Productivity Commission recommends flat weekend penalty rate for hospitality

The latest Productivity Commission report, released on 4 August, has recommended a flat penalty rate be applied across weekends for the hospitality, restaurant and caf industries.

According to Restaurant & Catering Australia CEO, John Hart, the draft recommendations of the Productivity Commission Inquiry into the current Workplace Relations Framework will represent a positive more for the industries by boosting employment and making businesses more sustainable.

Hart says that the current system leads to disemployment, business closures and reduced productivity, and that in contrast, the new recommendations would provide operators with greater flexibility and stability.

“The caf and restaurant industry is hamstrung by the current regime that sees businesses operating at a loss on some days, particularly public holidays,” says Hart.

“The proposal of two new public holidays in Victoria is a perfect example – the gazettal of Easter Sunday and Grand Final Eve is likely to cost the state economy $900 million. This hardly makes good economic sense at a time of rising unemployment, particularly youth unemployment.

“Research commissioned by R&CA indicates that 52 percent of businesses would employ more staff if penalty rates were reformed and 42 percent said they would open additional hours. This equates to approximately 39,000 extra staff or 60,000 additional hours of employment on any given Sunday or public holiday."

Hart says that the caf, restaurant and takeaway sector is the largest employer across all tourism-related sectors of the visitor economy, adding that the sector is projecting employment growth of 16.9 percent or 93,000 jobs to November 2019.

“We now need an industrial relations system that supports this growth,” says Hart

“Reform is never easy, but pretending there is not a problem will be detrimental to future economic growth. The Productivity Commission as a respected independent body has provided a clear view on reform that will benefit the economy.”

The draft recommendations were also welcomed by the Accommodation Asociation of Australia with CEO Richard Munro stating that the Commission has vindicated the concerns of the industry about high penalty rates on Sundays.

"The recommendation that Sunday penalty rates should be set at Saturday rates for the majority of workers in our industry is a sensible one," says Munro

"If Sunday penalty rates were to be brought into line with Saturday penalty rates, this would immediately result in operators of accommodation businesses employing more staff.

"Lower penalty rates on Sundays would also see the re-opening on Sundays of restaurants and cafes in accommodation businesses because it would be much more affordable for operators to do so. Lower penalty rates on Sundays would be the first step in helping Australia to catch up to other lower-cost international tourism destinations which are on our doorstep."

In May last year, the The Fair Work Commission announced a 25 percent cut in penalty rates on Sundays for casual employees.

The decision saw a reduction in casual loadings from 175 percent to 150 percent effective as of 1 July 2014.

At the time, R&CA CEO John Hart, said that the positive result came after the association’s "historic fight" for changes to the penalty rate regime, which were introduced through the Restaurant Industry Award in 2010.

The association initially made an application under the Modern Awards Review Process in 2012 to change the award, sighting deteriorating trading conditions since the introduction of the new rates. The application was rejected by the Fair Work Commission in October 2013, which resulted in R&CA lodging an appeal to a Full Bench.