AUS: Federal Court upholds penalty rates cut for retail and hospitality workers

Federal Court upholds penalty rates cut for retail and hospitality workers Advertisement The Fair Work Commission's controversial decisi...

Federal Court upholds penalty rates cut for retail and hospitality workers

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The Fair Work Commission's controversial decision to reduce Sunday and public holiday penalty rates has survived a Federal Court challenge in which unions argued the people most affected could least afford a pay cut.

A full panel of five Federal Court judges upheld the Commission's decision after it heard appeals by two unions, United Voice, which represents hospitality workers and the Shop, Distributive and Allied Employees Association, representing retail workers. Both cases were heard simultaneously.

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The Court found that "the Fair Work Commission's decision read as a whole reveals no jurisdictional error in its construction or application" of section 134 of the Fair Work Act. "For the reasons given in the Court's r easons for judgment, each of the applications must be dismissed".

The unions had argued the Fair Work Commission had failed to meet its legal obligations when it decided to reduce Sunday and public holiday penalty rates for hundreds of thousands of Australians.

Jo-anne Schofield, National Secretary for United Voice

Photo: Justin McManus
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In their decision on Wednesday, Federal Court Justices Anthony North, Richard Tracey, Geoffrey Flick, Jayne Jagot and Mordecai Bromberg said their role was not to review the merits or correctness of the Fair Work Commission's conclusions, but to ensure the Commission had made no error in performing its statutory task.

The judges rejected the argument that the Commission had failed to take into account the relative living standards and needs of the low paid as required by the Fair Work Act.

The Federal Court also rejected arguments that the Com mission miscarried its responsibility to review awards based on an interpretation of words including "review" and "relevant" in the legislation.

During three days of hearings, counsel for the unions, Herman Borenstein QC, told the court that the Commission had not given enough consideration to the low pay and living standards of the workers affected by the penalty rates decision. Justice Flick defended the basis of the Commission decision during the hearings in Melbourne.

John Keily who works in the hospitality industry.

Photo: Justin McManus

'Battle does not end here'

SDA National Secretary Gerard Dwyer said the Federal Court's decision was devastating for workers and their families, but vowed to continue the fight to protect penalty rates for more than 700,000 retail and fast food workers.

"We are disappointed that the Federal Court has not sided with the S DA and United Voice in our bid to overturn the Fair Work Commission decision to cut the pay of some of the country's lowest paid workers," he said.

The unions unsuccessfully argued that the Fair Work Commission had failed to meet its legal obligations with the decision to cut penalty rates.

Photo: Jessica Shapiro

"But the battle does not end here.

"Our workplace laws are broken, it's time to change the rules to restore penalty rates and stop workers from having their take-home pay cut."

The Federal Government welcomed the Fair Work Commission's decision in February to reduce the Sunday penalty rates for retail workers from double-time to time and a half, matching Saturday rates. Hospitality workers had their Sunday rates reduced from 175 per cent to 150 per cent. Fast-food employees' Sunday rates were lowered from 150 per cent to 125 per cent

The Commission de cided in June to phase in the cuts over four years for retail and pharmacy employees and over three years for hospitality and fast food workers.

Under the changes, public holiday rates were cut from 250 per cent to 225 per cent from July 1.

'Abysmal unfairness'

Shop, Distributive and Allied Employees Association National Secretary Gerard Dwyer has warned that retail workers on $600 per week could expect to lose $80 a week and that ordinary Australians could not afford the cut.

John Keily, a hospitality worker based in a Melbourne pub pulling beers and looking after TAB said he was "disgusted" with the decision.

Mr Keily said he has been working Sundays for 13 years and had relied on the penalty rates.

"The courts had a chance to rectify a wrong. They didn't," he said.

"In this age of wage growth stagnation, for hospitality workers who are the lowest paid in the country, to receive a cut to their pena lty rates beggars belief.

"The unfairness in Australia today is abysmal."

Industry groups welcomed the Federal Court decision, having long argued the reduction in penalty rates was necessary to help businesses to grow and hire more staff.

They claim a higher wage for Sunday staff is no longer justified in a 24/7 economy, where workers see no difference in working Sundays compared to Saturdays.

Federal Labor and the Greens have said they want to introduce legislation to overturn the Fair Work Commission's decision.

'Move on'

Australian Industry Group Chief Executive Innes Willox said it was now time for all parties to accept the independent umpire's decision "and move on".

"All political parties also need to accept the decision of the independent umpire and abandon proposals for legislative amendments to overturn the decision," he said.

"There are many workplace relations laws th at need to be reformed by Parliament to create a more productive, flexible and fair workplace relations system, but giving politicians a greater role in the determination of penalty rates has no merit."

Mr Willox said the Commission's full-bench decision was based on evidence given during two years of proceedings.

"On the evidence, the Commission decided that the previous Sunday penalty rates in the fast food, retail and hospitality industries were no longer fair or relevant, and needed to be adjusted," Mr Innes said.

"The decision will generate increased investment and employment, which will be beneficial for employees, businesses and the broader community.

Australian Retailers Association Executive Director Russell Zimmerman said the court's decision vindicated its work to increase employment rates and sustain economic growth.

"The latest August retailing trade figures of only 2.15 per cent year-on-year growth have p roved just how challenging the current retail climate is," Mr Zimmerman said.

"These disappointing growth figures, combined with increasing economic pressures are significantly affecting employment rates across Australia, and stifling retail growth nationally.

"The ARA hopes the ALP and other political parties who are seeking to overturn this decision are sensible enough to accept the umpire's decision and allow retailers to get on with the job of employing more people."

'New low point for workers'

United Voice National Secretary Jo-anne Schofield said penalty rates provided a vital safety net for workers in the hospitality industry and the Federal Court decision was a "new low point for workers in Australia".

"We will continue to challenge this harsh and unfair pay cut and will continue to speak out on behalf of all workers," she said.

"When our industrial relations laws are used by em ployers to cut pay and undermine the existing entitlements of workers in our country, when the courts refuse to intervene and when our government refuses to utter a word in support of these workers, the system is broken.

"Hospitality workers have been delivered a pay cut they can't afford and don't deserve. They will lose thousands of dollars a year from their pay packets as these cuts are fully implemented."

ACTU Secretary Sally McManus demanded action from Prime Minister Malcolm Turnbull to reverse the penalty rate cuts.

"Malcolm Turnbull can stop these wage cuts," she said.

"Australia needs a pay rise. Working people's wages are flatlining and their work is becoming more insecure. The government has a responsibility to act."

James Pearson, chief executive officer of the Australian Chamber of Commerce and Industry, said it was time for the union movement to accept the umpire's decision.

"S unday penalty rates have not been abolished, the decision only affects around 220,000 people in retail, pharmacy, hospitality and fast food, and we are talking about limited changes â€" for example, from double-time to time-and-three quarters for Sunday work," he said.

"It is time for all sides of politics to accept the decision and allow employers to get on with creating jobs."

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The Australian Hotels Association national chief executive officer Stephen Ferguson also welcomed the court decision.

​"This decision upholds the long-standing independence of the Fair Work Commission â€" it's now time to get on with creating more jobs in the hospitality sector," he said.

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Anna Patty
Anna Patty
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Anna Patty is Workplace Editor for The Sydney Morning Herald. She is a former Education Editor, State Political Reporter and Health Reporter. Her reports on inequity in schools funding led to the Gonski reforms and won her national awards. Her coverage of health exposed unnecessary patient deaths at Campbelltown Hospital and led to judicial and parliamentary inquiries. At The Times of London, she exposed flaws in international medical trials.

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