Penalty rates: a kick in the guts for service industry employers

By: Peter Anderson, ACCI Chief Executive
15 March, 2013

The Prime Minister's announcement to an ACTU Summit that the Gillard government will legislate to lock-in Australian penalty rates is a kick in the guts to small service industry businesses weighed down by already heavy penalty rate burdens and trying to seek relief from the Fair Work Commission.

Agree with penalty rates or not, entrenching this big labour cost into national law is foolhardy and calcifying for our economy and labour market.

The government's decision delivers a double blow – having set up a process that increased award penalty rates in 2010 despite promising no labour cost rises from award changes, the government now changes the law to prevent those small employers having a fair day in court to try and undo that damage.

It is a distortion of the fair go that employers expect from its governments. 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.

Not only are parts of the tribunal being stacked against industry, but the rules of the game are too.

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.

The law the Prime Minister plans will prevent the Fair Work Commission from doing its basic work - starting with an open-minded view and deciding matters in its discretion without an overarching government direction.

The announcement is in direct conflict with Labor senators who just this week told the Senate that Independent Senator Nick Xenophon's Bill to confine penalty rates should be opposed because the Fair Work Commission, not legislation, should decide the matter.

Once again an IR change is announced by the government that looks and feels political, with industry picking up the expensive bill.