PR590365 - Decision - 23 Feb 2017

[2017] FWCFB 1001
FAIR WORK COMMISSION

DECISION


Fair Work Act 2009

s.156 - 4 yearly review of modern awards

4 yearly review of modern awards –Penalty Rates
(AM2014/305)

JUSTICE ROSS,PRESIDENT
VICE PRESIDENT CATANZARITI
DEPUTY PRESIDENT ASBURY
COMMISSIONER HAMPTON
COMMISSIONER LEE

MELBOURNE,23 FEBRUARY 2017

4 yearly review of modern awards –penalty rates –hospitality and retail sectors

CONTENTS

Chapters

      1.

Introduction [1]
1.1 The Process [16]

      2.

The Decision:An Overview
2.1 The Legislative context and proposed changes in penalty rates [34]

      3.

Legislative Framework
3.1 Statutory constructions –general observations [95]
3.2 The relevant statutory provisions [101]
3.3 The Modern Awards Objective [113]
3.4 The proposed ‘material change in circumstances’test [230]
3.5 Summary [269]

      4.

Award Modernisation and the Transitional Review
4.1 Overview [271]
4.2 Award modernisation [274]
4.3 Transitional Review 2012 [286]

      5.

Submissions overview

      5.1 Principal parties [302]
      5.2 Productivity Commission Inquiry Report:Workplace Relations Framework [308]
      5.3 Other submissions [349]

      6.

Weekend work

      6.1 Overview of data and evidence [424]
      6.2 Expert evidence [508]
      6.3 Employment effects of changes to penalty rates [611]
      6.4 Summary [689]

      7.

The Hospitality Sector

      7.1 Overview [691]

        7.1.1 Features of the hospitality sector
        7.1.2 Hospitality sector employees
        7.1.3 Summary

      7.2 Hospitality Industry (General) Award 2010 [745]

        7.2.1 The claims
        7.2.2 Background to the Hospitality Award
        7.2.3 The Hospitality Industry
        7.2.4 The Evidence
        7.2.5 Consideration
        7.2.6 Conclusion

      7.3 Registered and Licenced Clubs Award 2010 [907]

        7.3.1 The claims
        7.3.2 Background to the Clubs Award
        7.3.3 The Clubs Industry
        7.3.4 The Evidence
        7.3.5 Consideration
        7.3.6 Conclusion

      7.4 Restaurant Industry Award 2010 [1010]

        7.4.1 The Claims
        7.4.2 The Cafes and restaurants industry
        7.4.3 Background to the Restaurant Award
        7.4.4 The Evidence
        7.4.5 Consideration
        7.4.6 Conclusion

      7.5 Fast Food Industry Award 2010 [1161]

        7.5.1 The Claims
        7.5.2 Background to the Fast Food Award
        7.5.3 The Evidence
        7.5.4 The Fast Food industry
        7.5.5 Fast Food industry employees
        7.5.6 Consideration
        7.5.7 Conclusion

      8.

The Retail Sector

      8.1 Overview [1410]

        8.1.1 Features of the Retail Sector
        8.1.2 Retail sector employees

      8.2 General Retail Industry Award 2010 [1466]

        8.2.1 The claims
        8.2.2 Background to the Retail Award
        8.2.3 The Retail industry
        8.2.4 The Evidence
        8.2.5 Consideration
        8.2.6 Conclusion

      8.3 Pharmacy Industry Award 2010 [1721]

        8.3.1 The claims
        8.3.2 Background to the Pharmacy Award
        8.3.3 The Pharmacy industry
        8.3.4 The Evidence
        8.3.5 Consideration
        8.3.6 Conclusion

      9.

Public Holiday Penalty Rates
9.1 Overview [1893]
9.2 The claims [1909]
9.3 Consideration [1926]
9.4 Conclusion [1947]

      10.

The Right to Refuse Work [1982]

      11.

Transitional Arrangements [1998]

      12.

Next Steps [2030]

 

ATTACHMENTS

Attachment A—List of witnesses
Attachment B—Research reference list
Attachment C—Comparison of penalty rates under key instruments against modern awards rates
Attachment D—Terms of reference for Productivity Commission inquiry
Attachment E––List of cases and additional references
Attachment F—List of tables,figures and charts

ABBREVIATIONS

AAWI

average annualised wage increases

ABI

Australian Business Industrial and the New South Wales Business Chamber

ABS

Australian Bureau of Statistics

ACCI

Australian Chamber of Commerce and Industry

ACTU

Australian Council of Trade Unions

AFEI

Australian Federation of Employers and Industries

Ai Group

Australian Industry Group

AIRC

Australian Industrial Relations Commission

AHA

Australian Hotels Association

AMSRS

Australian Market and Social Research Society

ANZSIC

Australian and New Zealand Standard Industrial Classification

APESMA

The Association of Professional Engineers,Scientists and Managers,Australia

ARA

Australian Retailers Association

ARS

Award Reliance Survey

ASR

Australian Survey Research Group Pty Ltd

AWRS

Australian Workplace Relations Study

Benchmarking Survey

restaurant and catering benchmarking survey conducted by RCI in 2014

CAI

Clubs Australia Industrial

Clubs Award

Registered and Licensed Clubs Award 2010

CoE

Characteristics of Employment Survey

Coffs Club Agreement

Coffs Ex Services Memorial and Sporting Club Enterprise Agreement 2015 [AE415387]

Commission 1

Fair Work Commission

EA Survey

Survey by Elections Australia Pty Ltd of RCI Members

EEBTUM

Employee Earnings,Benefits and Trade Unions Membership

EEH

Employee Earnings and Hours

Fast Food Award

Fast Food Industry Award 2010

FW Act

Fair Work Act 2009 (Cth)

FWO

Fair Work Ombudsman

FWO Wave 2 Report

National Hospitality Industry Campaign Restaurants,Café’s and Catering (Wave 2)

FWO Wave 3 Report

National Hospitality Industry Campaign 2012–15 Takeaway Foods (Wave 3)

HERRC industries

hospitality,entertainment,retail,restaurants and cafes

HILDA

Household,Income and Labour Dynamics in Australia

Hospitality Award

Hospitality Industry (General) Award 2010

Hospitality Employers

Australian Hotels Association and the Accommodation Association of Australia

Hospitality and Retail Awards

Hospitality,Restaurant,Retail,Fast Food and Pharmacy Awards (see [1915])

IPART

NSW Independent Pricing and Regulatory Tribunal

Jetty survey

survey by Jetty Research

KPMG Clubs Report

KPMG ‘National Club Census 2011’

MGA

Master Grocers Australia Limited

NES

National Employment Standards

NRA

National Retailers Association

PC Final Report

Productivity Commission Inquiry Report:Workplace Relations Framework

PGA

The Pharmacy Guild of Australia

Pharmacy Award

Pharmacy Industry Award 2010

QSR

Quick Service Restaurants

RCI

Restaurant &Catering Industrial

Request

Request by Minister for Employment and Workplace Relations to modernise awards in accordance with s.576C(1) of the WR Act

Restaurant Award

Restaurant Industry Award 2010

Retail Award

General Retail Industry Award 2010

Retail employers

Australian Retailers Association,National Retail Association and Master Grocers Association

Review

4 yearly review of modern awards

SDA

Shop,Distributive and Allied Employees Association

Taskforce Report

Final Report of the Visitor Economy Taskforce:A Plan to Double Overnight Visitor Expenditure to NSW by 2020

TPCA Act

Fair Work (Transitional Provisions and Consequential Amendments) Act 2009

Transitional Review

Transitional (or 2 year) review of modern awards under Item 6 of Schedule 5 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009

Victorian Shops Interim Award

Shop,Distributive and Allied Employees Association - Victorian Shops Interim Award 2000

WAD

Workplace Agreements Database

WR Act

Workplace Relations Act 1996

1. Introduction

4 yearly review

[1] Section 156 of the Fair Work Act 2009 (the FW Act) provides that the Fair Work Commission (the Commission) must conduct a review of all modern awards every four years (the Review).

[2] As detailed in a statement issued on 6 February 2014, 2 the Review consists of an Initial stage (dealing with jurisdictional issues),a Common issues stage and an Award stage (which would review all modern awards in four groups).3

[3] As part of the Review,various employer bodies have made application to vary penalty rate provisions in a number of modern awards. These applications have been heard together.

[4] In an Issues Paper dated 24 February 2014,the Commission indicated its preliminary view that proposals to vary penalty rates would not be dealt with as a common issue,but would be dealt with in the Award stage of the Review. 4 This preliminary view was confirmed in a Statement and Directions issued on 17 March 2014 and it was noted that the penalty rates matter would be dealt with by a separately constituted Full Bench. 5

[5] The modern awards subject to claims are:

Award title

Award code

Matter No.

Fast Food Industry Award 2010

MA000003

AM2014/267

General Retail Industry Award 2010

MA000004

AM2014/270

Hospitality Industry (General) Award 2010

MA000009

AM2014/272

Pharmacy Industry Award 2010

MA000012

AM2014/209

Registered and Licensed Clubs Award 2010

MA000058

AM2014/283

Restaurant Industry Award 2010

MA000119

AM2014/284

[6] This decision deals with those claims.

[7] Table 1 below sets out claims employer parties have made to reduce weekend penalty rates in respect of each award that is the subject of this decision. Table 1 sets out the current penalty rates for work performed on a Saturday and Sunday in each award,and the proposed change for each award is highlighted in red text.

Table 1

Weekend Penalty Rates

 

Full-time

Part-time

Casual (inclusive of casual loading)

 

% of permanent base rate

% of permanent base rate

% of permanent base rate

 

Sat

Sun

Sat

Sun

Sat

Sun

Restaurant Industry Award 2010

125

150

125

150

150

150 (175)1

Restaurant Industry Award 2010 2

(proposed by RCI)

125

125

125

125

150

150

Registered and Licensed Clubs Award 2010

150

175

150

175

150

175

Registered and Licensed Clubs Award 2010

(proposed by CAI)

125

150

125

150

150

150

General Retail Industry Award 2010

125

200

125

200

135

200

General Retail Industry Award 2010

(proposed by the Retail Employers and ABI3)

125

150

125

150

135

150

Hospitality Industry (General) Award 2010

125

175

125

175

150

175

Hospitality Industry (General) Award 2010

(proposed by AHA and AAA)

125

150

125

150

150

150

Fast Food Industry Award 2010

125

150

125

150

150

175

Fast Food Industry Award 2010

(proposed by RCI)

125

125

125

125

150

150

Fast Food Industry Award 2010

(proposed by Ai Group)

125

125

125

125

150

150

Pharmacy Industry Award 2010 4

200,125,150,175

200

200,125,150,175

200

225,150,175,200

225

Pharmacy Industry Award 2010

(proposed by the Pharmacy Guild)

200,125,150

200,150,175

200,125,150

200,150,175

200,125,150

200,150,175

1 Level 1–2 employees receive a penalty rate of 150% on Sundays,Level 3–6 casual employee receive 175%.

2 ABI have made a claim in relation to the Restaurant Award to reduce the public holiday rate only.

3 The Retail employers are also seeking to reduce the penalty rate for shiftworkers on Sunday from 200% to 150%.

4 There are currently up to four penalty rates,based on the time of working

[8] The principal parties to the proceedings are identified in Chapter 5.1.

[9] In a statement on 8 September 2016 directions were issued in which we sought to clarify the status of the various claims before us in the penalty rates proceedings. A draft summary of the claims was issued along with the statement,requesting parties’comments.

[10] Australian Business Industrial and the New South Wales Business Chamber (ABI) confirmed that the variations to the Hair and Beauty Industry Award 2010 which had been proposed by ABI and the Hair and Beauty Australia Industry Association,were no longer pressed. Correspondence was also received from Restaurant &Catering Industrial (RCI) confirming that its claim in respect of clauses 34.4(c) and 34.4(d) of the Restaurant Industry Award 2010 was no longer pressed.

[11] No correspondence was received from other parties in relation to the draft summary.

[12] A finalised version of the summary was republished as a statement on 12 October 2016. 6

[13] In addition to the claims set out in Table 1 above,a number of other claims have been made. These claims generally relate to the public holidays clause,for example the Hospitality Employers (the Australian Hotels Association and the Accommodation Association of Australia) seek to introduce a two-tiered regime into the Hospitality Award in respect of public holiday penalty rates under which higher penalty rates are prescribed for work performed on the public holidays specified under s.115(1) of the FW Act. Other claims seek to reduce the existing penalties paid for work on public holidays. We set out all these claims in more detail in Chapter 9. Claims have also been made seeking changes to the early/late night work penalties in a number of the awards.

[14] We deal with each claim in detail later in this decision.

[15] As noted in the Statement issued 17 December 2014,further proposals to alter penalty rates in other modern awards will be dealt with on an award-by-award basis in the award stage of the Review. 7

      1.1. The Process

[16] After a consultation process,a consensus emerged among interested parties that the modern awards and issues in relation to penalty rates would be dealt with jointly but sequenced into three ‘groups’,as follows:

(i) Common evidence—evidence relevant to the consideration of claims in all awards and industry sectors.

(ii) Hospitality group—includes the following awards:

    Amusement,Events and Recreation Award 2010
    Hospitality Industry (General) Award 2010
    Registered and Licensed Clubs Award 2010
    Restaurant Industry Award 2010

(iii) Retail group—includes the following awards:

    Dry Cleaning and Laundry Industry Award 2010
    Fast Food Industry Award 2010
    General Retail Industry Award 2010
    Hair and Beauty Industry Award 2010
    Pharmacy Industry Award 2010

[17] Applications to vary the Amusement,Events and Recreation Award 2010,Dry Cleaning and Laundry Industry Award 2010 and Hair and Beauty Industry Award 2010 were withdrawn by the parties at various points in the proceedings. 8

[18] A number of conferences were held and various procedural Statements issued by the Commission dealing with a range of programming and scheduling matters. There was general agreement that ‘common evidence’would be heard first and separate to the particular evidence relating to the Hospitality group and the Retail group,followed by a submission process.

[19] Common evidence is evidence that is relevant to the consideration of claims in all of the relevant awards and industry sectors,and would generally be provided by an expert. Such evidence could include government reports and statistical or social commentary material. Award or industry-specific evidence would be presented during the Hospitality and Retail group stages.

[20] Final directions and a hearing timetable were issued in a Statement on 3 March 2015. 9 The directions set out the process for the filing of evidence (including witness statements from expert witnesses and lay witnesses across the three streams),objections to any evidence,submissions,proposed findings and survey material.

[21] The directions and timetable were revised on 7 August 2015, 10 after a number of parties sought variations to the 3 March 2015 directions.

[22] Parties were advised that issues in relation to the penalty rate payable on a public holiday in the awards referred to in paragraph [5] of this decision were to be dealt with during these proceedings,and not as part of the common issue public holiday proceedings. 11

[23] The Commission heard evidence on 8–25 September,1 October,12–28 October,4–6 November,15–16 and 21 December 2015. Evidence was given by 143 lay and expert witnesses of whom 128 were required for cross-examination. Witnesses included employers and employees from the relevant industry sectors,appearing either in person or from around Australia (including regional locations) via videolink. The expert evidence included academics with expertise in economics and workplace relations. A complete list of witnesses is attached to this decision at Attachment A.

[24] A number of Mentions have been held concurrently while evidence is being heard,dealing with scheduling of witnesses,objections to evidence (both expert and lay),legal professional privilege claims and applications for confidentiality orders. As part of these proceedings,the Commission has issued 38 Orders for the production of documents,and eight confidentiality orders.

[25] In total there have been 39 days of hearings and an additional 15 mentions and conferences.

[26] The dates for filing final submissions were revised following requests from the parties,and final hearings in the matter were held from 11–15 April 2016 and 28 September 2016. The final written submission was received on 4 February 2017.

[27] In addition to material received from parties,the Commission has published its own research material. Three reports have been prepared and published by the Workplace and Economic Research Section of the Commission to assist parties with their submissions in the matter:

(i) Industry profile –Accommodation and food services
(ii) Industry profile –Retail trade
(iii) Changing work patterns

[28] These reports have been updated and republished a number of times to take into account new data. The most recent update to all three reports was on Friday 20 January 2017 to take into account the following:

  • Australian Bureau of Statistics (ABS) Employee Earnings and Hours,May 2016;and

  • Household,Income and Labour Dynamics in Australia (HILDA) survey,2015.

[29] A Research Reference List was published on the Commission’s website on 15 January 2016 containing references that had been cited in the substantive evidence of expert witnesses and the submissions of the parties. Additional publications identified by staff of the Commission that may be of relevance were also included in the list. Interested persons were given an opportunity to comment on the list 12. The Research Reference List is contained in Attachment B.

[30] The conduct of the Review has been open and transparent,in accordance with s.577 of the FW Act. The Commission’s website has been used extensively to provide information to any interested person in order to facilitate broad participation in the Review. Interested persons were encouraged to subscribe to the dedicated penalty rates subscription notification service to keep them informed about the penalty rates matter.

[31] On 15 January 2016 13,revised directions were issued directing that:

‘Any interested person who is not a party to the proceedings may put forward a position (and file material in support of their position) in relation to varying the penalty rate provisions in the above awards by no later than 4.00pm Wednesday 17 February 2016.’

[32] This direction was publicly advertised in major newspapers nationally on 20 January 2016. 14 Some 5845 public contributions from individual employees and employers were received and published on the Commission’s website15 and 55 additional confidential contributions were forwarded to the Full Bench and provided to the principal parties,but not published.

