Australia’s retail chiefs aren’t exactly popping champagne over the Federal Government’s new penalty rates law. The legislation guarantees penalty and overtime rates for around 2.6 million award-reliant workers, but business groups warn it’s a heavy-handed move that ties the hands of small retailers.

Employment Minister Amanda Rishworth reckons penalty rates are “essential to the pay packets of millions of Australians”, covering those late nights, weekend shifts and public holidays that keep the country running. However the Australian Retailers Association (ARA) and National Retail Association (NRA) say the bill undercuts the independence of the Fair Work Commission (FWC) and piles even more red tape on businesses already stretched thin.

Penalty rates Not fit-for-purpose

ARA boss Chris Rodwell said the bill is yet another layer of regulatory burden.

“It creates more problems than it solves. It effectively forbids businesses and their employees from negotiating the incorporation of penalty rates into base salary, an option which could lift that salary by as much as 135 per cent,” he said.

Rodwell also hit out at what he calls the fiction behind the government’s move. “There has been no effort to abolish penalty rates. The focus has been on giving employees a choice around their salary, allowing them to opt for a higher base salary in lieu of penalty rates, and to improve job security,” he said.

For him, the bigger picture is that the industrial relations system just isn’t keeping up.

“This is a further reflection that Australia’s industrial relations system is not fit-for-purpose. Its rigidity undermines efforts to lift labour productivity.”

Rodwell didn’t stop there. “At the same time the Federal Government is aspiring to genuine productivity growth and reduction of red tape, the continued heavy-handed regulation of workplaces has the effect of tangling businesses, especially small retailers, in cost and compliance. It undermines efforts to improve productivity and lift living standards. It also undermines confidence in the system without improving outcomes for workers.”

Small biz left out of the conversation

One point that particularly stings for retailers is the lack of consultation.

“We are deeply disappointed that the reasonable proposal of some parliamentarians to examine the impact of this legislation on small businesses has not occurred,” Rodwell said.

He also took aim at the push for multi-employer bargaining as a supposed productivity booster.

“The view that enterprise-bargaining agreements and multi-employer bargaining act as the key vehicles for improved productivity is simply impractical. It is clear that most small businesses lack the resources and the expertise to pursue bargaining outcomes as is evidenced by the poor uptake of that option.”

So, while the government celebrates a win for workers, retailers are bracing for higher compliance headaches and fewer options to reward staff in flexible ways. For small business owners, it may mean juggling rosters gets harder and the weekend penalty bill will just keep climbing.

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