sunday penalty rates for Hospitality, Pharmacy, Fast food and Retail employees.

Various employer organisations and industry lobbies led by The Australian Industry Group had lodged a complaint with the Fair Work Commission pleading that the commission should reduce the Sunday penalty rate to match the Saturday rate claiming that the rates were unfair and irrelevant. After hearing from all the parties, the Full Bench determined that there should be a phased reduction over the next four years starting on 1 July 2017 until the year 2020.

 

The phased reduction by industry takes effect as summarized below:

Retail

Retail industry full-time and part-time employees will have their Sunday rates reduced by a whopping 50 per cent over a four-year period from the highs of 200 per cent to the lows of 150 per cent.
On the other hand, casual employees will have to make good with a 25 per cent reduction from the current 200 per cent to 175 per cent stretched over a three-year period.

Fast Food

Over a two-year period, fast food level one full-time and part-time employees will have their Sunday penalty rates reduced by 25 per cent from 150 per cent to 125 per cent and 175 per cent to 150 per cent for casual employees.
No cuts for level two and level three fast food employees.

Hospitality

Full-time and part-time hospitality employees will have their earnings slashed from 175 per cent to 150 per cent over a two-year period.
Casual hospitality workers Sunday rates remained at 175 per cent.

Pharmacy

Full-time and part-time Pharmaceutical workers working between 7am and 9pm will have their penalty rates reduced by 5 per cent in the first year and 45 per cent over the subsequent three-years and 225 per cent to 175 per cent for casual employees over the same period.

Interested Parties Submissions

Labor union bosses believe that the Sunday penalty rate reduction will negatively affect a significant percentage of the Hospitality, Fast food, Retail and Pharmacy employees.
However, the Council of Small Businesses argued that big businesses employees 80 per cent of workers with enterprise agreements and they will not be affected by the ruling.
The Full Bench was persuaded by the claims that the current Sunday penalty rates had made doing business unsustainable stating that by cutting the Sunday penalty rates they will spark employment in the affected industries.

Going Forward

With the Sunday penalty rates effected, small business owners are rejoicing. It means that the cost of doing business will significantly reduce while the margin of profit expands. Nevertheless, there might be a spike in employment levels in the short-term but it is uncertain whether it will be sustained. However, it will be more affordable to buy expensive commercial combi oven Sydney, which restaurants require to operate.
As highlighted with the changes above the big losers in this debate are the workers, as they will have to do with less than they used to. It might take a toll in some households but the sooner you get across the changes the better.


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