[33] Throughout the process and in addition to the 5845 public contributions,36 submissions have been received from organisations who are not principal parties to the proceedings. These organisations included Members of Parliament and State governments,unions,student organisations,community groups,small businesses,churches and industry groups. Of these submissions 14 supported a reduction to the current penalty rates regime and 22 did not support any change to the current system. These submissions are addressed in Chapter 5.3.

2. The Decision:An Overview

    2.1 The Legislative context and proposed changes in penalty rates

[34] Section 156 of the FW Act provides that the Commission must conduct a 4 yearly review of modern awards (the Review). Subsection 156(2) deals with what must be done in the Review and provides that the Commission must review all modern awards and may,among other things,make determinations varying modern awards.

[35] This decision deals with the review of the weekend and public holiday penalty rates and some related matters,in a number of Hospitality and Retail awards.

[36] The Commission’s task in the Review is to decide whether a particular modern award achieves the modern awards objective. If it does not then it is to be varied such that it only includes terms that are ‘necessary to achieve the modern awards objective’(s.138).

[37] The modern awards objective in s.134(1) of the FW Act is central to the Review. The modern awards objective is to ‘ensure that modern awards,together with the National Employment Standards (NES) provide a fair and relevant minimum safety net of terms and conditions’,taking into account the particular considerations identified in sections 134(1)(a) to (h). Fairness in this context is to be assessed from the perspective of the employees and employers covered by the modern award in question. ‘Relevant’is intended to convey that a modern award should be suited to contemporary circumstances. We deal with the relevant legislative provisions in more detail in Chapter 3.

[38] Historically,industrial tribunals have expressed the rationale for penalty rates in terms of both the need to compensate employees for working outside ‘normal hours’(the compensatory element) and to deter employers from scheduling work outside ‘normal’hours (the deterrence element). 16

[39] Having regard to more recent authority,the terms of the modern awards objective,and the scheme of the FW Act,we have concluded that deterrence is no longer a relevant consideration in the setting of weekend and public holiday penalty rates. We accept that the imposition of a penalty rate may have the effect of deterring employers from scheduling work at specified times or on certain days,but that is a consequence of the imposition of an additional payment for working at such times or on such days,it is not the objective of those additional payments. Compensating employees for the disutility associated with working on weekends and public holidays is a primary consideration in the setting of weekend and public holiday penalty rates.

[40] We note that the Productivity Commission has expressed a different view in respect of public holiday penalty rates:

‘…by definition,genuine public holidays are intended to serve a special community role and,as such,there are strong grounds to limit the expectation that they are for working. In that sense,the original concept of deterrence continues to have relevance’. 17

[41] We accept that public holidays,by their nature,are intended ‘to serve a special community role’and that the expectation (and practice) is that the vast majority of employees do not work on public holidays. But these features do not support the adoption of deterrence as an objective in setting public holiday penalty rates. However,these features are relevant to determining the amount of compensation to be provided to employees who work on public holidays,given the additional disutility associated with working on a day when the vast majority of other employees are enjoying a day of leisure.

[42] A central contention advanced by the Shop,Distributive and Allied Employees Association (SDA) and United Voice in these proceedings is that before the Commission can vary a modern award in the Review,it must first be satisfied that since the making of the modern award there has been a material change in circumstances pertaining to the operation or effect of the award such that the modern award is no longer meeting the modern awards objective (the ‘material change in circumstances test’). If adopted the proposed test would require the proponent of a variation to establish that there has been a material change in circumstances since the modern award was made. The proposed ‘material change in circumstances’test seeks to place a constraint on the discretion conferred by s.156 which is not warranted by the terms of this section or the relevant statutory context and purpose. There is no such express or implied requirement in s.156.

[43] We reject the proposition advanced by the Unions. The adoption of the proposed ‘material change in circumstances test’would obfuscate the Commission’s primary task in the Review,determining whether the modern award achieves the modern awards objective. To adopt such a test would add words into s.156 in circumstances where it is not necessary to do so in order to achieve the legislative purpose. For completeness we record our agreement with the point advanced by the Australian Industry Group (Ai Group) in its submission in reply 18 that the variation of a modern award may be warranted if it was established that there was a ‘material change in circumstances’since the modern award was made,but the establishment of such a change is not a condition precedent to the variation of a modern award in the Review.

[44] As mentioned,the modern awards objective is central to the Review. In determining whether an award achieves the modern awards objective the Commission must take into account a range of considerations,including those set out in s.134(1)(da). Relevantly,s.134(1)(da)(iii) requires that we take into account the ‘need to provide additional remuneration’for ‘employees working on weekends or public holidays’.

[45] An assessment of ‘the need to provide additional remuneration’to employees working in the circumstances identified requires a consideration of a range of matters,including:

(i) the impact of working at such times or on such days on the employees concerned (i.e. the extent of the disutility);

(ii) the terms of the relevant modern award,in particular whether it already compensates employees for working at such times or on such days (e.g. through ‘loaded’minimum rates or the payment of an industry allowance which is intended to compensate employees for the requirement to work at such times or on such days);and

(iii) the extent to which working at such times or on such days is a feature of the industry regulated by the particular modern award.

[46] Assessing the extent of the disutility of working at such times or on such days (issue (i) above) includes an assessment of the impact of such work on employee health and work-life balance,taking into account the preferences of the employees for working at those times.

[47] Section 134(1)(da) speaks of the ‘need to provide additional remuneration’for employees performing work in the circumstances mentioned. We note that the minority in the Restaurants 2014 Penalty Rates decision 19 made the following observation about s.134(1)(da):‘…the objective requires additional remuneration for working on weekends’.20

[48] To the extent that the above passage suggests that s.134(1)(da) ‘requires additional remuneration for working on weekends’,we respectfully disagree. We acknowledge that the provision speaks of ‘the need for additional remuneration’and that such language suggests that additional remuneration is required for employees working in the circumstances identified in paragraphs 134(1)(da)(i) to (iv). But the expression must be construed in context and the context tells against the proposition that s.134(1)(da) requires that each modern award must provide additional remuneration for working in the identified circumstances.

[49] The various employer parties have sought reductions in Sunday and public holiday penalty rates. These claims are summarised in Tables 1 and 74. There were also some claims to vary the penalty payments for early/late night work in some awards.

[50] Generally speaking,no changes are sought in relation to Saturday penalty rates. 21

[51] We have reviewed the Saturday penalty rates in 4 of the 6 modern awards before us and (subject to the observations at [65] and [66]) we are satisfied that the existing Saturday penalty rates achieve the modern awards objective –they provide a fair and relevant minimum safety net. The review of Saturday penalty rates in the Clubs and Pharmacy Awards is to be the subject of further proceedings (see [994][1009] and [1872][1892]).

[52] Variations to modern awards must be justified on their merits. The extent of the merit argument required will depend on the circumstances. Significant changes where merit is reasonably contestable should be supported by an analysis of the relevant legislative provisions and,where feasible,probative evidence.

[53] We have decided that the existing Sunday penalty rates in 4 of the modern awards before us (the Hospitality,Fast Food,Retail and Pharmacy Awards) do not achieve the modern awards objective,as they do not provide a fair and relevant minimum safety net.

[54] Except in the Fast Food Award (for the reasons set out at [1394][1397]),we do not propose to reduce the Sunday penalty rates to the same level as the Saturday penalty rates. As we mention shortly,for many workers Sunday work has a higher level of disutility than Saturday work,though the extent of the disutility is much less than in times past. In this regard we also note that it is implicit in the claims advanced by most of the employer interests that they accept the proposition that the disutility associated with Sunday work is higher than the disutility associated with Saturday work. If this was not the case then they would have proposed that the penalty rates for Sunday and Saturday work be the same,but they did not.

[55] The reductions in Sunday penalty rates we have determined are set out below:

Award

Sunday Penalty Rate

Hospitality Award

full-time and part-time employees:

(no change for casuals)

 

175 per cent →150 per cent

Fast Food Award

(Level 1 employees only)

Full-time and part-time employees:

Casual employees:

 

150 per cent →125 per cent

175 per cent →150 per cent

Retail Award

Full-time and part-time employees:

Casual employees:

 

200 per cent →150 per cent

200 per cent → 175 per cent

Pharmacy Award

(7.00 am –9.00 pm only)

Full-time and part-time employees:

Casual employees:

 

 

200 per cent → 150 per cent

225 per cent → 175 per cent

[56] In relation to the Fast Food Industry Award 2010,for reasons associated with the preferences of the relevant employees and the limited impact of Sunday work upon those employees (see Chapter 7.5),we have decided to reduce the Sunday penalty rate,for level 1 employees from 150 per cent to 125 per cent (for full-time and part-time employees) and from 175 per cent to 150 per cent (for casual employees). We do not propose to change the Sunday penalty rate for Level 2 and 3 employees.

[57] The differential treatment of Level 1 versus Level 2 and 3 employees is on the basis that Level 2 and 3 employees experience a higher level of disutility associated with Sunday work than that experienced by level 1 employees. The evidence supports the retention of the current Sunday penalty rate for level 2 and 3 employees. In this context we note that level 2 and 3 employees are,generally speaking,regarded as ‘career’employees with the major chains whereas casual and part-time crew members (level 1 employees) are usually regarded as ‘non-career’employees.

[58] We also note that in addition to the changes to Sunday penalty rates we have decided to vary some of the penalty provisions in relation to early/late night work in the Restaurants and Fast Food Awards (see [1126][1137],[1154],[1324][1334] and [1391])

[59] As to the Pharmacy Industry Award 2010, at this stage,we are not persuaded to make the changes proposed to the loadings for work before 7.00 am and between 9.00 pm and midnight,on weekends and Monday to Friday. We deal with the next steps in the review of this award in Chapter 12.

[60] On the material presently before us we are not satisfied that the variations proposed to the Registered and Licensed Clubs Award 2010 and the Restaurant Industry Award 2010 are necessary to ensure that these awards achieve the modern awards objective. In short,the employer organisations concerned have not established a merit case sufficient to warrant the granting of their claims. We deal with the deficiencies in the cases put and the next steps in relation to the review of these 2 awards in Chapter 11 at [2044][2050].

[61] We have also decided to reduce the public holiday penalty rates in the Hospitality and Retail Awards (except for the Clubs Award,for the reasons set out at [1915]).

[62] We also conclude that the two-tiered approach to public holiday penalty rates advanced by the Hospitality Employers lacks merit. The distinction sought to be drawn between those public holidays expressly mentioned in s.115(1)(a) and the other days declared or prescribed by or under a law of a State or Territory as a public holiday (s.115(1)(b)),is illusory. In that regard we concur with the views expressed in the 1994 Public Holidays Test Case decisions and the Modern Awards Review 2012 –Public Holidays decision,that,in essence,the number and standardisation of public holidays across Australia is primarily an issue for the Commonwealth,State and Territory legislatures.

[63] The effect of our decision in respect of public holiday penalty rates is shown (in marked up format) in Table 2 below.

Table 2

Proposed public holiday penalty rates in the Hospitality and Retail awards

Award title

Public holiday penalty rates (%)

Full-time &part-time

Casual

Hospitality Award (cl. 32)

250 225

275 250

Restaurant Award (cl. 34)

250 225

250

Clubs Award (cl. 29)

250

250

Retail Award (cl. 29)

250 225

275/250 250

Fast Food Award (cl. 30)

250 225

275 250

Pharmacy Award (cl. 31)

250 225

275 250

[64] The changes we propose to make to Sunday and public holiday penalty rates will result in greater consistency in penalty rate settings in the Hospitality and Retail Awards .

[65] In each of the Sunday and public holiday penalty rates we have fixed we have adopted what the Productivity Commission Inquiry Report:Workplace Relations Framework (PC Final Report) describes as the ‘default approach’to setting the appropriate rate for casual employees (see [333][338]). Under this approach the rate of pay for casual employees is always 25 percentage points above the rate of pay for non-casual employees. Hence if the Sunday penalty rate for full-time and part-time employees is 150 per cent,the Sunday rate for casuals will be 150 + 25 = 175 per cent.

[66] We note that the approach we have adopted may have implications for the rate paid to casuals for Saturday work under the Retail Award. We refer to that issue at [1716][1720]. It may also result in a shift from casual to part-time employment in respect of those employed in the modern awards which we propose to vary.

[67] The decision to reduce Sunday and public holiday penalty rates in these awards is based on our conclusions with respect to the common evidence (see Chapter 6) and our assessment of the evidence in relation to each of these particular awards (see Chapters 7.2,7.5,8.2 and 8.3).

[68] In Chapter 6 we consider the ‘common evidence’adduced in these proceedings and deal with the incidence and effects of weekend work and the employment effects of reducing penalty rates. The following propositions emerge from the common evidence before us:

1. There is a disutility associated with weekend work,above that applicable to work performed from Monday to Friday. Generally speaking,for many workers Sunday work has a higher level of disutility than Saturday work,though the extent of the disutility is much less than in times past.

2. We agree with the assessment in the PC Final Report that there are likely to be some positive employment effects from a reduction in penalty rates,though it is difficult to quantify the precise effect. Any potential positive employment effects from a reduction in penalty rates are likely to be reduced due to substitution and other effects.

[69] As to proposition 1 above,we are aware that our conclusion is different to that in the PC Final Report. However,in the proceedings before us we have had the opportunity to consider evidence not available to the Productivity Commission,such as the Pezzullo Weekend Work Report,the Rose Report and the Sands Report in addition to a substantial amount of lay employer and employee evidence. None of the above reports concluded that the activities conducted on,and attitudes towards,Saturdays and Sundays were identical.

[70] As to proposition 2,the Hospitality and Retail Employers’lay evidence supports the proposition that the current level of Sunday penalty rates has led employers to reduce labour costs associated with Sunday trading by imposing a number of operational limitations,such as:

  • restricting trading hours;

  • lowering staff levels;and

  • restrictions on the type and range of services provided.

[71] The Hospitality and Retail Employers’lay evidence also supports the proposition that a reduction in penalty rates is likely to lead to:

  • increased trading hours on Sundays and public holidays;

  • a reduction in the hours worked by some owner operations;
  • an increase in the level and range of services offered on Sundays and public holidays;and

  • an increase in overall hours worked.

[72] We do not suggest that these changes will apply uniformly across all hospitality and retail businesses. The actual impact of a reduction in Sunday penalty rates will depend on the circumstances applying to individual businesses.

[73] As to public holiday penalty rates,we note that the disutility of working on public holidays is greater than the disutility of working on Sundays (which in turn is greater than Saturday work). The notion of relative disutility supports a proportionate approach to the fixation of weekend and public holiday penalty rates. In determining the appropriate penalty rate for public holiday work we have had regard to the level of Sunday penalty rates in the Hospitality and Retail Awards (after applying the decisions we have made to reduce those rates).

[74] We also note that the disutility in relation to public holidays has been ameliorated somewhat by the introduction of the statutory right to refuse to work on such days,on reasonable grounds. Contrary to ABI’s submission,we would not characterise s.114(3) of the FW Act as making public holiday work ‘voluntary’(it is a limited right to refuse to work,on reasonable grounds),but it is still a significant contextual matter which was not taken into account when the existing 250 per cent penalty was set.

[75] In addition,public holiday work is more common in the Hospitality and Retail sectors and,on the evidence before us,reducing the public holiday penalty rate will increase employment and have a number of positive effects on business.

[76] It is important to appreciate that the conclusions we have reached in relation to the weekend and public holiday penalty rates in the Hospitality and Retail Awards is largely based on the circumstances relating to these particular awards. The Hospitality and Retail sectors have a number of characteristics which distinguish them from other industries.

[77] The distinguishing characteristics of the Hospitality and Retail sectors are alluded to in the PC Final Report,where it explains the rationale for focussing on the ‘HERRC’(hospitality,entertainment,retail,restaurants and cafes) industries.

‘…the appropriate level for regulated penalty rates for weekend work —particularly on Sundays in a number of discretionary consumer service industries —has become a highly contested and controversial issue. The industries of greatest concern are hospitality,entertainment,retail,restaurants and cafes (HERRC). These are industries where consumer expectations of access to services has expanded over time so that the costs of penalty rates affect consumer amenity in ways they did not when penalty rates were first introduced. Such industries are also important sources of entry-level jobs for,among others,relatively unskilled casual employees and young people (particularly students) needing flexible working arrangements. The provision of discretionary,and therefore demand responsive,services on weekends is less frequent in most other industries,which is a key (but not only) rationale for a focus of concerns on the HERRC industries. It is notable that the FWC is currently also considering appropriate penalty rates in awards,and that their focus almost exactly matches the group of industries that the Productivity Commission has identified as the most relevant.’ 22 (footnotes omitted)

[78] The data on weekend work shows that workers in the Retail and Hospitality sectors are more likely to work on weekends than workers in other industries. As shown in Table 3A below (see [457]).

Table 3A 23

Proportion of employees who work on weekends,by industry

Industry

2002–2008

2009–2016

Accommodation and food services

58.6

60.8

Retail trade

44.4

47.6

All employees

25.9

27.5

[79] The sections that provide an overview of the Retail and Hospitality sectors (see Chapters 7.1 and 8.1) also highlight some differences between these two sectors and other industries. Both industries are much more likely to comprise small businesses (employing fewer than 20 persons) than across all industries and fewer businesses in both the Hospitality and Retail sectors operate on weekdays only,with a greater proportion working 6 or 7 days a week (an average of 6.2 to 6.7 days a week) than businesses across all industries (an average of 5.8 days) as shown in Table 3B below.

