Deputy President Anne Gooley of the Fair Work Commission has rejected an application by restaurant and catering industry employers to abolish weekend penalty rates in the sector amongst increasing clamor for change from employers and employer organisations.

The FWC had before it an application by Restaurant and Catering Australia [RCA] to abolish weekend penalty rates and replace them with penalties which would only apply where employees worked six or more consecutive days. RCA was supported by some other employer associations and opposed by United Voice, the union representing restaurant employees.

Employers in the sector have repeatedly called for the elimination of weekend penalty rates, arguing that they are outmoded and unnecessary. Successive decisions of the tribunal have disagreed.

The Restaurant Industry Award 2010 is one of 120 modern awards created by the then Industrial Relations Commission in 2008 and 2009 and commenced operation in January 2010.

In its initial consideration of this sector, the Award Modernisation Full Bench initially determined to make one big hospitality industry award but under pressure from various sectors of the industry broke it up into sub-sectors.

In fact, the restaurant sector took its case to the then Minister for Workplace Relations, Julia Gillard, who amended her Ministerial Request to the AIRC, virtually directing the tribunal to make a restaurants only award, which it subsequently did.

Deputy President Gooley’s decision arises from the 2012 Review of all modern awards which the FWC has been working its way through for some time. Like many other applications, that of the RCA faced the difficulty that the variations sought had been well-argued and rejected by the Award modernisation Full Bench which based its decision on the merits of the case put to it and the provisions of pre-existing State and Federal awards applying in the sector.

Deputy President Gooley found that there was insufficient evidence before her to depart from previous full bench decisions. Lack of evidence to support award changes has been a feature of many cases brought seeking to change modern awards. The Deputy President’s decision carefully considers all the witness and other evidence put to the tribunal. However, the decision states:

[223] The RCA seeks to vary the Award so that penalties are payable on the sixth and seventh day worked. There was no evidence put forward about the incidence of employees working a sixth and seventh day. For full-time employees the sixth and seventh day would normally be paid at overtime rates as full-time employees must have eight full days off per four week period. Given the nature of employment in the industry particularly the high levels of casual and part time employment it would not be unreasonable to assume, given no evidence to the contrary, that very few employees would work the sixth and seventh day and in those circumstances the application in effect seeks to eliminate penalties for the vast majority of employees.
[224] It is not disputed that employees in the restaurant and catering industry are low paid. They are disproportionately dependent on the minimum rates of pay set in the Award.
[225] The RCA submit that the changing nature of labour market and the fact that the restaurant industry is a seven day a week industry means that penalties for working Saturday, Sunday and late nights are no longer relevant.
[226] I do not accept the submissions of RCA that there are no longer any disabilities associated with working unsociable hours. More importantly, I am not satisfied that there has been a significant change in the disabilities associated with working unsociable hours since the making of the Award.

[241] I acknowledge that except for small business the RCA is not proposing to reduce the minimum wage for employees, however if penalty rates were only payable on the sixth and seventh day only, this would have a significant impact on the take home pay of the employees in the industry. It is also not sufficient to assert that the employees may be offered additional hours to compensate for the reduction in their take home pay. There was insufficient evidence about the capacity of these employees to take up those additional hours of work. The need to work additional hours for the same income may also have detrimental effects. Professor Lewis commented on the optimal number of hours a student can work without impacting negatively on his or her studies. 66Further those with carer’s responsibilities would be required to find additional childcare.
[242] While I accept that the variation proposed would reduce employment costs and reduce the regulatory burden on businesses (though I note that once the transition period is over it will be simpler for employers and employees to understand the terms and conditions which apply) , this does not necessarily lead to an improvement in productivity.
[243] The variations proposed would have a negative impact on the relative living standards and the needs of the low paid who would need to increase the hours worked simply to maintain their current income. (1)

The Deputy President’s decision was strongly attacked by the employer association which made the application. Fairfax newspapers reported RCA CEO John Hart as saying:

