The Fair Work Commission has decided to cut Sunday penalty rates for hundreds of thousands of retail, hospitality and fast food industry workers.
The commission says the move, to take effect from July, will increase services and trading hours on Sundays and will likely lead to more employment. There is no change to rates for working on a Saturday.
Retail workers and those working at pharmacies will see their Sunday double time reduced to 150% of their hourly rate.
Sunday pay for full-time hospitality workers will be cut to 150% from 175%. However, casuals workers will still get 175%.
In the fast food industry, the rates will drop to 125% from 150%.
Unions say 700,000 workers, including some of the lowest paid who need the penalty loading to survive, are affected. The Australian Council of Trade Unions (ACTU) says the cut in penalties will mean a 25% plus fall in earnings for some workers.
“It will simply mean people whose pay has been cut will have to work more hours, work longer shifts,” says ACTU president Ged Kearney.
The commission acknowledged that a substantial proportion of employees affected are low paid.
“Many of these employees earn just enough to cover weekly living expenses, saving money is difficult and unexpected expenses produce considerable financial distress,” the commission said in its judgement.
“The immediate implementation of all of the variations we propose would inevitably cause some hardship to the employees affected, particularly those who work on Sundays.”
The commission has decided to take submissions on transitional arrangements to mitigate the hardship caused by the cuts.
Industry bodies say penalty rates are no longer relevant in today’s seven day a week economy.
The Australian Industry Group (Ai Group) says the decision better aligns the fast food industry with the characteristics and needs of 21st century workplaces.
In the fast food industry, weekends and evenings are peak times.
“A very high proportion of employees in the fast food industry are young people who have study commitments during normal business hours,” says Ai Group CEO Innes Willox.
“The commission accepted Ai Group’s evidence that young people often prefer to work in the evenings and on weekends, and that many prefer to work on Sundays rather than Saturdays.”
The Australian Retailers Association welcomed the decision to reduce Sunday penalty rates from double time to time and a half, saying employers will now look at taking on more staff on Sundays.
The association calculates that cutting Sunday rates will give employers a 4% to 5% reduction on wages.
“Reducing these rates from double time to time and a half, will increase retail growth nationally and reduce the unemployment rate in Australia,” says association executive director Russell Zimmerman.
“With retailers currently paying employees double time on Sundays, many retailers are forced to close their doors on this day, impeding on growth in the retail sector.”
The decision comes at a time when wages growth is at its lowest. Official numbers show rates of pay growing by just 1.87% a year.
The Fair Work Commission has heard more than 140 witnesses and received 6000 written submissions on the issue over the past two years.
In 2015, the Productivity Commission recommended that Sunday rates be reduced.
Penalty rates became an issue during last year’s federal election.
Unions, Labor and the Greens have all opposed any reduction in penalty rates. The Coalition government has not come down on either side, saying it will respect and accept the decision of the commission.