Table 3B 24

Structure and operations,2014

 

Retail trade

Accommodation and food services

All industries

 

(%)

(%)

(%)

Operating days

   

Weekdays only

18.9

8.6

48.8

Weekdays and Saturday

37.1

5.3

17.5

Some weekdays and weekend

2.8

5.4

2.3

Operating 7 days

40.6

80.5

31.1

Other

np

np

0.4

 

100.0

100.0

100.0

Average number of operating days per week

6.2

6.7

5.8

Average years of operation under current ownership

18.9

15.6

18.5

Note:np = not published due to estimate having a relative standard error of greater than 50 per cent.

[80] Data on the characteristics of employees in these industries presented in Chapters 7.1 and 8.1 show that they are more likely to be female,younger (under 25 years),work part-time hours,be employed on a casual basis and be award reliant than employees in other industries. Employees in these industries are also more likely to be low paid.

[81] Given the distinguishing characteristics of the Hospitality and Retail sectors,the decisions we have made in respect of the Hospitality and Retail Awards provide no warrant for the variation of penalty rates in other modern awards. Each case must be determined on its merits. We note the views expressed in the PC Final Report in this regard:

‘There is no case for common penalty rates across all industries The Commission is not recommending a reduction in the Sunday penalty rates beyond HERRC. Regulated penalty rates as currently constructed for essential services and many other industries are justifiable. The original justifications have not altered materially:they align with working arrangements that often involve rotating shifts across the whole week,are not likely to reduce service availability meaningfully,are commensurate with the skills of the employees,and are unlikely to lead to job losses.’ 25

[82] We deal with the implementation of our decision in Chapter 11:Transitional Arrangements.

[83] In the numerous submissions before us little attention was given to the implementation of any variations to Sunday penalty rates arising from these proceedings. One exception was in the PC Final Report which recommends that 12 months’notice of any change be given,rather than an extended transition process involving staggered small changes to Sunday penalty rates. We also note that some submissions also alluded to the need to protect the take home pay of workers affected by any changes to penalty rates.

[84] A substantial proportion of award-reliant employees covered by these modern awards are low paid and the reductions in Sunday penalty rates we have determined are likely to reduce the earnings of those employees who currently work on Sundays. As observed in the Productivity Commission Inquiry Report:Workplace Relations Framework (PC Final Report),in general,most existing employees would probably face reduced earnings as it is improbable that,as a group,existing workers’hours on Sundays would rise sufficiently to offset the income effects of penalty rate reductions.

[85] The evidence of the SDA and United Voice lay witnesses puts a human face on the data and provides an eloquent individual perspective on the impact of the award variations. Many of these employees earn just enough to cover weekly living expenses,saving money is difficult and unexpected expenses produce considerable financial distress. 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. There is plainly a need for appropriate transitional arrangements to mitigate such hardship.

[86] We have concluded that appropriate transitional arrangements are necessary to mitigate the hardship caused to employees who work on Sundays. We have not reached a concluded view as to the form of those transitional arrangements and we propose to seek submissions from interested parties as to that issue. For the assistance of those parties who wish to make submissions as to the form of the transitional arrangements we have expressed the following provisional views:

(i) Contrary to the views expressed by the Productivity Commission we do not think it appropriate to delay making any changes to Sunday penalty rates for 12 months,as it would impose an unnecessary delay on the introduction of any reduction in Sunday penalty rates and would give rise to a sharp fall in earnings for some affected employees at the end of the 12 month period.

(ii) If ‘take home pay orders’are an available option then they may mitigate the effects of a reduction in Sunday penalty rates. But we do not favour any general ‘red circling’term which would preserve the current Sunday penalty rates for all existing employees.

(iii) The reductions in Sunday penalty rates should take place in a series of annual adjustments on 1 July each year (commencing 1 July 2017) to coincide with any increases in modern award minimum wages arising from Annual Wage Review decisions.

(iv) As to the number of annual instalments,the 5 annual instalment process which accompanied the making of the modern awards is too long for present purposes. It is likely that at least 2 instalments will be required (but less than 5 instalments). The period of adjustment required will depend on the extent of the reduction in Sunday penalty rates,the availability of ‘take home pay orders’and the circumstances applying to each modern award.

[87] The changes to public holiday penalty rates will take effect on 1 July 2017.

[88] We deal with the next steps in these proceedings in Chapter 12. The matters addressed include:

  • transitional arrangements having regard to the impact of the Sunday penalty reductions for some employees;

  • the potential further review of the Clubs Award,the Restaurants Award and other retail modern awards;
  • the terminology of penalty rates;and

  • the potential for loaded rates in retail modern awards.

[89] As to the last matter,a ‘loaded rate’in this context refers to a rate which is higher than the applicable minimum hourly rate specified in the modern award and is paid for all hours worked instead of certain penalty rates (such as the penalty rates for Saturday and Sunday work).

[90] It seems to us that,subject to appropriate safeguards,schedules of ‘loaded rates’may make awards simpler and easier to understand,consistent with the considerations in s.134(1)(g). Schedules of ‘loaded rates’would also allow small businesses to access additional flexibility without the need to enter into an enterprise agreement.

[91] We also note that the Fair Work Ombudsman (FWO) has reported significant levels of non-compliance in the Hospitality and Retail awards which are before us. It appears from the various FWO reports we mention in Chapter 12 that some businesses in the Hospitality and Retail sectors already provide ‘flat’(or loaded) rates of pay,in order to simplify their payroll process,but they underestimate the additional premium (or loading) required in order to compensate employees for the loss of penalty rates,resulting in non-compliance. The insertion of ‘loaded rates’schedules in these modern awards may have a positive effect on award compliance.

[92] In raising this matter,we are alive to the potential complexity involved in the task of developing schedules appropriately for loaded rates. It has to be borne in mind that any loaded rate will remain part of the safety net and will have to be fair and relevant. Determining an appropriate loaded rate would not be straightforward. For example,an employee who worked the vast majority of their hours on a weekend or late at night,when a penalty rate would apply,would require a higher loaded rate than,say,an employee who worked the vast majority of their hours during the ordinary spread of hours,Monday to Friday.

[93] Any loaded rate and the associated roster configuration,would,of course,need to be relevant to the needs of industry and employees. Accordingly,there would be benefit in further engagement with interested parties as to the dominant roster patterns in the relevant industries so that appropriate rates can be developed.

[94] We envisage that the development of loaded rates will be an iterative process undertaken in consultation with interested parties. That process will commence after we have determined the transitional arrangements in respect of the reductions in Sunday penalty rates.

3. The Legislative Framework

      3.1 Statutory construction –general observations

[95] This part of our decision deals with the legislative provisions relevant to these proceedings. We begin by making some general observations about the task of statutory construction.

[96] The starting point is to construe the words of a statute according to their ordinary meaning having regard to their context and legislative purpose. Context includes the existing state of the law and the mischief the legislative provisions was intended to remedy. 26 Regard may also be had to the legislative history in order to work out what a current legislative provision was intended to achieve.27

[97] Each provision of the FW Act must be read in context by reference to the language of the FW Act as a whole. 28 The relevant legislative context may operate to limit a word or expression of wide possible connotation.29 The literal meaning (or the ordinary grammatical meaning) of the words of a statutory provision may be displaced by the context and legislative purpose,as the majority observed in Project Blue Sky:

‘…the duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have. Ordinarily,that meaning (the legal meaning) will correspond with the grammatical meaning of the provision. But not always. The context of the words,the consequences of a literal or grammatical construction,the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning.’ 30

[98] The provisions of an act must be read together such that they fit with one another. This may require a provision to be read more narrowly than it would if it stood on its own. 31

[99] More recently,in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue 32 (Alcan) the High Court described the task of legislative interpretation in the following terms:

‘This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context,which includes the general purpose and policy of a provision,in particular the mischief it is seeking to remedy.’

[100] We now turn to the specific provisions relevant to these proceedings.

      3.2 The relevant statutory provisions

[101] Section 156 of the FW Act provides that the Commission must conduct a 4 yearly review of modern awards as soon as practicable after 1 January 2014. Subsection 156(2) deals with what must be done in the Review and provides that the Commission must review all modern awards and may,among other things,make determinations varying modern awards.

[102] The requirement in s.156(5) to review each modern award ‘in its own right’,is intended to ensure that the Review is conducted ‘by reference to the particular terms and the particular operation of each particular award rather than by a global assessment based upon generally applicable considerations’. 33 However,while the review of each modern award must focus on the particular terms and operation of the particular award,this does not mean that the review of a modern award is to be confined to a single holistic assessment of all of its terms.34 In these proceedings we are considering whether the relevant modern awards achieve the modern awards objective in relation to the penalty payments they prescribe for working at certain times.

[103] Subsection 156(5) provides that in the Review each modern award is reviewed in its own right,however,this does not prevent the Commission from reviewing 2 or more modern awards at the same time.

[104] The Commission must be constituted by a Full Bench to conduct the Review and to make determinations and modern awards in the Review (see ss.616(1),(2) and (3) of the FW Act). Section 582 of the FW Act provides that the President may give directions about the conduct of the Review.

[105] In addition to s.156 a range of other provisions in the FW Act are relevant to the Review:s.3 (objects of the Act);s.55 (interaction with the NES);Part 2-2 (the NES);s.134 (the modern awards objective);s.135 (special provisions relating to modern award minimum wages);Divisions 3 (terms of modern awards) and 6 (general provisions relating to modern award powers) of Part 2-3;s.284 (the minimum wages objective);s.577 (performance of functions and exercise of powers of the Commission);s.578 (matters the Commission must take into account in performing functions and exercising powers);and Division 3 of Part 5-1 (conduct of matters before the Commission).

[106] The general provisions relating to the performance of the Commission’s functions apply to the Review. Sections 577 and 578 are particularly relevant in this regard. Section 577 states:

‘FWC must perform its functions and exercise its powers in a manner that:

    (a) is fair and just;and

    (b) is quick,informal and avoids unnecessary technicalities;and

    (c) is open and transparent;and

    (d) promotes harmonious and cooperative workplace relations.

Note:The President also is responsible for ensuring that FWC performs its functions and exercises its powers efficiently etc. (see section 581).’

[107] Section 578 states:

‘In performing functions or exercising powers,in relation to a matter,under a part of this Act (including this Part),FWC must take into account:

    (a) the objects of this Act,and any objects of the part of this Act;and
    (b) equity,good conscience and the merits of the matter;and
    (c) the need to respect and value the diversity of the work force by helping to prevent and eliminate discrimination on the basis of race,colour,sex,sexual preference,age,physical or mental disability,marital status,family or carer’s responsibilities,pregnancy,religion,political opinion,national extraction or social origin.’

[108] As stated in s.578(a),in performing functions and exercising powers under a part of the FW Act (including the Review function under Part 2-3 Modern Awards) the Commission must take into account the objects of the FW Act and any particular objects of the relevant part. The object of Part 2-3 is expressed in s.134,the modern awards objective. The object of the FW Act is set out in s.3,as follows:

‘3 Object of this Act

The object of this Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians by:

(a) providing workplace relations laws that are fair to working Australians,are flexible for businesses,promote productivity and economic growth for Australia’s future economic prosperity and take into account Australia’s international labour obligations;and

(b) ensuring a guaranteed safety net of fair,relevant and enforceable minimum terms and conditions through the National Employment Standards,modern awards and national minimum wage orders;and

(c) ensuring that the guaranteed safety net of fair,relevant and enforceable minimum wages and conditions can no longer be undermined by the making of statutory individual employment agreements of any kind given that such agreements can never be part of a fair workplace relations system;and

(d) assisting employees to balance their work and family responsibilities by providing for flexible working arrangements;and

(e) enabling fairness and representation at work and the prevention of discrimination by recognising the right to freedom of association and the right to be represented,protecting against unfair treatment and discrimination,providing accessible and effective procedures to resolve grievances and disputes and providing effective compliance mechanisms;and

(f) achieving productivity and fairness through an emphasis on enterprise-level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action;and

(g) acknowledging the special circumstances of small and medium-sized businesses.’

[109] In conducting the Review the Commission is able to exercise its usual procedural powers,contained in Division 3 of Part 5-1 of the FW Act. Importantly,the Commission is not bound by the rules of evidence and procedure (s.591) and may inform itself in relation to any matter before it in such manner as it considers appropriate (s.590(1)).

[110] The Review is to be distinguished from inter partes proceedings. Section 156 imposes an obligation on the Commission to review all modern awards and each modern award must be reviewed in its own right. The Review is conducted on the Commission’s own motion and is not dependent upon an application by an interested party. Nor is the Commission constrained by the terms of a particular application. 35 The Commission is not required to make a decision in the terms applied for (s.599) and,in a Review,may vary a modern award in whatever terms it considers appropriate,subject to its obligation to accord interested parties procedural fairness and the application of relevant statutory provisions,such as ss.134,138 and 578.

[111] The scope of the Review was considered in the 4 Yearly Review of Modern Awards:Preliminary Jurisdictional Issues Decision. 36 We adopt and apply that decision and in particular the following propositions:

(i) The Review is broader in scope than the Transitional Review of modern awards completed in 2013.

(ii) In conducting the Review the Commission will have regard to the historical context applicable to each modern award.

(iii) The Commission will proceed on the basis that prima facie the modern award being reviewed achieved the modern awards objective at the time it was made.

(iv) Variations to modern awards should be founded on merit based arguments. The extent of the argument and material required will depend on the circumstances.

[112] We now turn to the relevance of the ‘modern awards objective’to the Review.

3.3 The modern awards objective

    (i) General observations

[113] The modern awards objective applies to the performance or exercise of the Commission’s modern award powers,which are defined to include the Commission’s functions or powers under Part 2-3 of the FW Act. The Review function is set out in s.156,which is in Part 2-3 and so will involve the performance or exercise of the Commission’s modern award powers. It follows that the modern awards objective applies to the Review.

[114] The modern awards objective is set out in s.134 of the FW Act. It states:

‘134 The modern awards objective

What is the modern awards objective?

(1) The FWC must ensure that modern awards,together with the National Employment Standards,provide a fair and relevant minimum safety net of terms and conditions,taking into account:

    (a) relative living standards and the needs of the low paid;and

    (b) the need to encourage collective bargaining;and

    (c) the need to promote social inclusion through increased workforce participation;and

    (d) the need to promote flexible modern work practices and the efficient and productive performance of work;and

    (da) the need to provide additional remuneration for:

      (i) employees working overtime;or
      (ii) employees working unsocial,irregular or unpredictable hours;or
      (iii) employees working on weekends or public holidays;or
      (iv) employees working shifts;and

    (e) the principle of equal remuneration for work of equal or comparable value;and

    (f) the likely impact of any exercise of modern award powers on business,including on productivity,employment costs and the regulatory burden;and

    (g) the need to ensure a simple,easy to understand,stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards;and

    (h) the likely impact of any exercise of modern award powers on employment growth,inflation and the sustainability,performance and competitiveness of the national economy.

This is the modern awards objective.

When does the modern awards objective apply?

(2) The modern awards objective applies to the performance or exercise of the FWC’s modern award powers,which are:

    (a) the FWC’s functions or powers under this Part;and

    (b) the FWC’s functions or powers under Part 2-6,so far as they relate to modern award minimum wages.

Note:The FWC must also take into account the objects of this Act and any other applicable provisions. For example,if the FWC is setting,varying or revoking modern award minimum wages,the minimum wages objective also applies (see section 284).’

[115] The modern awards objective is to ‘ensure that modern awards,together with the National Employment Standards,provide a fair and relevant minimum safety net of terms and conditions’,taking into account the particular considerations identified in sections 134(1)(a) to (h) (the s.134 considerations). The objective is very broadly expressed. 37 The obligation to take into account the s.134 considerations means that each of these matters,insofar as they are relevant,must be treated as a matter of significance in the decision making process. 38 No particular primacy is attached to any of the s.134 considerations and not all of the matters identified will necessarily be relevant in the context of a particular proposal to vary a modern award.

[116] While the Commission must take into account the s.134 considerations,the relevant question is whether the modern award,together with the NES,provides a fair and relevant minimum safety net of terms and conditions. As to the proper construction of the expression ‘a fair and relevant minimum safety net of terms and conditions’we would make three observations.

[117] First,fairness in this context is to be assessed from the perspective of the employees and employers covered by the modern award in question. So much is clear from the s.134 considerations,a number of which focus on the perspective of the employees (e.g. s.134(1)(a) and (da)) and others on the interests of the employers (e.g. s.134(1)(d) and (f)). Such a construction is also consistent with authority. In Shop Distributive and Allied Employees Association v $2 and Under (No. 2) 39 Giudice J considered the meaning of the expression ‘a safety net of fair minimum wages and conditions of employment’in s.88B(2) of the Workplace Relations Act 1996 (Cth) (the WR Act). That section read as follows:

‘88B Performance of Commission’s functions under this Part …

    (2) In performing its functions under this Part,the Commission must ensure that a safety net of fair minimum wages and conditions of employment is established and maintained,having regard to the following:

      (a) the need to provide fair minimum standards for employees in the context of living standards generally prevailing in the Australian community;

      (b) economic factors,including levels of productivity and inflation,and the desirability of attaining a high level of employment;

      (c) when adjusting the safety net,the needs of the low paid.’