”It’s a tragedy,” he said. ”A hell of a whole [lot] of businesses will go to the wall as a result of today’s decision.”
“Mr Hart said he expected the Coalition government to provide more support for employers to argue their case before the commission.
”The previous government tended to focus on the detriment that would be faced by employees,” he said. ”I would hope the new government would at least consider the position of employers.” (2)

The new Employment Minister in the Abbott Government, Eric Abetz, has said nothing officially and the Government’s response has been muted. A Ministerial spokesman was reported as saying that the FWC “had made an independent decision on the award. The minister understands that some parties may be frustrated that the commission has not made more significant amendments to modern awards through this process,” he said. There would be a major review of pay rates and conditions in 2014, the spokesperson said. (3)

ACTU President Ged Kearney and United Voice National Secretary Louise Tarrant welcomed the decision. Tarrant said:

“This is a sweet victory for hospitality workers generally and restaurant workers in particular. The true effect of the employers’ claim would have been that 90% of staff in 90% of restaurant businesses would have lost significant income.
“The Fair Work Commission has told the employers – for the fourth time in five years – No!
“Deputy President Anne Gooley has re-affirmed that in setting the safety net of minimum terms and conditions for vulnerable workers, business profitability is not the sole criteria for setting wages. Employee needs – particularly in low-paid industries – are just as valid.
“By confirming that penalty rates should continue to compensate workers when they are required by their employers to work unsociable hours the Fair Work Commission has stood up for the Aussie weekend and for Australian values.” (4)

More employers call for change…while others advise silence

Outside of the restaurant sector, there have been mounting calls from employers for more radical change to employment conditions. The Melbourne Age reported that speaking at a lunch in Melbourne, Lend Lease chairman David Crawford and Asciano chairman Malcolm Broomhead seized on Mr Abbott’s inaction on workplace issues.

Mr Broomhead said it was ”absolute madness” to defer reforms until 2016 at the earliest. The 2016 date was nominated by Mr Abbott in August, when he launched a set of pre-election workplace policies that left the Labor Party’s Fair Work Act largely unchanged.

Mr Crawford, who sits on the BHP Billiton board with Mr Broomhead, said putting off more extensive workplace reform was ”extremely disappointing”. He said Mr Abbott had made a political decision to help get elected. ”I think he has lost an opportunity to deal with the fundamental issue which, as you said, has been identified by just about everybody in business,” he said. ”We need to have industrial relations reform, and it needs to be done in a way that will lead to productivity growth and will lead to infrastructure development.” (5)

On the other hand, Fairfax newspapers also reported National Australia Bank chief executive Cameron Clyne calling for business leaders to keep their mouths shut about reform discussions, saying it was counter-productive to provide a running commentary. He said the government needed ”clear air” to introduce long-term reforms, a luxury he said the Rudd and Gillard governments were not afforded:

”The previous government was often criticised for lacking consultation,” he said. ”It didn’t. I can certainly think of two occasions where there was a genuine attempt for consultation, only to have that quickly breached by a number of participants bursting out the door to provide their views on it. That perhaps scared them away from future consultation.”

Mr Clyne said reform was never easy, and people were wrong if they thought the reforms of the Hawke-Keating era were achieved seamlessly. ”It has always been hard,” he said. ”The harsh reality of real reform is there will be winners and losers.
”The challenge business faces is we are not going to win everything. If we descend into the individual wants of each industry then we are going to be very, very susceptible to dividing and conquering.” (6)

Employment Minister Eric Abetz was again muted in his response saying only that the Coalition would implement the ”38-page policy of improvements to the Fair Work laws” announced before the election. Greens Deputy Leader Adam Bandt said ”ideological cheerleaders” were urging Mr Abbott to start a race to the bottom.

ACTU President Ged Kearney said big business was ”clearly relishing the election of a Coalition government as a chance to push its agenda of lower wages, more individual contracts and a reduction in workers’ rights”. (7)

AIER has detailed employer agendas for change in a pre-election preview of IR policies for change. The year 2014 remains likely to be a battleground over award terms and conditions and competing submissions to the promised Productivity Commission review.




[3] Ibid


[5] The Age Business Day, October 11th 2013, page 23-24.


[7] Ibid