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Issue #1724      March 23, 2016

Fight for penalty rates

The Productivity Commission (PC) report* on a workplace relations framework singled out workers in the hospitality, entertainment, retail, restaurant and café industries as prime targets for cuts to their penalty rates. These workers are amongst some of the lowest paid in the country.

Penalty rates were introduced over 100 years ago to act as a disincentive to bosses employing workers at unsociable hours such as at night, weekends or public holidays and long hours of overtime. They are also to some degree compensation for workers who work those inconvenient hours.

They vary according to occupation, industry, working arrangements, whether a worker is permanent or casual, the strength of organised labour, and so on. They were won and defended through the struggles of the trade union movement.

They can act as a disincentive to the use of overtime instead of hiring more labour.

The PC recognised the importance of penalty rates. “Penalty rates have a legitimate role in compensating employees for working long hours or at asocial times.”

Long hours

The PC recognised that, “There are compelling grounds for premium rates of pay for overtime, night and shift work: Long hours of work involve risks not only to an employee’s health and safety, but also for the community.”

Australia, which had the first eight-hour day now has some of the longest working hours in the world. According to the Australian Bureau of Statistics, in mid-2015, around 2.8 million Australian employees reported working more than 40 hours per week and over 1.5 million reported working 50 hours or more per week. (ABS 6302)

In some industries these hours have crept up because of the “incorporation” of penalty rates into a fixed wage. The wage rise was a trade-off. In other instances employers have made inroads where trade unions are weak or there is no trade union presence. The gross underpayment of workers in 7-Eleven stores is one example.

In the building and construction industry penalty rates on unionised sites, the hourly rate is time and a half (150%) after eight hours. Work on Saturday is 150 percent of the hourly rate for the first two hours and double time for the rest of the day. Sundays are paid at double time and public holidays at double time and a half.

On non-union sites where most employment is precarious, workers are paid lower rates than their unionised counterparts; there are no penalty rates, no sick leave or annual leave. This sector uses labour hire, it is deregulated and workers can be laid off at one hour’s notice. A boss’s dream!

Reliance on penalty rates

Nurses, to take an example, are not well paid considering their years of tertiary education, the highly skilled nature of their work and the life-and-death responsibilities they carry. Most nurses work night shifts and at weekends. If someone does not turn up for their shift they can end up doing double-headers, working 16 or more hours straight.

More than 13,000 nurses, assistants and midwives responded to a national survey conducted in 2015 by the Australian Nursing and Midwifery Federation (ANMF). The survey asked about the importance of penalty rates and effects of shift work on their lives:

  • 92% of respondents worked shifts outside regular Monday-Friday day-shift hours
  • 90% reported that shift work affected their life outside work, particularly night and weekend shifts

“Shift work is exhausting. It affects my social and personal life, health and fitness. I love nursing but if penalty rates are taken I’d leave the industry,” one typical respondent said.

Another said, “This month alone, I have only one weekend off. This weekend I’m working night shifts all weekend, leaving me no time at all to spend with my family or friends. Shift work, particularly afternoon and night shifts means that even days off can leave you exhausted.”

The abolition of penalty rates could see some nurses take more than a 20 percent pay cut.

There are many other occupations where shift and weekend work is necessary such as in the emergency services and others where it is not necessary but employers can double or triple their profits by operating 24/7.

The reality is that the wage rate has been whittled down in real terms so that many workers are reliant on long hours of overtime and shift work to pay their bills.

Targeting the low paid

Employers in every industry are out to get rid of penalty rates. The PC has started with workers in the hospitality, entertainment, retail, restaurant and café industries. In these areas there is a high rate of casualisation and turnover of workers. The Shop Assistants’ Union in South Australia has already done a deal to reduce Sunday penalty rates.

“Workers being singled out for cuts, such as those who serve us in restaurants and shops or who care for our elderly, are among the lowest paid in the economy. For them, penalty rates aren’t extra pay – they help provide the basic income their families need just to get by,” ACTU president Ged Kearney said.

Penalty rates in the hospitality industry are 125 percent for permanent employees and on Saturdays and 140 percent for casuals. The rate is 175 percent for both permanent and casual on Sundays and 150 percent for permanent and 275 percent for casuals on public holidays. (Casuals have a built-in loading of 25 percent in their minimum wage rate as they do not receive sick pay, annual leave or paid public holidays unless working.)

The PC recommended that Sunday penalty rates should be brought into line with Saturday rates for these industries. This would mean 125 percent for Sundays in the hospitality sector. The PC argued that they predominantly employ casual and young employees, including overseas and local students, especially at weekends.

Full-time shift workers stand to take a savage cut in their pay – anything ranging from 10, 20 or 30 percent or more, depending on their shifts, wage rates and industry.

The ACTU is waging a campaign to protect penalty rates. It has produced “thank you” cards for trade unionists to hand out over Easter. It also has a “Save Our Weekend” petition which can be signed by going on line to

Weekends are still weekends

During the campaign for an eight-hour day, the late Communist and waterfront worker Stan Moran coined the term: “The nights are made for love.” Today, the same expression could be applied in the struggle to defend penalty rates. Then add to that: “Weekends are for family and leisure.”

Kearney made the point that she would believe Saturdays and Sundays were no different to weekdays when the footy finals were played on a weekday.

* Productivity Commission, “Workplace Relations Framework”,

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