[118] As to the assessment of fairness in this context his Honour said:

‘In relation to the question of fairness it is of course implicit that the Commission should consider fairness both from the perspective of the employees who carry out the work and the perspective of employers who provide the employment and pay the wages and to balance the interests of those two groups. This must be done in the context of any broader economic or other considerations which might affect the public interest.’ 40

[119] While made in a different (albeit similar) statutory context the above observation is apposite to our consideration of what constitutes a ‘fair …safety net’in giving effect to the modern awards objective. We would also endorse the following observation by the Full Bench in the Equal Remuneration Decision 2015:

‘We consider,in the context of modern awards establishing minimum rates for various classifications differentiated by occupation,trade,calling,skill and/or experience,that a necessary element of the statutory requirement for ‘fair minimum wages’is that the level of those wages bears a proper relationship to the value of the work performed by the workers in question.’ 41

[120] Second,the word ‘relevant’is defined in the Macquarie Dictionary (6th Edition) to mean ‘bearing upon or connected with the matter in hand;to the purpose;pertinent’. In the context of s.134(1) we think the word ‘relevant’is intended to convey that a modern award should be suited to contemporary circumstances. As stated in the Explanatory Memorandum to what is now s.138:

‘527 …the scope and effect of permitted and mandatory terms of a modern award must be directed at achieving the modern awards objective of a fair and relevant safety net that accords with community standards and expectations.’(emphasis added)

[121] Finally,as to the expression ‘minimum safety net of terms and conditions’,the conception of awards as ‘safety net’instruments was introduced by the Industrial Relations Reform Act 1993 (Cth) (the 1993 Reform Act). The August 1994 Review of Wage Fixing Principles decision 42 summarised the changes made to the legislative framework by the 1993 Reform Act. In particular,the Commission noted that:

‘The Act now clearly distinguishes between the arbitrated award safety net and the bargaining stream. It intends that the actual wages and conditions of employment of employees will be increasingly determined through bargaining at the workplace or enterprise.

Under the Act the Commission,while having proper regard to the interests of the parties and the wider community,is now required to ensure,so far as possible,that the award system provides for ‘secure,relevant and consistent wages and conditions of employment’(s 90AA(2)) so that it is an effective safety net ‘underpinning direct bargaining’(s 88A(b)).’

[122] Relevantly for present purposes,the 1993 Reform Act inserted s.88A into the Industrial Relations Act 1988 (Cth) (the IR Act). Section 88A set out the objects to Part VI –Dispute Resolution and Settlement,in the following terms:

‘88A The objects of this Part are to ensure that:

(a) wages and conditions of employment are protected by a system of enforceable awards established and maintained by the Commission;and

(b) awards act as a safety net of fair minimum wages and conditions of employment;and

(c) awards are simplified and suited to the efficient performance of work according to the needs of particular workplaces or enterprises;and

(d) the Commission’s functions and powers in relation to making and varying awards are performed and exercised in a way that encourages the making of agreements between employers and employees at the workplace or enterprise level.’(emphasis added)

[123] The protective nature of the award safety net at that time is apparent from the language used in s.88A(a) and (b). 43

[124] The Workplace Relations and Other Legislation Amendment Act 1996 (WROLA Act) renamed the IR Act the WR Act and,among other things,restricted the range of matters that would be dealt with in federal awards (see s.89A WR Act) and repealed what had been Part VI C of the IR Act,which dealt with ‘Paid Rates Awards’. The objects of Part VI were amended but the characterisation of awards as a ‘safety net’which ‘protected’wages and conditions of employment,remained. It is not necessary to canvass the various legislative amendments from the WROLA Act to the FW Act.

[125] The objects of the FW Act are set out in s.3 (see [108]),relevantly s.3(b) speaks of:

‘ensuring a guaranteed safety net of fair,relevant and enforceable minimum terms and conditions through the National Employment Standards,modern awards and minimum wage orders.’

[126] It is apparent from the scheme of the FW Act that modern awards and the NES ‘underpin’enterprise agreements,through the operation of s.55 and the ‘better off overall test’(s.186(2)(d) and s.193). 44 Under s.57 a modern award does not apply to the extent that an enterprise agreement applies to a particular employment relationship,even where the award deals with matters not covered in the agreement.45

[127] In their reply submission the Australian Chamber of Commerce and Industry,Australian Business Industrial and the New South Wales Business Chamber (the joint employer reply submission) submit that the reference to a ‘minimum safety net’in s.134(1) means the ‘least …possible’to create a ‘minimum floor’:

‘The notion of a ‘safety’‘net’is effectively the creation of a floor ensuring employees are ‘caught’preventing them from being exposed to ‘hurt,injury,danger or risk’.

The addition of the term ‘minimum’reinforces the level that this floor is calibrated to:namely,‘…the least quantity or amount possible …’

The creation of the minimum safety net by sections 134 and 284 of the FW Act illuminates what the phrase ‘only to the extent necessary’in s 138 relates to.

That is,section 138 is dictating that the Commission may only include terms in a modern award to the extent necessary to create a minimum floor. Once this minimum floor is created,section 138 restrains the Commission from going any further irrespective of what historically would be called the ‘general industrial merits of the case’.’ 46

[128] The proposition advanced relies on dictionary definitions of some individual words within s.134(1). But the argument advanced pays scant regard to the fact the modern awards objective is a composite expression which requires that modern awards,together with the NES,provide ‘a fair and relevant minimum safety net of terms and conditions’. The joint employer reply submission gives insufficient weight to the statutory directive that the minimum safety net be ‘fair and relevant’. Further,in giving effect to the modern awards objective the Commission is required to take into account the s.134 considerations,one of which is ‘relative living standards and the needs of the low paid’(s.134(1)(a)). The matters identified tell against the proposition advanced in the joint employer reply submission.

[129] We conclude our general observations about the modern awards objective by noting that the nature of modern awards under the FW Act is quite different from the awards made under previous legislative regimes. 47 In times past awards were made in settlement of industrial disputes. The content of these instruments was determined by the constitutional and legislative limits of the tribunal’s jurisdiction;the matters put in issue by the parties (i.e. the ‘ambit’of the dispute) and the policies of the tribunal as determined from time to time in wage fixing principles or test cases. An award generally only bound the employers,employer organisations and unions who had been parties to the industrial dispute that gave rise to the making of the award and were named as respondents. Modern awards are very different to awards of the past.

[130] Modern awards are not made to prevent or settle industrial disputes between particular parties. Rather,the purpose of modern awards,together with the NES and national minimum wage orders,is to provide a safety net of fair,relevant and enforceable minimum terms and conditions of employment for national system employees (see ss.3(b) and 43(1)). They are,in effect,regulatory instruments that set minimum terms and conditions of employment for the employees to whom the modern award applies (see s.47).

[131] Nor are there named respondents to modern awards. Modern awards apply to,or cover,certain persons,organisations and entities (see ss.47 and 48),but these persons,organisations and entities are not ‘respondents’to the modern award in the sense that there were named respondents to awards in the past. The nature of this shift is made clear by s.158 which sets out who may apply for the making of a determination making,varying or revoking a modern award. Under previous legislative regimes the named respondents to a particular award would automatically have the requisite standing to make such applications;that is no longer the case. 48

[132] Under the FW Act modern awards form part of a minimum safety net which provides ‘fair,relevant and enforceable minimum terms and conditions’of employment to national system employees. As such,modern awards,together with the NES and national minimum wage orders,provide a minimum set of terms and conditions that must be provided to the employees to whom a modern award applies. And,as we have mentioned,modern awards also underpin enterprise bargaining.

    (ii) Section 138 and the modern awards objective

[133] Section 138 of the FW Act emphasises the importance of the modern awards objective in the following terms:

‘A modern award may include terms that it is permitted to include,and must include terms that it is required to include,only to the extent necessary to achieve the modern awards objective and (to the extent applicable) the minimum wages objective.’

[134] To comply with s.138 the terms included in modern awards must be ‘necessary to achieve the modern awards objective’.

[135] In Shop,Distributive and Allied Employees Association v National Retail Association (No.2) 49 Tracey J considered the proper construction of the expression ‘the Commission is satisfied that making [a determination varying a modern award] …is necessary to achieve the modern awards objective’,in s.157(1). His Honour held:

‘The statutory foundation for the exercise of FWA’s power to vary modern awards is to be found in s 157(1) of the Act. The power is discretionary in nature. Its exercise is conditioned upon FWA being satisfied that the variation is “necessary”in order “to achieve the modern awards objective”. That objective is very broadly expressed:FWA must “provide a fair and relevant minimum safety net of terms and conditions”which govern employment in various industries. In determining appropriate terms and conditions regard must be had to matters such as the promotion of social inclusion through increased workforce participation and the need to promote flexible working practices.

The subsection also introduced a temporal requirement. FWA must be satisfied that it is necessary to vary the award at a time falling between the prescribed periodic reviews.

The question under this ground then becomes whether there was material before the Vice President upon which he could reasonably be satisfied that a variation to the Award was necessary,at the time at which it was made,in order to achieve the statutory objective …

In reaching my conclusion on this ground I have not overlooked the SDA’s subsidiary contention that a distinction must be drawn between that which is necessary and that which is desirable. That which is necessary must be done. That which is desirable does not carry the same imperative for action. Whilst this distinction may be accepted it must also be acknowledged that reasonable minds may differ as to whether particular action is necessary or merely desirable. It was open to the Vice President to form the opinion that a variation was necessary.’ 50

[136] The above observation –in particular the distinction between that which is ‘necessary’and that which is merely desirable –is apposite to our consideration of s.138. Further,we agree with the observation that reasonable minds may differ as to whether a particular award term or proposed variation is necessary (within the meaning of s.138),as opposed to merely desirable. It seems to us that what is ‘necessary’to achieve the modern awards objective in a particular case is a value judgment,taking into account the s.134 considerations to the extent that they are relevant having regard to the context,including the circumstances pertaining to the particular modern award,the terms of any proposed variation and the submissions and evidence. 51

[137] The SDA and United Voice submit that the terms of s.138 require that the Commission be satisfied that the variations proposed by the various employer parties are necessary to achieve the modern awards objective. 52 The submission put focuses attention on the particular variation proposed,rather than on the terms of the modern award,as varied.

[138] We do not think the Unions’contention is correct. In the Preliminary Jurisdictional Issues decision the Full Bench considered what had to be demonstrated by the proponent of an award variation and concluded that:

‘To comply with s138 the formulation of terms which must be included in modern awards or terms which are permitted to be included in modern awards must be terms ‘necessary to achieve the modern awards objective’…In the Review the proponent of a variation to a modern award must demonstrate that if the modern award is varied in the manner proposed then it would only include terms to the extent necessary to achieve the modern awards objective.’ 53

[139] The above proposition is supported by the terms of s.138 and the legislative context. Section 138 requires that ‘[A] modern award may include terms …only to the extent necessary to achieve the modern awards objective’. The section focuses attention on the terms of a modern award,rather than on the terms of a proposed variation. Further,as we have mentioned,the jurisdictional basis for the Review is s.156. Section 157 deals with the variation of modern awards outside the system of 4 yearly reviews. Section 157(1) states,relevantly:

‘The FWC may:

(a) Make a determination varying a modern award …if the FWC is satisfied that making the determination …outside the system of 4 yearly reviews of modern awards is necessary to achieve the modern awards objective.’(emphasis added)

[140] Section 157(1) makes express reference to the Commission being satisfied that the ‘determination varying a modern award’is necessary to achieve the modern awards objective. There is no such express reference in either s.138 or s.156. The difference in the language used in ss.138,156 and 157 tells against the proposition advanced by the SDA and United Voice.

[141] Contrary to the Unions’contention the Commission’s task in the Review is to make a finding as to whether a particular modern award achieves the modern awards objective. If a modern award is not achieving the modern awards objective then it is to be varied such that it only includes terms that are ‘necessary to achieve the modern awards objective’(s.138). In such circumstances regard may be had to the terms of any proposed variation,but the focal point of the Commission’s consideration is upon the terms of the modern award,as varied. The approach outlined is supported by the terms of s.138 itself,the legislative context and the judgement of the Full Court of the Federal Court in National Retail Association v Fair Work Commission. 54

[142] We now turn to the application of the modern awards objective to the issues raised in these proceedings.

      (iii) The modern awards objective and weekend penalty rates

[143] Historically industrial tribunals have expressed the rationale for weekend penalty payments in terms of both the need to compensate employees for working outside ‘normal hours’(the compensatory element) and to deter employers from scheduling work outside ‘normal’hours (the deterrence element). 55 For example,in the 1947 Weekend Penalty Rates case Drake-Brockman ACJ and Sugarman J made the following observation about the expression ‘penalty rate’:

‘‘Penalty rate’is not a term of art. It is used by those skilled in industrial law in widely divergent meanings. Usually an award provides for an ordinary rate of remuneration,payable for the ordinary work of a standard period performed under normal conditions,and for additional amounts to be paid where work is done under special conditions of time,place or circumstance. In one sense the use of the term ‘penalty’as applied to such additional amounts is a misnomer,there is no question of punishment about the matter. But in another sense it expresses accurately enough the operation of the requirement of additional payment as,inter alia,a deterrent against calling upon employees to work in the circumstances in which the additional payment is required to be made. Most,if not all,of such requirements combine the element of compensation with that of deterrence.’ 56

[144] Similarly,in 1950 a Full Bench of the NSW Industrial Commission described the rationale for weekend penalty rates in the following terms:

‘In our opinion additional rates for weekend work are given to compensate the employee for having to work on days which are not regular working days for all employees in industry. The aim is to compensate for disturbance of social and family life and the full opportunity of religious observance,and in some cases to discourage employers working employees on non-regular working days.’ 57

[145] More recently industrial tribunals have eschewed any reliance on the historical ‘deterrence element’in setting appropriate loadings for working ordinary hours on a weekend. For example,in setting weekend penalty rates in the hospitality industry,in 1993,Commissioner Gay said:

‘The rate to apply in the hotel industry for weekend work should have no element designed to deter an employer from requiring work to be performed on Saturdays and Sundays and no punitive element designed to punish when such work is actually required to be performed.’ 58

[146] Similarly,in fixing the rate for Sunday work in the Victorian retail sector,the majority (Watson SDP and Raffaelli C) in Re Shop,Distributive and Allied Employees’Association and $2 and Under and Ors 59 said:

‘In our view,in the context of the reality that retailing in Victoria is a seven-day a week industry…the Sunday ordinary time penalty…should be directed to the compensation for the disabilities upon employees and should not be directed to deterring the working of Sunday ordinary hours’.

[147] Further,in the 2012 Transitional Review –Penalty Rates decision the Full Bench said:

‘Although described in the modern awards as penalty rates,they are in reality a loading which compensate for disabilities.’ 60

[148] It is apparent from these more recent decisions that the deterrence element is no longer a relevant consideration in setting the rate of pay for working ordinary hours on a weekend. Indeed,as submitted by the Australian Hotels Association (AHA) and Accommodation Association of Australia (AAA) in these proceedings, 61 it is difficult to reconcile the notion of deterrence with the purpose of the FW Act.

[149] The object of the FW Act is ‘to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians’,by the means specified in s.3(a) to (g). Deterring the working of ordinary hours on a weekend is not one of the specified means of achieving the object of the FW Act.

[150] Nor does the notion of deterrence sit conformably with the modern awards objective and the considerations the Commission is required to take into account in giving effect to that objective.

[151] The modern awards objective is to ‘ensure that modern awards,together with the NES,provide a fair and relevant minimum safety net of terms and conditions’. As we have mentioned,fairness in this context is to be assessed from the perspective of the employees and employers covered by the modern award in question. It is difficult to conceive of the circumstances in which setting a rate of pay for work at particular times or on particular days with the objective of deterring the scheduling of work at that time or on those days can be said to be fair to the employers covered by the relevant modern award.

[152] Nor is the notion of deterring the scheduling of work at particular times or on particular days expressly mentioned as a s.134 consideration. Indeed the matters mentioned in s.134(1)(a) to (h) appear to be inconsistent with the concept of deterrence. In particular,the ‘need to promote flexible modern work practices and the efficient and productive performance of work’(s.134(1)(d)) appears antithetical to the idea of deterring the performance of work at specified times.

[153] Further,s.134(1)(da)(ii) and (iii) refer specifically to employees working ‘unsocial …hours’and ‘working on weekends or public holidays’and ‘the need to provide additional remuneration’for employees in such circumstances. We deal later with the proper construction of s.134(1)(da),but it suffices for present purposes to observe that the provision is focused on the compensatory element of the historical rationale for penalty rates –there is no express reference in s.134(1)(da) to the notion of deterrence.

[154] We also note that the FW Act directly addresses the adverse consequences associated with working excessive hours by providing a right to refuse to work unreasonable hours. Section 62(1) provides:

‘(1) An employer must not request or require an employee to work more than the following number of hours in a week unless the additional hours are reasonable:

    (a) for a full-time employee--38 hours;or

    (b) for an employee who is not a full-time employee--the lesser of:

      (i) 38 hours;and
      (ii) the employee’s ordinary hours of work in a week.’

[155] Section 62(2) gives an employee a right to refuse to work additional hours ‘if they are unreasonable’. The criteria for determining whether additional hours are reasonable or unreasonable are set out in s.62(3):

‘(3) In determining whether additional hours are reasonable or unreasonable for the purposes of subsections (1) and (2),the following must be taken into account:

    (a) any risk to employee health and safety from working the additional hours;

    (b) the employee’s personal circumstances,including family responsibilities;

    (c) the needs of the workplace or enterprise in which the employee is employed;

    (d) whether the employee is entitled to receive overtime payments,penalty rates or other compensation for,or a level of remuneration that reflects an expectation of,working additional hours;

    (e) any notice given by the employer of any request or requirement to work the additional hours;

    (f) any notice given by the employee of his or her intention to refuse to work the additional hours;

    (g) the usual patterns of work in the industry,or the part of an industry,in which the employee works;

    (h) the nature of the employee’s role,and the employee’s level of responsibility;

    (i) whether the additional hours are in accordance with averaging terms included under section 63 in a modern award or enterprise agreement that applies to the employee,or with an averaging arrangement agreed to by the employer and employee under section 64;

    (j) any other relevant matter.’

[156] The Explanatory Memorandum to what is now s.62(2) makes clear (at paragraph 250) that ‘the relevance of each of these factors and the weight to be given to each of them will vary according to the particular circumstances’,and that in some instances ‘a single factor will be of great importance and outweigh all others’,whilst in other instances it will be necessary to undertake ‘a balancing exercise between factors’.

[157] The cases which have applied these provisions make it clear that an employer cannot simply require an employee to work additional hours without regard to the employee’s personal circumstances. 62 What is ‘reasonable’is necessarily assessed on a case-by-case basis,by reference to the employee’s circumstances and the employer’s business in accordance with the terms of s.62(3).63

[158] Having regard to recent arbitral authority,the terms of the modern awards objective,and the scheme of the FW Act,it seems to us that deterrence is no longer a relevant consideration in the setting of weekend penalty rates. We accept that the imposition of a penalty rate may have the effect of deterring employers from scheduling work at specified times or on certain days,but that is a consequence of the imposition of an additional payment for working at such times or on such days,it is not the objective of those additional payments. Compensating employees for the disutility associated with working on weekends is a primary consideration in the setting of weekend penalty rates.

[159] We note that the Productivity Commission has expressed a different view in respect of public holiday penalty rates:

‘…by definition,genuine public holidays are intended to serve a special community role and,as such,there are strong grounds to limit the expectation that they are for working. In that sense,the original concept of deterrence continues to have relevance’. 64

[160] We accept that public holidays,by their nature,are intended ‘to serve a special community role’and that the expectation (and practice) is that the vast majority of employees do not work on public holidays. But these features do not support the adoption of deterrence as an objective in setting an appropriate penalty rate for working on public holidays. Rather,they are relevant considerations in determining the amount of compensation to be provided to employees who work on public holidays,given the additional disutility associated with working on a day when the vast majority of other employees (and,it may be inferred,a substantial proportion of their friends and family) are enjoying a day of leisure.

[161] We now turn to the s.134 considerations.

      (iv) The s.134 considerations

[162] In order for the Commission to be satisfied that a modern award is not achieving the modern awards objective it is not necessary to make a finding that the award fails to satisfy one or more of the s.134 considerations. 65 Generally speaking,the s.134 considerations do not set a particular standard against which a modern award can be evaluated;many of them may be characterised as broad social objectives. As the Full Court of the Federal Court said in National Retail Association v Fair Work Commission:

‘It is apparent from the terms of s.134(1) that the factors listed in (a)–(h) are broad considerations which the FWC must take into account in considering whether a modern award meets the objective set by s.134(1),that is to say,whether it provides a fair and relevant minimum safety net of terms and conditions. The listed factors do not,in themselves,however,pose any questions or set any standard against which a modern award could be evaluated. Many of them are broad social objectives. What,for example,was the finding called for in relation to the first factor (“relative living standards and the needs of the low paid”)? Furthermore,it was common ground that some of the factors were inapplicable to the SDA’s claim.’ 66

[163] There is a degree of tension between some of the s.134 considerations. The Commission’s task is to balance the various considerations and ensure that modern awards provide a fair and relevant minimum safety net of terms and conditions. This balancing exercise and the diverse circumstances pertaining to particular modern awards may result in different outcomes in different modern awards. As the Full Bench observed in the Preliminary Jurisdictional Issues decision:

‘The need to balance the competing considerations in s.134(1) and the diversity in the characteristics of the employers and employees covered by different modern awards means that the application of the modern awards objective may result in different outcomes between different modern awards.

Given the broadly expressed nature of the modern awards objective and the range of considerations which the Commission must take into account there may be no one set of provisions in a particular award which can be said to provide a fair and relevant safety net of terms and conditions. Different combinations or permutations of provisions may meet the modern awards objective.’ 67

[164] Some of the s.134 considerations have been the subject of comment in other proceedings and some were the subject of submissions in the present proceedings.

[165] Section 134(1)(a) requires that we take into account ‘relative living standards and the needs of the low paid’. This consideration incorporates two related,but different,concepts. As explained in the 2012–13 Annual Wage Review decision:

‘The former,relative living standards,requires a comparison of the living standards of award-reliant workers with those of other groups that are deemed to be relevant. The latter,the needs of the low paid,requires an examination of the extent to which low-paid workers are able to purchase the essentials for a “decent standard of living”and to engage in community life. The assessment of what constitutes a decent standard of living is in turn influenced by contemporary norms.’ 68

[166] In successive Annual Wage Reviews the Expert Panel has concluded that a threshold of two-thirds of median full-time wages provides ‘a suitable and operational benchmark for identifying who is low paid’,within the meaning of s.134(1)(a). 69 There is,however,no single accepted measure of two-thirds of median (adult) ordinary time earnings. The surveys that provide the information about the distribution of earnings from which a median is derived vary in their sources,coverage and definitions in ways that affect the absolute values of average and median wages (and,accordingly,what constitutes two-thirds of those values).70 The two main Australian Bureau of Statistics (ABS) surveys of the distribution of earnings are the ‘Employee Earnings,Benefits and Trade Unions Membership 71 (the ‘EEBTUM’) and the survey of Employee Earnings and Hours 72 (the ‘EEH’). We note that the EEBTUM is no longer published and the relevant data is now produced as part of the Characteristics of Employment Survey73 (the ‘CoE’). Some data is also available from the HILDA survey.74

[167] In the 2015–16 Annual Wage Review decision the Expert Panel noted that the submissions provided different estimates of the ‘two-thirds of median (adult) ordinary time earnings’threshold. The relevant extract from that decision,and the Expert Panel’s conclusion,are set out below:

‘In its submission,the Australian Government provided two estimates to identify low-paid workers:

  • $18.67 per hour (or about $710.00 per week over a 38-hour week),using the May 2014 EEH data;and

  • $18.42 per hour (or about $700.00 per week over a 38-hour week) using the 2014 HILDA survey data.

    The Australian Government contended that there were about 1.3 million low-paid employees in 2014 (or 13.3 per cent of all employees),with around one-third of award-reliant workers being low paid in the EEH data. Their analysis took explicit account of the number and the level of pay of junior workers.

    The ACTU used unpublished ABS EEH data on the distribution of award only workers by hourly earnings to estimate the number of employees at each award classification level. On the basis of the May 2014 data,the ACTU estimated that 43 per cent of award only employees had hourly earnings at or below the C10 rate of pay in May 2014 ($724.50).

    Research Report 6/2013 found that around 75 per cent of adult award-reliant employees in the non-public sector were earning below the C10 rate of $18.60 per hour. 

    Whilst no specific conclusion is available,the information as a whole suggests that a sizeable proportion—probably a majority—of employees who are award reliant are also low paid by reference to the two-thirds of median weekly earnings benchmark.’ 75 (footnotes omitted)

[168] The most recent data for the ‘low paid’threshold is set out below:

      Two-thirds of median full-time earnings

      Characteristics of Employment survey (Aug. 2015) 76

      Employee Earnings and Hours survey (May 2016) 77

      $/week

      818.67

      917.33

[169] The assessment of relative living standards focuses on the comparison between award-reliant workers and other employed workers,especially non-managerial workers. 78 As noted in the 2015–16 Annual Wage Review decision:

‘There is no doubt that the low paid and award reliant have fallen behind wage earners and employee households generally over the past two decades,whether on the basis of wage income or household income.’ 79

[170] Award reliance is a measure of the proportion of employees whose pay rate is set according to the relevant award rate specified for the classification of the employee and not above that rate. Table 4.8 from the 2015–16 Annual Wage Review decision sets out the extent of award reliance by industry. 80 Relevantly for present purposes,the most recent data identify the Accommodation and food services and Retail trade industries as among the most award reliant in that they are the industries in which the highest proportion of employees are award reliant (42.7 per cent and 34.5 per cent,respectively).

[171] The relative living standard of employees is affected by the level of wages they earn,the hours they work,tax-transfer payments and the circumstances of the households in which they live. 81 As a general proposition,around two-thirds of low-paid employees are found in low income households (i.e. in the bottom half of the distribution of employee households) and have lower living standards than other employees. Many low-paid employees live in households with low or very low disposable incomes.82

[172] In taking into account ‘relative living standards’in the context of Annual Wage Reviews,the Expert Panel has paid particular attention to changes in the earnings of all award-reliant employees compared to changes in measures of average and median earnings more generally. 83

[173] In the 2015–16 Annual Wage Review decision the Expert Panel also observed that increases in modern award minimum wages have a positive impact on the relative living standards of the low paid and on their capacity to meet their needs. 84 It seems to us that the converse also applies,that is,the variation of a modern award which has the effect of reducing the earnings of low-paid employees will have a negative impact on their relative living standards and on their capacity to meet their needs.

[174] Section 134(1)(b) requires that we take into account ‘the need to encourage collective bargaining’.

[175] In the context of Annual Wage Review decisions the Expert Panel has consistently adopted the following propositions about the relationship between increases in minimum wages and enterprise bargaining:

  • whilst the gap between award minimum wages and bargained wages is likely to increase the incentive for employees to bargain,a large gap may be a disincentive for employers to bargain;

  • minimum wages are only one element of the incentive to bargain;and

  • there is no evidence that the incentive to bargain has been adversely affected by the increases in minimum wages which have occurred over the last decade. 85

[176] Further,Research Report 7/2013,dealing with incentives to bargain,concluded as follows:

    ‘The study did not reveal a positive or negative relationship between AWR increases and the incentive to bargain,instead pointing to a complex mix of factors that may contribute to employee and employer decision-making about whether to not to bargain…

    The workplace case studies,qualitative relativities analysis and Award Reliance Survey each suggest that there may be a link between minimum wages (and their associated instruments) themselves and over-award wage outcomes,but the extent of this link remains unclear and may require further investigation.’ 86

[177] In the Annual Wage Review 2013–14 decision the Expert Panel commented on the above research,noting that:

    ‘The research does not reveal any particular relationship between minimum award increases and the incentive to bargain. Instead it points to a complex mix of factors that may contribute to employee and employer decision-making about whether or not to bargain.’ 87

[178] It seems to us that the observations made by the Expert Panel in the context of Annual Wage Reviews are also apposite to the present context. A reduction in penalty rates is likely to increase the incentive for employees to bargain,but may also create a disincentive for employers to bargain. It is also likely that employee and employer decision-making about whether or not to bargain is influenced by a complex mix of factors,not just the level of penalty rates in the relevant modern award.

[179] Section 134(1)(c) requires that we take into account ‘the need to promote social inclusion through increased workforce participation’. The use of the conjunctive ‘through’makes it clear that in the context of s.134(1)(c),social inclusion is a concept to be promoted exclusively ‘through increased workforce participation’,that is obtaining employment is the focus of s.134(1)(c).

[180] However,we also accept that the level of penalty rates in a modern award may impact upon an employee’s remuneration and hence their capacity to engage in community life and the extent of their social participation. The broader notion of promoting social inclusion is a matter that can be appropriately taken into account in our consideration of the legislative requirement to ‘provide a fair and relevant minimum safety net of terms and conditions’and to take into account ‘the needs of the low paid’(s.134(1)(a)). Further,one of the objects of the FW Act is to promote ‘social inclusion for all Australians by’(among other things) ‘ensuring a guaranteed safety net of fair,relevant and enforceable minimum terms and conditions through …modern awards and national minimum wage orders’(s.3(b)). 88

[181] The likely impact of any exercise of modern award powers on ‘employment growth’is also one of the considerations we are required to take into account,by s.134(1)(h). It is these considerations (i.e. ss.134(1)(c) and (h)) which have led us to assess the likely impact of any proposed change to penalty rates on employment growth,that is the creation of new jobs or an increase in hours worked.

[182] Section 134(1)(d) requires that we take into account ‘the need to promote flexible modern work practices and the efficient and productive performance of work’.

[183] We deal further with this consideration later in our decision when addressing the review of the particular modern awards before us.

[184] Section 134(1)(da) requires that we take into account the ‘need to provide additional remuneration’for:

    ‘(i) employees working overtime;or
    (ii) employees working unsocial,irregular or unpredictable hours;or
    (iii) employees working on weekends or public holidays;or
    (iv) employees working shifts.’

[185] Section 134(1)(da) was inserted by the Fair Work Amendment Act 2013 (Cth),with effect from 1 January 2014. The Explanatory Memorandum to the Fair Work Amendment Bill 2013 made the following observation about the addition of s.134(1)(da):

    ‘Under the FW Act,the FWC must ensure that modern awards,together with the National Employment Standards,provide a fair and relevant safety net of terms and conditions. In making or varying modern awards,the FWC must take into account the modern awards objective (see subsection 134(1) of the FW Act).

    Item 1 of Schedule 2 to the Bill amends the modern awards objective to include a new requirement for the FWC to consider,in addition to the existing factors set out in subsection 134(1) of the FW Act,the need to provide additional remuneration for:

  • employees working overtime;

  • employees working unsocial,irregular or unpredictable hours;

  • employees working on weekends or public holidays;or

  • employees working shifts.

  • This amendment promotes the right to fair wages and in particular recognises the need to fairly compensate employees who work long,irregular,unsocial hours,or hours that could reasonably be expected to impact their work/life balance and enjoyment of life outside of work.’

[186] In the second reading speech to the Fair Work Amendment Bill 2013 the then Minister for Employment and Workplace Relations said:

    ‘…as part of this Bill,the Government is seeking to ensure that work at hours which are not family friendly is fairly remunerated. This will be done by amending the modern awards objective to ensure that the Fair Work Commission,in carrying out its role,must take into account the need to provide additional remuneration for employees working outside normal hours,such as employees working overtime or on weekends…’

[187] Section 134(1)(da) is a relatively new provision and one which did not exist at the time the modern awards under review were made. These provisions have not yet been the subject of substantive arbitral or judicial comment.

[188] Five observations may be made about s.134(1)(da).

[189] First,s.134(1)(da) speaks of the ‘need to provide additional remuneration’for employees performing work in the circumstances mentioned in s.134(1)(da)(i),(ii),(iii) and (iv).

[190] An assessment of ‘the need to provide additional remuneration’to employees working in the circumstances identified in paragraphs 134(1)(da)(i) to (iv) requires a consideration of a range of matters,including:

    (i) the impact of working at such times or on such days on the employees concerned (i.e. the extent of the disutility);

    (ii) the terms of the relevant modern award,in particular whether it already compensates employees for working at such times or on such days (e.g. through ‘loaded’minimum rates or the payment of an industry allowance which is intended to compensate employees for the requirement to work at such times or on such days);and

    (iii) the extent to which working at such times or on such days is a feature of the industry regulated by the particular modern award.

[191] Assessing the extent of the disutility of working at such times or on such days (issue (i) above) includes an assessment of the impact of such work on employee health 89 and work-life balance,taking into account the preferences of the employees for working at those times.

[192] The expression ‘additional remuneration’in the context of s.134(1)(da) means remuneration in addition to what employees would receive for working what are normally characterised as ‘ordinary hours’,that is reasonably predictable hours worked Monday to Friday within the ‘spread of hours’prescribed in the relevant modern award. Such ‘additional remuneration’could be provided by means of a penalty rate or loading paid in respect of,for example,work performed on weekends or public holidays. Alternatively,additional remuneration could be provided by other means such as a ‘loaded hourly rate’. 90

[193] As mentioned,s.134(1)(da) speaks of the ‘need’to provide additional remuneration. We note that the minority in Re Restaurant and Catering Association of Victoria 91 (the Restaurants 2014 Penalty Rates decision) made the following observation about s.134(1)(da):

    ‘This factor must be considered against the profile of the restaurant industry workforce and the other circumstances of the industry. It is relevant to note that the peak trading time for the restaurant industry is weekends and that employees in the industry frequently work in this industry because they have other educational or family commitments. These circumstances distinguish industries and employees who expect to operate and work principally on a 9am-5pm Monday to Friday basis. Nevertheless the objective requires additional remuneration for working on weekends. As the current provisions do so,they meet this element of the objective.’ 92 (emphasis added)

[194] To the extent that the above passage suggests that s.134(1)(da) ‘requires additional remuneration for working on weekends’,we respectfully disagree. We acknowledge that the provision speaks of ‘the need for additional remuneration’and that such language suggests that additional remuneration is required for employees working in the circumstances identified in paragraphs 134(1)(da)(i) to (iv). But the expression ‘the need for additional remuneration’must be construed in context,and the context tells against the proposition that s.134(1)(da) requires additional remuneration be provided for working in the identified circumstances.

[195] Section s.134(1)(da) is a relevant consideration,it is not a statutory directive that additional remuneration must be paid to employees working in the circumstances mentioned in paragraphs 134(1)(da)(i),(ii),(iii) or (iv). Section 134(1)(da) is a consideration which we are required to take into account. To take a matter into account means that the matter is a ‘relevant consideration’in the Peko-Wallsend 93sense of matters which the decision maker is bound to take into account. As Wilcox J said in Nestle Australia Ltd v Federal Commissioner of Taxation:

    ‘To take a matter into account means to evaluate it and give it due weight,having regard to all other relevant factors. A matter is not taken into account by being noticed and erroneously disregarded as irrelevant’. 94

[196] Importantly,the requirement to take a matter into account does not mean that the matter is necessarily a determinative consideration. This is particularly so in the context of s.134 because s.134(1)(da) is one of a number of considerations which we are required to take into account. No particular primacy is attached to any of the s.134 considerations. The Commission’s task is to take into account the various considerations and ensure that the modern award provides a ‘fair and relevant minimum safety net’.

[197] A further contextual consideration is that ‘overtime rates’and ‘penalty rates’(including penalty rates for employees working on weekends or public holidays) are terms that may be included in a modern award (s.139(1)(d) and (e));they are not terms that must be included in a modern award. As the Full Bench observed in the 4 yearly review of modern awards –Common issue –Award Flexibility decision:

    ‘…s.134(1)(da) does not amount to a statutory directive that modern awards must provide additional remuneration for employees working overtime and may be distinguished from the terms in Subdivision C of Division 3 of Part 2-3 which must be included in modern awards…’ 95

[198] Further,if s.134(1)(da) was construed such as to require additional remuneration for employees working,for example,on weekends,it would have significant consequences for the modern award system,given that about half of all modern awards currently make no provision for weekend penalty rates. 96 If the legislative intention had been to mandate weekend penalty rates in all modern awards then one would have expected that some reference to the consequences of such a provision would have been made in the extrinsic materials.

[199] Third,s.134(da) does not prescribe or mandate a fixed relationship between the remuneration of those employees who,for example,work on weekends or public holidays,and those who do not. The additional remuneration paid to the employees whose working arrangements fall within the scope of the descriptors in s.134(1)(da)(i)–(v) will depend on,among other things,the circumstances and context pertaining to work under the particular modern award.

[200] Fourth,s.134(1)(da)(ii) is not to be read as a composite expression,rather the use of the disjunctive ‘or’makes it clear that the provision is dealing with separate circumstances: ‘unsocial,irregular or unpredictable hours’(emphasis added).

[201] Section 134(1)(da)(ii) requires that we take into account the need to provide additional remuneration for employees working in each of these circumstances. The expression ‘unsocial …hours’would include working late at night and or early in the morning,given the extent of employee disutility associated with working at these times. ‘Irregular or unpredictable hours’is apt to describe casual employment.

[202] Fifth,s.134(1)(da) identifies a number of circumstances in which we are required to take into account the need to provide additional remuneration (i.e. those in paragraphs 134(1)(da)(i) to (iv)). Working ‘unsocial …hours’is one such circumstance (s.134(1)(da)(i)) and working ‘on weekends or public holidays’(s.134(1)(da)(iii)) is another. The inclusion of these two,separate,circumstances leads us to conclude that it is not necessary to establish that the hours worked on weekends or public holidays are ‘unsocial …hours’. Rather,we are required to take into account the need to provide additional remuneration for working on weekends or public holidays,irrespective of whether working at such times can be characterised as working ‘unsocial …hours’. 97 Ultimately,however,the issue is whether an award which prescribes a particular penalty rate provides ‘a fair and relevant minimum safety net.’A central consideration in this regard is whether a particular penalty rate provides employees with ‘fair and relevant’compensation for the disutility associated with working at the particular time(s) to which the penalty attaches.

[203] For completeness we note that the Australian Chamber of Commerce and Industry (ACCI) and ABI drew attention to the fact that s.134(1)(da)(iii) speaks of ‘working on weekends’and does not distinguish between Saturdays and Sundays and submit that:

    ‘It is noteworthy that the FW Act does not prescribe that Sundays are to receive an increased loading. Instead,section 134(1)(da)(iii) accords Saturdays and Sundays equal treatment by referring to both days as the “weekend”.

    Unless there is an evidentiary basis that justifies providing employees working Sundays with increased remuneration,employees working weekends should all be treat in the same manner. There is nothing contained within the modern awards objective that would suggest a different approach.’ 98

    For our part we do not think that any particular significance attaches to the reference to ‘weekends’in s.134(1)(da)(iii),rather than ‘Saturdays and Sundays.’It cannot be reasonably inferred that the use of the word ‘weekends’manifests a legislative intention that there be no distinction between the level of additional remuneration provided for Saturday and Sunday work. Any additional remuneration provided for Saturday or Sunday work in a particular modern award will depend on the circumstances and merits in each case.

[204] Section 134(1)(e) requires that we take into account ‘the principle of equal remuneration for work of equal or comparable value’.

[205] The ‘Dictionary’in s.12 of the FW Act states,relevantly:

    ‘In this Act:

    equal remuneration for work of equal of comparable value:see subsection 302(2).’

[206] The expression ‘equal remuneration for work of equal or comparable value’is defined in s.302(2) to mean ‘equal remuneration for men and women workers for work of equal or comparable value’.

[207] The appropriate approach to the construction of s.134(1)(e) is to read the words of the definition into the substantive provision such that in giving effect to the modern awards objective the Commission must take into account the principle of ‘equal remuneration for men and women workers for work of equal or comparable value’. 99

[208] United Voice contends that women make up the majority of the hospitality workforce and a significant proportion of the workers who receive penalty rates. On this basis United Voice submits that:

    ‘Cuts to penalty rates will disproportionality affect women’. 100

[209] To make good the proposition advanced,it would have to be shown that more female hospitality workers usually work on Sundays,than males. But no data has been presented which shows the number of hospitality workers who usually work on Sundays,by gender. Further,the available data does not appear to support the proposition advanced.

[210] Dr Oliver’s expert report deals with the impact of penalty rates on the wages of hospitality workers. The report utilises unit record data from both the HILDA Survey and the Australian Workplace Relations Study (AWRS) to show that:

  • of all hospitality workers who receive penalty rates,50.7 per cent are male compared to 49.3 per cent who are female (AWRS data). 101

  • Of all hospitality workers who usually work on either Saturdays and/or Sundays,57.4 per cent are male compared with 42.6 per cent who are female (HILDA data). 102

[211] The SDA advanced a similar submission 103 to that put by United Voice in relation to retail workers and submits that any cuts to penalty rates in the General Retail Industry Award 2010 will ‘disproportionately affect women’.104 There is no evidence before us which shows the number of retail workers who usually work on Sundays,by gender.

[212] Data drawn from the ABS Working Time Arrangements series shows that across surveys conducted in 2006,2009 and 2012 the proportion of male employees who usually work on Sundays was greater than the proportion of female employees who usually work on Sundays. 105 But this is ‘all industries’data. It is not confined to the retail industry.

[213] Using HILDA data,Dr Watson and Peetz conclude that females outnumbered males among young workers (i.e. aged 15–18 years) in the weekend retail workforce.106 The SDA acknowledges that this material does not directly deal with the question of whether more female retail workers work on Sundays than males,but submits that this data:

    ‘…does provide a strong basis to infer that women working in retail on Sundays outnumber men in some material proportion.’ 107

[214] We disagree. The data relied on deals with weekend retail work,it is not confined to Sunday work and,further,it only relates to young workers not all retail workers. In this regard it is relevant to observe that over the past decade the proportion of 15–19 year olds in the retail workforce has gradually declined from 23.5 per cent in November 2004 to 18.3 per cent in November 2013. 108

[215] Further,even if it was shown that a reduction in Sunday penalty rates disproportionately impacted on women workers that fact would not necessarily enliven s.134(1)(e). Section 134(1)(e) requires that we take into account the principle of equal remuneration for men and women workers ‘for work of equal or comparable value’. Any reduction in Sunday penalty rates in these awards would apply equally to men and women workers.

[216] However,if it was shown that a reduction in penalty rates did disproportionately affect female workers then it is likely to have an adverse impact on the gender pay gap. Such an outcome may well be relevant to an assessment of whether such a change would provide a ‘fair and relevant minimum safety net’,but it does not necessarily enliven s.134(1)(e).

[217] Section 134(1)(f) requires that we take into account ‘the likely impact of any exercise of modern award powers on business,including on productivity,employment costs and the regulatory burden’.

[218] We note at the outset that s.134(1)(f) is expressed in very broad terms. We are required to take into account the likely impact of any exercise of modern award powers ‘on business,including’(but not confined to) the specific matters mentioned,that is,‘productivity,employment costs and the regulatory burden’.

[219] It is axiomatic that the exercise of modern award powers to vary a modern award to reduce penalty rates is likely to have a positive impact on business,by reducing employment costs for those businesses that require employees to work at times,or on days,which are subject to a penalty rate. The impact of a reduction in penalty rates upon productivity is less clear.

[220] The term ‘productivity’appears in several Parts of the FW Act:

  • Part 1-1 –Introduction:s.3 Object of the Act

  • Part 2-3 –Modern Awards:s.134 The modern awards objective

  • Part 2-4 –Enterprise agreements:s.171 Objective of the Part,ss.241 and 243 Low paid bargaining and authorisation

  • Part 2-5 –Workplace determinations:ss.262 and 275

  • Part 2-6 –Minimum wages:s.284 The minimum wages objective

  • Part 2-8 –Transfer of business:ss.318–320 Making and variation of transferable instruments.

[221] ‘Productivity’is not defined in the FW Act but given the context in which the word appears it is clear that it is used to signify an economic concept.

[222] The Productivity Commission defines productivity as:

    ‘…a measure of the rate at which outputs of goods and services are produced per unit of input (labour,capital,raw materials,etc). It is calculated as the ratio of the quantity of outputs produced to some measure of the quantity of inputs used’. 109

[223] Similarly,the Commonwealth Treasury also defines productivity by reference to volumes of inputs and output:

    ‘Productivity is a measure of the rate at which inputs,such as labour,capital and raw materials,are transformed into outputs. The level of productivity can be measured for firms,industries and economies. Productivity growth implies fewer inputs are used to produce a given output or,for a given set of inputs,more output is produced.’ 110

[224] The conventional economic meaning of productivity is the number of units of output per unit of input. It is a measure of the volumes or quantities of inputs and outputs,not the cost of purchasing those inputs or the value of the outputs generated. As the Full Bench observed in the Schweppes Australia Pty Ltd v United Voice –Victoria Branch:

    ‘…we find that ‘productivity’as used in s.275 of the Act,and more generally within the Act,is directed at the conventional economic concept of the quantity of output relative to the quantity of inputs. Considerations of the price of inputs,including the cost of labour,raise separate considerations which relate to business competitiveness and employment costs.

    Financial gains achieved by having the same labour input –the number of hours worked –produce the same output at less cost because of a reduced wage per hour is not productivity in this conventional sense.’ 111

[225] While the above observation is directed at the use of the word ‘productivity’in s.275,it is apposite to our consideration of this issue in the context of s.134(1)(f).

[226] Section 134(1)(g) requires that we take into account ‘the need to ensure a simple,easy to understand,stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards’.

[227] We deal further with this consideration later in our decision when addressing the review of the particular modern awards before us.

[228] Section 134(1)(h) requires that we take into account ‘the likely impact of any exercise of modern award powers on employment growth,inflation and the sustainability,performance and competitiveness of the national economy’.

[229] We note that the requirement to take into account the likely impact of any exercise of modern award powers on ‘the sustainability,performance and competitiveness of the national economy’(emphasis added) focuses on the aggregate (as opposed to sectorial) impact of an exercise of modern award powers. We deal further with this consideration later in our decision when addressing the review of the particular modern awards before us.

      3.4 The proposed ‘material change in circumstances test’

[230] A central contention advanced by the SDA and United Voice in these proceedings is that in order to enliven its discretion in the Review to vary a modern award the Commission must first be satisfied that since the making of the modern award there has been a material change in circumstances pertaining to the operation or effect of the award such that the modern award is no longer meeting the modern awards objective (the ‘material change in circumstances test’). It is said to follow from this proposition that a sufficient merit argument and supporting probative evidence must be directed at establishing the existence of the requisite material change in the period since the making of the modern award. The material change in circumstances test is said to be consistent with the approach articulated in the Preliminary Jurisdictional Issues decision;more recent Full Bench decisions and the statutory context of the Review. The more recent Full Bench decisions referred to are:Re Security Services Industry Award 2010 112 and Re Stevedoring Industry Award 2010.113

[231] The Australian Council of Trade Unions (ACTU) puts the test somewhat differently:

    ‘…the safety net has evolved on the basis of whether particular conditions of employment are a necessary or desirable minimum for workers and whether such conditions are achievable given the impact on employers and the economy more generally. In this framework,it is unsurprising that the minimum conditions contained in awards are rarely eroded:to do so would effectively require proof that economic and social development had regressed to a point where it is no longer economically sustainable to continue to provide such minimums,notwithstanding their desirability.’ 114

[232] It is convenient to refer to the proposition advanced by the ACTU as the ‘economic unsustainability test’.

[233] We turn first to the relevant statutory context. The SDA advances this aspect of its argument in the following way:

    ‘…The critical aspect of the statutory context is the legislative acceptance (recognised by the Full Bench in the Preliminary Jurisdictional decision) that,at the time a modern award was made,it was meeting the modern award objectives. In this way,the award is in effect deemed to meet the modern award objective. Once this is understood,it necessarily follows that a material change in circumstances must be established in order to properly justify a proposed variation to a modern award - to do otherwise is to ignore the statutory mandate that modern awards,when made,achieved the modern award’s objective. The fact of the making of the modern awards and their legal character as meeting the modern award objective forms an essential part of the historical context of the Review recognised by the Full Bench in the Preliminary Jurisdictional decision.

    The fact that particular minimum entitlements in a modern award might not have been the subject of detailed evidentiary consideration in award modernisation is irrelevant to a proper understanding of the Commission’s statutory function in the 4 yearly review. That function is directed at ensuring instruments which,when made 6 years ago met the modern award’s objective,continue to meet that objective.

    Given the character of modern awards as being deemed to have met the modern award objective when made,it must necessarily follow that any variation of their terms requires the making of a finding by the Commission of some material change in the circumstances pertaining to the operation or effect of an award such that it no longer can be said to meet the modern awards objective. That task necessarily directs attention to the existence,or otherwise,of change in relevant circumstances since the making of a modern award.’ 115

[234] Section 156 sets out the requirement to conduct 4 yearly reviews of modern awards and what may be done in such reviews. As we have mentioned,ascertaining the meaning of s.156 necessarily begins with the ordinary and grammatical meaning of the words used. 116 These words must be read in context by reference to the language of the Act as a whole and to the legislative purpose.117 Section 578(a) of the FW Act also directs attention to the objects of the FW Act. Of course it must be borne in mind that the purpose or policy of the Act is to be gleaned from a consideration of all of the relevant provisions of the Act.118 Section 15AA of the Acts Interpretation Act 1901 (Cth) requires that a construction that would promote the purpose or object of the FW Act is to be preferred to one that would not promote that purpose or object. The purpose or object of the FW Act is to be taken into account even if the meaning of a provision is clear. When the purpose or object is brought into account an alternative interpretation may become apparent. If one interpretation does not promote the object or purpose of the FW Act,and another does,the latter interpretation is to be preferred. Of course,s.15AA requires us to construe the FW Act,in the light of its purpose,not to rewrite it.119

[235] Section 156(1) provides that the Commission must conduct a 4 yearly review of modern awards starting as soon as practicable after each 4th anniversary of the commencement of Part 2-3 of the FW Act. Part 2-3 commenced on 1 January 2010, 120 hence the first Review is to start as soon as practicable after 1 January 2014.

[236] Section 156(2) deals with what has to be done in a Review;it provides that the Commission:

  • must review all modern awards (s.156(2)(a));

  • may make one or more determinations varying or revoking modern awards (s.156(2)(b)(i) and (iii)) and may make one or more modern awards (s.156(2)(b)(ii));and

  • must not review,or make a determination to vary,a default fund term of a modern award (s.156(2)(c)).

[237] Section 156(3) deals with the variation of modern award minimum wages in a Review. ‘Modern award minimum wages’are defined in s.284(3) as the rates of minimum wages in modern awards,including:

    (a) wage rates for junior employees,employees to whom training arrangements apply and employees with a disability;and
    (b) casual loadings;and
    (c) piece rates.

[238] Section 156(3) provides that the Commission may vary modern award minimum wages ‘only if’the Commission is satisfied that the variation is justified by ‘work value reasons’. ‘Work value reasons’is defined in s.156(4):

‘Work value reasons are reasons justifying the amount that employees should be paid for doing a particular kind of work,being reasons related to any of the following:

    (a) the nature of the work;
    (b) the level of skill or responsibility involved in doing the work;
    (c) the conditions under which the work is done.’

[239] We note here that subsections 156(3) and (4) were the subject of some consideration in the Equal Remuneration Decision 2015 121 in which the Full Bench said:

    ‘We see no reason in principle why a claim that the minimum rates of pay in a modern award undervalue the work to which they apply for gender-related reasons could not be advanced for consideration under s.156(3) or s.157(2). Those provisions allow the variation of such minimum rates for ‘work value reasons’,which expression is defined broadly enough in s.156(4) to allow a wide-ranging consideration of any contention that,for historical reasons and/or the application of an indicia approach,undervaluation has occurred because of gender inequity. There is no datum point requirement in that definition which would inhibit the Commission from identifying any gender issue which has historically caused any female-dominated occupation or industry currently regulated by a modern award to be undervalued.’ 122 (emphasis added)

[240] The absence of a datum point requirement in s.156(4) is a matter of some significance in the present context and we return to it later.

[241] Section 156(5) requires that each modern award must be reviewed in its own right,though this does not prevent the Commission from reviewing 2 or more modern awards at the same time.

[242] The mode of expression used in s.156 is a significant textual indicator of legislative purpose. As Spigelman CJ observed in Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd:

    ‘Substantial,indeed often,but not always,determinative weight must be given to language which is in mandatory form.’ 123

[243] The words ‘must’and ‘must not’in ss.156(1),(2)(a),(2)(c) and (5) constitute language in mandatory form. 124 The use of these words may be contrasted with the use of ‘may’in s.156(2)(b)(i),as in the Commission ‘may make one or more determinations varying modern awards’. The word ‘may’usually connotes the conferral of a discretion.125 That is plainly the intent of s.156(2)(b)(i) and no party contended otherwise.

[244] Section 156 clearly delineates what must be done in a Review,what must not be done and what may be done. Further,where the legislative intent is to qualify a discretion it is done expressly,as in s.156(3). The Commission may vary modern award minimum wages ‘only if’it is satisfied that the variation is justified by work value reasons. This may be contrasted with the discretion in s.156(2)(b)(i) to make determinations varying modern awards in a Review which is expressed in general,unqualified,terms.

[245] An unqualified discretion is confined only by the subject matter and the legislative context and purpose. 126 The apparent scope of a discretion such as that in s.156(2)(b)(i) may be limited by other sections of the FW Act.

[246] A number of provisions in the FW Act which are relevant to the Review operate to constrain the breadth of the discretion in s.156(2)(b)(i). As we have already mentioned,in exercising its powers in a Review the Commission is exercising ‘modern award powers’(see s.134(2)(a)) and hence the modern awards objective and s.138 apply to the Review.

[247] Any variation of a modern award arising from the Review must also comply with the requirements of the FW Act which relate to the content of modern awards. Division 3 of Part 2-3 deals with the terms of modern awards,in particular terms that may or must be included in modern awards,and terms that must not be included in modern awards. This division also deals with the interaction between the NES and modern awards. These provisions are relevant to the Review and,in an appropriate case,may operate to constrain the power in s.156. 127

[248] Similarly,Division 6 of Part 2-3 contains specific provisions relevant to the exercise of modern award powers –these provisions apply to the Review. If the Commission were to make a modern award,or change the coverage of an existing modern award in the Review,then the requirements set out in s.163 must be satisfied. Sections 165 and 166 deal with when variation determinations come into operation. Determinations varying modern awards arising from the Review will generally operate prospectively,unless the Commission is satisfied that the variation is made under s.160 (which deals with variations to remove ambiguities or uncertainties,or to correct errors:see ss.165(2)(a) and 166(3)(a)) and there are exceptional circumstances that justify retrospectivity (ss.165(2)(b) and 166(3)(b)).

[249] As is apparent from their submissions,the Unions’contention relies on ‘the legislative acceptance …that at the time a modern award was made,it was meeting the modern awards objective’. It is said to necessarily follow from this ‘legislative acceptance’that a ‘material change in circumstances’must be established in order to justify the variation of a modern award in the Review because ‘to do otherwise is to ignore the statutory mandate that modern awards,when made,achieved the modern awards objective’.

[250] In support of this general proposition counsel for the SDA 128 relied on the observations of Kirby P (as he then was) in Commissioner of Stamp Duties v Permanent Trustee Co Ltd (Trustee for Anzareno dal Bon and Silvanio dal Bon),129 regarding the preferred construction of inter-related legislation. In particular,the SDA relied on the following paragraphs from his Honour’s judgment:

    ‘Upon the hypothesis (which is admittedly often sorely tried) that there is a rational integration of the legislation of the one Parliament,it is proper for courts to endeavour to so construe inter related statutes as to produce a sensible,efficient and just operation of them in preference to an inefficient,conflicting or unjust operation. This is the approach which I take to the task of statutory interpretation…

    The result is that,in construing the legislation under consideration here,I will prefer that construction which is available in the language used and which facilitates the sensible operation together of the four statutes mentioned,avoiding inefficiency and the capricious operation of revenue law which would seriously impede or discourage the availability of beneficial statutory provisions for the sale or partition of property held by co-owners. In the case of ambiguity of the legislation I consider this to be the modern approach which this Court should adopt in implementing the will of Parliament. We should presume that Parliament intended its legislation to operate rationally,efficiently and justly,together.’ 130

[251] The above observation has been endorsed by other intermediate appellate courts 131 and we have applied it to our consideration of s.156. But the adoption of such an approach does not warrant the importation of a condition on the exercise of the discretion in s.156(2)(b)(i).

[252] The terms of s.156 and the statutory context do not support the ‘material change in circumstances test’advanced by the SDA and United Voice.

[253] The modern awards objective provides that the Commission must ensure that modern awards,together with the NES,provide a fair and relevant minimum safety net of terms and conditions,taking into account the s.134 considerations. One of those considerations is the need to ensure a ‘stable’modern award system (s.134(1)(g)). A ‘stable’modern award system implies that the variation of a modern award be supported by a merit argument. The extent of the argument required will depend on the circumstances. This issue was the subject of some debate in the proceedings which led to the Preliminary Jurisdictional Issues decision. In that decision the Full Bench said:

    ‘The Commission is obliged to ensure that modern awards,together with the NES,provide a fair and relevant minimum safety net taking into account,among other things,the need to ensure a ‘stable’modern award system (s.134(1)(g)). The need for a ‘stable’modern award system suggests that a party seeking to vary a modern award in the context of the Review must advance a merit argument in support of the proposed variation. The extent of such an argument will depend on the circumstances. We agree with ABI’s submission that some proposed changes may be self evident and can be determined with little formality. However,where a significant change is proposed it must be supported by a submission which addresses the relevant legislative provisions and be accompanied by probative evidence properly directed to demonstrating the facts supporting the proposed variation.

    In conducting the Review the Commission will also have regard to the historical context applicable to each modern award. Awards made as a result of the award modernisation process conducted by the former Australian Industrial Relations Commission (the AIRC) under Part 10A of the Workplace Relations Act 1996 (Cth) were deemed to be modern awards for the purposes of the FW Act (see Item 4 of Schedule 5 of the Transitional Act). Implicit in this is a legislative acceptance that at the time they were made the modern awards now being reviewed were consistent with the modern awards objective. The considerations specified in the legislative test applied by the AIRC in the Part 10A process is,in a number of important respects,identical or similar to the modern awards objective in s.134 of the FW Act. 132 In the Review the Commission will proceed on the basis that prima facie the modern award being reviewed achieved the modern awards objective at the time that it was made.

    Although the Commission is not bound by principles of stare decisis it has generally followed previous Full Bench decisions. In another context three members of the High Court observed in Nguyen v Nguyen:

      ‘Where a court of appeal holds itself free to depart from an earlier decision it should do so cautiously and only when compelled to the conclusion that the earlier decision is wrong. The occasion upon which the departure from previous authority is warranted are infrequent and exceptional and pose no real threat to the doctrine of precedent and the predictability of the law:see Queensland v The Commonwealth per Aickin J at 620.’ 133

    While the Commission is not a court,the public interest considerations underlying these observations have been applied with similar,if not equal,force to appeal proceedings in the Commission. 134 As a Full Bench of the Australian Industrial Relations Commission observed in Cetin v Ripon Pty Ltd (T/as Parkview Hotel) (Cetin)135:

      “Although the Commission is not,as a non-judicial body,bound by principles of stare decisis,as a matter of policy and sound administration it has generally followed previous Full Bench decisions relating to the issue to be determined,in the absence of cogent reasons for not doing so.” 136

    These policy considerations tell strongly against the proposition that the Review should proceed in isolation unencumbered by previous Commission decisions. In conducting the Review it is appropriate that the Commission take into account previous decisions relevant to any contested issue. The particular context in which those decisions were made will also need to be considered. Previous Full Bench decisions should generally be followed,in the absence of cogent reasons for not doing so.’ 137

[254] It is apparent from the above extract that the adoption of the prima facie position that the modern award being reviewed achieved the modern awards objective at the time it was made is but an example of the general proposition that previous Full Bench decisions should generally be followed,in the absence of cogent reasons for not doing so.

[255] As observed by the Full Bench in the Preliminary Jurisdictional Issues decision,while it is appropriate to take account of previous decisions relevant to a contested issue arising in the Review it is necessary to consider the context in which those decisions were made. The particular context may be a cogent reason for not following a previous Full Bench decision,for example:

  • the legislative context which pertained at that time may be materially different from the FW Act;

  • the extent to which the relevant issue was contested and,in particular,the extent of the evidence and submissions put in the previous proceeding will be relevant to the weight to be accorded to the previous decision;or

  • the extent of the previous Full Bench’s consideration of the contested issue. The absence of detailed reasons in a previous decision may be a factor in considering the weight to be accorded to the decision.

[256] It is convenient to deal now with the submission that the proposed ‘material change in circumstances test’is consistent with the approach articulated in more recent Full Bench decisions. As mentioned earlier,the Full Bench decisions referred to are Re Security Services Industry Award 2010 138 and Re Stevedoring Industry Award 2010.139

[257] The Unions rely upon the two Full Bench decisions mentioned to support the contention that there must be ‘some material change in circumstances’from when the award was made before the Commission’s discretion to vary the award is enlivened. However,no such requirement is evident from either decision. The Full Bench’s comments in Re Security Services Industry Award 2010 express no such requirement,rather the decision simply stands for the proposition that the proponent of an award variation should present a persuasive evidentiary case. This is apparent from the following extract from the decision:

    ‘While this may be the first opportunity to seek significant changes to the terms of modem awards,a substantive case for change is nevertheless required. The more significant the change,in terms of impact or a lengthy history of particular award provisions,the more detailed the case must be. Variations to awards have rarely been made merely on the basis of bare requests or strongly contested submissions. In order to found a case for an award variation it is usually necessary to advance detailed evidence of the operation of the award,the impact of the current provisions on employers and employees covered by it and the likely impact of the proposed changes. Such evidence should be combined with sound and balanced reasoning supporting a change. Ultimately the Commission must assess the evidence and submissions against the statutory tests set out above,principally whether the award provides a fair and relevant minimum safety net of terms and conditions and whether the proposed variations are necessary to achieve the modern awards objective. These tests encompass many traditional merit considerations regarding proposed award variations.’ 140 (emphasis added)  

[258] In that matter the Full Bench declined to vary the definition of permanent night work’for reason of the lack of an evidentiary case,not because of a failure to show ‘some material change in circumstance’. In declining that variation the Full Bench said:

    ‘In our view,a matter such as this should be considered in the light of other award provisions regarding permanent night shift penalties with appropriate adaptations for the nature of the industry. If an evidentiary case established that the current provisions were inappropriate and that the matter cannot be conveniently addressed by way of enterprise agreements or the award flexibility provision,then a case may exist for an appropriate award variation. However,the case presented fell well short of the detailed review of circumstances that might warrant a variation. In our view,the variation should not be made.’ 141 (emphasis added)

[259] In Re Stevedoring Industry Award 2010 the majority applied the approach set out in Re Security Services Industry Award 2010 142 and rejected an employer application to reduce penalty rates. The basis for the majority’s rejection of that application is set out at paragraphs [156] and [161] of their decision:

    ‘…the evidence led by the Applicants is inadequate to justify the significant variations to penalty rates sought,particularly in circumstances where the evidence supports a finding that there are factors unique to this industry which are relevant when considering the level of penalty rates in this Award necessary to meet the modern awards objective…

    While it is not disputed that the level of penalty rates in this industry are above those in comparable industries,we are not satisfied that the Applicants have established the case for their proposed variation to penalty rates or that the variation is necessary to meet the modern awards objective. In our view,the evidence before us indicates that there are factors unique to this industry when compared to other industries that work on a 24/7 basis. However,the Applicants and other parties who appeared before us failed to go the next step and provide probative evidence which would have enabled us to determine whether the existing or some other level of penalty rates was appropriate. On such a significant issue,it is just too simplistic to argue that the level of penalty rates should be reduced in the absence of such probative evidence and on the basis that the existing level of penalty rates in the Award are above those applying in other modern awards. We acknowledge that there is an important issue to be tested here. However,simply showing that the existing level of penalty rates are above those applying in comparable awards and industries is in our view insufficient,in the absence of probative evidence,to satisfy us that the Award needs to be varied to meet the modern awards objective. As discussed earlier,the Award achieved the modern awards objective at the time that it was made and the Applicants have not established that the Award no longer meets that objective.’ 143

[260] It is apparent from the above extract that it was the absence of probative evidence that led to the rejection of the employer claim,not the failure to establish a material change in circumstances since the award was made.

[261] For completeness we would note that a proposition similar to that advanced by the Unions in these proceedings was rejected by the majority in the Restaurants 2014 Penalty Rates decision. We will deal with this decision in more detail later in our consideration of the application to vary the Restaurant Industry Award 2010,but it suffices to note here that the majority concluded that the decision of the Member at first instance was attended by appealable error because the Deputy President adopted ‘a significant change of circumstances’as the apparent criterion for variation. The majority held that the adoption of such a test was not derived from the relevant statutory provisions and accordingly the exercise of discretion was artificially confined and thereby miscarried. 144

[262] The SDA 145 and United Voice146 submit that the Restaurants 2014 Penalty Rates decision was wrong and should not be followed. Those submissions are predicated upon our acceptance of the Unions’argument in support of the ‘material change in circumstances test’. We do not accept the argument put in respect of the ‘material change in circumstances test’,nor are we persuaded that the views expressed by the majority in the Restaurants 2014 Penalty Rates decision were wrong.

[263] In our view there is no warrant in the text of the section for the importation of a material change in circumstances test. The Commission’s approach that prima facie modern awards achieved the modern awards objective at the time that they were made addresses the point made in the Preliminary Jurisdictional Issues decision that awards made under Part 10A of the WR Act were deemed to be modern awards for the purposes of the FW Act (and by implication,consistent with the modern awards objective at that time). The Unions’proposition would place a constraint on the discretion conferred by s.156(2)(b)(i) which is not warranted by the terms of s.156 or the relevant statutory context and purpose. The Commission must assess the evidence and submissions in support of an award variation against the statutory tests,principally whether the award provides a fair and relevant minimum safety net of terms and conditions and whether the proposed variation is necessary in order for the award to achieve the modern awards objective. The proposition advanced by the Unions would preclude the Commission from varying a modern award where the Commission was satisfied that the award was not meeting the modern awards objective,unless there was a material change in circumstances. This would be inconsistent with s.138 of the FW Act and could not have been intended.

[264] The adoption of the proposed ‘material change in circumstances test’would obfuscate the Commission’s primary task in the Review of determining whether the modern award achieves the modern awards objective. To adopt such a test would be to add words to the text of s.156 in circumstances where it is not necessary to do so in order to achieve the legislative purpose. As the plurality (French CJ,Crennan and Bell JJ) observed in Taylor v Owners –Strata Plan No 11564: 147

    ‘The question whether the court is justified in reading a statutory provision as if it contained additional words or omitted words involves a judgment of matters of degree. That judgment is readily answered in favour of addition or omission in the case of simple,grammatical,drafting errors which if uncorrected would defeat the object of the provision. It is answered against a construction that fills “gaps disclosed in legislation”or makes an insertion which is “too big,or too much at variance with the language in fact used by the legislature”.’ 148 (citations omitted)

[265] In the present case,there is no basis for the introduction of additional requirements or conditions on the exercise of the discretion in s.156(2)(b)(i) which might have been,but which have not been,enacted. 149

[266] The adoption of the proposed test would also be an unwarranted fetter on the exercise of what the legislature clearly intended would be a discretionary decision. As Bowen LJ observed in Gardner v Jay 150:

‘When a tribunal is invested by Act of Parliament or by Rules with a discretion,without any indication in the Act or Rules of the grounds upon which the discretion is to be exercised,it is a mistake to lay down any rules with a view to indicating the particular grooves in which the discretion should run,for if the Act or the Rules do not fetter the discretion of the Judge why should the court so do.’ 151

[267] For the same reasons we reject the ‘economic unsustainability test’advanced by the ACTU. There is no proper legislative basis for such a test and to adopt it would be an unwarranted fetter on the discretion conferred by s.156(2)(b)(i).

[268] For completeness we record our agreement with the point advanced by the Australian Industry Group (Ai Group) in its submission in reply 152 that the variation of a modern award may be warranted if it was established that there was a ‘material change in circumstances’since the modern award was made,but the establishment of such a change is not a condition precedent to the variation of a modern award in the Review.

      3.5 Summary

[269] The following general propositions apply to the Commission’s task in the Review:

    1. The Commission’s task in the Review is to determine whether a particular modern award achieves the modern awards objective. If a modern award is not achieving the modern awards objective then it is to be varied such that it only includes terms that are ‘necessary to achieve the modern awards objective’(s.138). In such circumstances regard may be had to the terms of any proposed variation,but the focal point of the Commission’s consideration is upon the terms of the modern award,as varied.

    2. Variations to modern awards must be justified on their merits. The extent of the merit argument required will depend on the circumstances. Some proposed changes are obvious as a matter of industrial merit and in such circumstances it is unnecessary to advance probative evidence in support of the proposed variation. 153 Significant changes where merit is reasonably contestable should be supported by an analysis of the relevant legislative provisions and,where feasible,154 probative evidence.

    3. In conducting the Review it is appropriate that the Commission take into account previous decisions relevant to any contested issue. For example,the Commission will proceed on the basis that prima facie the modern award being reviewed achieved the modern awards objective at the time it was made. The particular context in which those decisions were made will also need to be considered.

    4. The particular context may be a cogent reason for not following a previous Full Bench decision,for example:

  • the legislative context which pertained at that time may be materially different from the FW Act;

  • the extent to which the relevant issue was contested and,in particular,the extent of the evidence and submissions put in the previous proceeding will bear on the weight to be accorded to the previous decision;or

  • the extent of the previous Full Bench’s consideration of the contested issue. The absence of detailed reasons in a previous decision may be a factor in considering the weight to be accorded to the decision.

[270] We note that the significance of historical context applicable to some of the modern awards which are the subject of these proceedings is a matter of contention between the parties. We deal with those disputes later in our decision.

4. Award Modernisation and the Transitional Review

      4.1 Overview

[271] As mentioned in Chapter 3,the Commission’s task in the Review is to determine whether a particular modern award achieves the modern awards objective. In addressing that task,it is appropriate that we take into account previous decisions relevant to any contested issue. We proceed on the basis that prima facie the modern awards before us achieved the modern awards objective at the time they were made. It is in this context that the award modernisation process and the subsequent Transitional Review assume some significance.

[272] We use the term ‘award modernisation’to refer to the processes under Part 10A of the Workplace Relations Act 1996 (the WR Act). The current 122 modern awards were made during 2008–09 as a consequence of that process and came into operation on 1 January 2010. The awards were the subject of further variations (in some cases before they commenced operation) during the award modernisation process and were then reviewed in a ‘Transitional Review’commencing in 2012,under the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the TPCA Act).

[273] This chapter sets out some background material on the award modernisation process that led to the making of the current 122 modern awards,including the modern awards which are the subject of these proceedings. We also set out some material in relation to the Transitional Review which followed the award modernisation process. The background relevant to the particular awards that are the subject of this decision are summarised in the various chapters dealing with those awards.

      4.2 Award modernisation

[274] The award modernisation process was initiated by a request by the Minister for Employment and Workplace Relations on 28 March 2008,pursuant to s.576C(1) of the WR Act). The Ministerial Request provided the framework and overarching timetable for the award modernisation process.

[275] Following the Ministerial Request,the then President issued a statement 155 which attached a ‘Draft List of Priority Industries’and called for submissions as to which industries should be dealt with first in the process (the ‘priority industries’). The Award Modernisation Full Bench comprising seven Members then dealt with all award modernisation matters between 2008–09. In determining the priority industries the Award Modernisation Full Bench took a number of factors into consideration,including the size and importance of the industry,an assessment of the dimensions of the modernisation exercise in each case,the views of the parties and the desire to include industries from across the spectrum of the economy.156 The hospitality and retail industries were included in the list of priority industries.

[276] A further Statement issued on 22 July 2008 157 outlined the proposed approach and timeline for the award modernisation process which,in accordance with the Ministerial Request,had to be completed by 31 December 2009.

[277] Commission staff prepared lists of federal awards and Notional agreements preserving State awards (NAPSAs 158) (which were federal system instruments derived from awards previously operating in State systems) to be considered by the Award Modernisation Full Bench in the making of the modern award(s) in each industry. A comparison was undertaken of the range of entitlements under the key federal awards and NAPSAs in each industry. This analysis was published on the Australian Industrial Relations Commission (AIRC) website159 in a series of spreadsheets setting out provisions including wage rates,hours of work,penalty rates and overtime.

[278] After the determination of the priority industries,the remaining industries were divided into three further tranches and each generally followed a four step process:

    (i) parties were invited to make initial written submissions and/or file parties’draft awards,followed by oral hearings regarding the scope and content of proposed awards;
    (ii) exposure drafts were prepared by the Commission and published for comment;
    (iii) further written and oral submissions were made regarding the exposure drafts;and
    (iv) the awards were issued in ‘final form’.

[279] The Ministerial Request stated that one of the objectives of the award modernisation process was to reduce the number of awards operating in the workplace relations system. 160 Consistent with that objective,the Full Bench initially proposed only one award in the hospitality industry covering accommodation,hotels,pubs,taverns and gaming (including casinos);restaurants and catering;and clubs. On 20 June 2008,in response to the parties’proposals to create four separate modern awards in the hospitality industry,the Award Modernisation Full Bench stated:

    ‘…we think the proposals for a split into three or more awards have the potential for significant overlap and duplication. At the level of the safety net it may be difficult to justify the creation of four separate modern awards if the peculiar circumstances of each part of the industry could be dealt with satisfactorily by minor modifications to some of the terms of one industry award.’ 161

[280] A Statement was issued on 12 September 2008 162 by the Award Modernisation Full Bench which confirmed its intention to create a single Retail award (covering general retail;fast food;community pharmacies;and hair and beauty),but decided that while the Hospitality award would cover restaurants it would no longer cover employers and employees in registered and licensed clubs. The Clubs sector was deferred to Stage 3.

[281] Further submissions were made regarding the exposure drafts for the priority industries. A decision was issued on 19 December 2008 with a single ‘final’award for the hospitality industry (including restaurants),however a later amendment to the Ministerial Request led to the making of a separate Restaurant Award in Stage 4.

[282] In the 19 December 2008 decision the Award Modernisation Full Bench stated that it was difficult to address the disparate provisions across the various segments of the retail industry without significant changes to the safety net 163 (an earlier statement164 had identified 118 awards operating in the Retail sector across Australia). Accordingly,4 separate retail awards were made covering general retail;fast food;pharmacies and hair and beauty. As a result of the late disaggregation of the proposed general retail award,no exposure drafts were published for comment for the separate modern awards covering the fast food and pharmacy industries. We deal with the background to these modern awards in Chapters 7.5.2 and 8.3.2.

[283] In determining the final provisions in each modern award the Full Bench generally adopted the terms and conditions in the preponderance of pre-reform instruments:

    ‘The consolidated request also provides that the process is not intended to disadvantage employees or increase costs for employers –objectives which are potentially competing. The content of the awards we have formulated is a combination of existing terms and conditions in relevant awards and existing community standards. In order to minimise disadvantage to employees and increases in costs for employers we have generally adopted terms and conditions which have wide application in the existing awards in the relevant industry or occupation. However the introduction of modern awards applying across the private sector in place of the variety of different provisions in the Federal and State awards inevitably means that some conditions will change in some States. Some wages and conditions will increase as a result of moving to the terms which apply elsewhere in the industry. Equally some existing award entitlements will not be reflected in the applicable modern award because they do not currently have general application.

    The creation of modern awards which will constitute the award elements of the safety net necessarily involves striking a balance as to appropriate safety net terms and conditions in light of diverse award arrangements that currently apply. It is in that context that the formulation of appropriate transitional provisions arises.’ 165

[284] To mitigate the impact of modern awards on employers and employees the Award Modernisation Full Bench determined that modern awards should contain transitional provisions to phase in changes to minimum wage rates,loadings,penalties and shift allowances over a period of up to five years. These transitional provisions were outlined in the decision of 2 September 2009 166. Broadly speaking,variations to minimum wages,loadings penalties and allowances were implemented in equal increments between 1 July 2010 and 1 July 2014.

[285] It should be noted that while the introduction of modern awards increased penalty rates payable by employers in some jurisdictions,for many employers penalty rates remained constant,and for some the modern award provided lower penalty rates (e.g. Cafes and Restaurants (South Australia) Award provided a penalty of 200 per cent for working on a Sunday compared to 150 per cent under the modern award 167). Further,some modern awards restrict when penalty rates apply,relative to the position in pre modernisation instruments. For example,the Cafes and Restaurants (South Australia) Award provided that the 10 per cent penalty for working in the evening commenced at 6.00 pm rather than 10.00 pm under the modern award168. A comparison of penalty rates in certain pre modernisation instruments with the terms of the relevant modern awards rates is set out at Attachment C.

      4.3 Transitional Review 2012

[286] The TPCA Act required Fair Work Australia (the predecessor tribunal to the Commission) to conduct a review of all modern awards 169 as soon as practicable after 1 January 2012 (the Transitional Review). The legislative context for the Transitional Review is principally set out in Item 6 of Schedule 5 of the TPCA Act:

    “6 Review of all modern awards (other than modern enterprise awards and State reference public sector modern awards) after first 2 years

    (1) As soon as practicable after the second anniversary of the FW (safety net provisions) commencement day,FWA must conduct a review of all modern awards,other than modern enterprise awards and State reference public sector modern awards.

    Note:The review required by this item is in addition to the annual wage reviews and 4 yearly reviews of modern awards that FWA is required to conduct under the FW Act.

    (2) In the review,FWA must consider whether the modern awards:

      (a) achieve the modern awards objective;and

      (b) are operating effectively,without anomalies or technical problems arising from the Part 10A award modernisation process.

    (2A) The review must be such that each modern award is reviewed in its own right. However,this does not prevent FWA from reviewing 2 or more modern awards at the same time.

    (3) FWA may make a determination varying any of the modern awards in any way that FWA considers appropriate to remedy any issues identified in the review.

    Note:Any variation of a modern award must comply with the requirements of the FW Act relating to the content of modern awards (see Subdivision A of Division 3 of Part 2-3 of the FW Act).

    (4) The modern awards objective applies to FWA making a variation under this item,and the minimum wages objective also applies if the variation relates to modern award minimum wages.

    (5) FWA may advise persons or bodies about the review in any way FWA considers appropriate.

    (6) Section 625 of the FW Act (which deals with delegation by the President of functions and powers of FWA) has effect as if subsection (2) of that section included a reference to FWA’s powers under subitem (5)”.

[287] Item 6(1) of Schedule 5 to the TPCA Act provides a review must be conducted of all modern awards (other than modern enterprise awards and State reference public sector modern awards) as soon as practicable after 1 January 2012 (being the second anniversary of the Fair Work (Safety Net Provisions) commencement day). Item 6(2) provides that in conducting the Transitional Review the Tribunal must consider two questions:

    (a) whether modern awards achieve the modern awards objective in s.134 of the Fair Work Act 2009 (the Act);and

    (b) whether modern awards are operating effectively,without anomalies or technical problems arising from the Part 10A award modernisation process.

[288] The Transitional Review commenced in early 2012 and the scope of that review was the subject of a Full Bench decision issued on 29 June 2012 170 (Re Modern Awards Review decision). The Full Bench concluded that the Transitional Review was quite separate from,and narrower in scope than,the 4 yearly review of modern awards provided for in s.156 of the FW Act:

    ‘To summarise,we reject the proposition that the Review involves a fresh assessment of modern awards unencumbered by previous Tribunal authority. It seems to us that the Review is,intended to be narrower in scope than the 4 yearly reviews provided in s.156 of the FW Act.’ 171

[289] Many of the applications made as part of the Transitional Review involved matters expressly dealt with by the Commission in the award modernisation process. In those circumstances the need to advance probative evidence in support of an application to vary a modern award was particularly important as the Transitional Review did not involve a fresh assessment of modern awards unencumbered by previous Tribunal decisions. The June 2012 decision stated,in the context of the Transitional Review:

    ‘…the Tribunal is unlikely to revisit issues considered as part of the Part 10A award modernisation process unless there are cogent reasons for doing so,such as a significant change in circumstances which warrants a different outcome.’ 172

[290] It is important to recognise that the Transitional Review was dealing with a system in transition. Item 6 of Schedule 5 formed part of transitional legislation,intended to facilitate the movement from the WR Act to the FW Act. The Transitional Review was a “one off”process required by the transitional provisions and conducted a relatively short time after the completion of the award modernisation process. The fact that the transition to modern awards was taking place at the time of the Transitional Review militated against the adoption of broad changes to modern awards as part of that review.

[291] During the Transitional Review the Commission considered a number of applications to vary penalty rates in modern awards,including those that are the subject of the present proceeding. The decisions arising from those claims are summarised below.

Modern Awards Review 2012—Penalty Rates 173

[292] In March 2012,several parties lodged applications to vary penalty rate provisions contained in 5 awards. These applications were dealt with by a single Full Bench. The Full Bench had before it applications from employer organisations,individual employers and the SDA. The relevant variations sought were as follows 174:

    ●Fast Food Industry Award 2010 (AM2014/240 and others)

    • Alter the span of hours for penalty rates applying to evening work from Monday to Sunday

    • Delete clauses which provide for penalty rates on the weekend

    • Vary clause to specify time at which penalty rate ceases

    ●General Retail Industry Award 2010 (AM2014/177)

    • Reduce penalty for Sunday from 200% to 150%

    • Remove the 25% penalty payment for evening work that presently applies to all non-casual hours

    ●Hospitality Industry (General) Award 2010 (AM2014/204 and others)

    • Reduce the Sunday penalty from 175% to 150%

    • On a public holiday,reduce the penalty from 275% to 250%

[293] Although a number of penalty rate provisions were sought to be varied,the major focus of both the evidence and the submissions was on the penalty for Sunday work in the Retail Award and on the weekend and other penalties in the Fast Food Award. 175

[294] Other than the applications relating to the proposed reduction in existing penalty rates in the Retail Award and Fast Food Award,there was little or no probative evidence dealing with other aspects of the applications before the Commission.

[295] The essence of the employers’contentions,particularly in the retail sector,was that the existing penalty rate provisions resulted in employers engaging fewer employees than they would prefer to employ on a Sunday,and that the mix of employees engaged on a Sunday,in terms of age and experience,was less than optimal. It was submitted that if the Sunday penalty rate was reduced employers would be willing to offer more hours of work on Sundays and the mix of employees engaged would promote more efficient and productive performance of work.

[296] The Commission decided that while there was some evidence in support of these submissions,the evidence was far from compelling. In rejecting the substantive claims,the Full Bench commented that:

    ‘There is a significant ‘evidentiary gap’in the cases put. It is particularly telling that there is no reliable evidence regarding the impact of the differing Sunday (or other) penalties when applied upon actual employer behaviour and practice. This is a most unfortunate omission given that the transitional provisions,which rely upon the differing NAPSA entitlements,provide an opportunity for evidence to be led from employers operating in multiple States to provide these comparisons. There is also no reliable evidence about the impact of the existing differential Saturday and Sunday penalties upon employment patterns,operational decisions and business performance.

    We are not persuaded that a sufficient case has been made out to warrant varying the relevant awards in the manner proposed by the employers. While aspects of the applications before us are not without merit - particularly the proposals to reassess the Sunday penalty rate in light of the level applying on Saturdays - the evidentiary case in support of the claims was,at best,limited.

    The 4 yearly review of these awards is to commence in 2014. That review will be broader in scope than the Transitional review and will provide an opportunity for the issues raised in these proceedings to be considered in circumstances where the transitional provisions relating to the relevant awards will have been fully implemented. In the event that the claims before us are pressed in the 4 yearly review we would expect them to be supported by cogent evidence. We would be particularly assisted by evidence regarding the matters referred to above and the likely impact upon employment levels,the organisation of work and employee welfare of any change in the penalty rates regimes.’ 176

[297] As mentioned in Chapter 3,in conducting the Review it is appropriate that the Commission take into account previous decisions relevant to any contested issue. The extent of the evidence and submissions put in the previous decision may be a factor in considering the weight to be accorded to that decision.

[298] As noted by the Full Bench in the Modern Awards Review 2012 –Penalty Rates decision,the evidentiary case presented in support of the various applications before it ‘was,at best,limited’. Further,the Full Bench expressly indicated that the 4 yearly review would provide an opportunity for the issues which had been raised in the Transitional Review proceedings to be considered ‘in circumstances where the transitional provisions relating to the relevant awards will have been fully implemented’. In these circumstances the Modern Awards Review 2012 –Penalty Rates decision has limited relevance to the present proceedings.

[299] In addition to the Modern Awards Review 2012 –Penalty Rates decision an application by RCI to vary the Restaurant Industry Award 2010 was also considered during the Transitional Review. RCI’s application was rejected at first instance. 177Permission to appeal was granted and,by majority,the Appeal bench decided to reduce the Sunday penalty rates for casual employees engaged at classification levels 1 and 2,from 175 per cent to 150 per cent (including the 25 per cent casual loading). The essence of the majority’s reasons for providing for differential Sunday penalty rates is set out at paragraph 154 of the decision:

    ‘Although a 50% Sunday penalty rate is generally appropriate for employees under the Restaurant Award,for transient and lower-skilled casual employees working mainly on weekends,who are primarily younger workers,the superimposition of the casual loading of 25% in addition to the 50% penalty tends to overcompensate them for working on Sundays and is more than is required to attract them for work on that day. In that respect,the Restaurant Award is not meeting the modern awards objective in s.134 of the FW Act.’ 178

[300] We deal with the Restaurants 2014 Penalty Rates decision in more detail in Chapter 7.4.5.

[301] The significance of the historical context applicable to some of the modern awards which are the subject of these proceedings is a matter of contention between the parties. We deal with the relevant background to the modern awards before us at Chapters 7.2.2,7.3.2,7.4.2,7.5.2,8.2.2 and 8.3.2.

5. Submissions:Overview

      5.1 Principal parties

[302] This section briefly describes the principal parties in these proceedings. For this purpose we have characterised an employer association as a ‘principal party’if they have made an application to vary one or of the more modern awards before us. Tables 1 and 74 set out the various claims before us. The principal employer parties were:

  • the Australian Hotels Association and the Accommodation Association of Australia (the Hospitality Employers);

  • Clubs Australia Industrial (CAI);

  • Australian Business Industrial and the New South Wales Business Chamber (jointly,ABI);

  • Restaurant and Catering Industry Australia (RCI);

  • the Australian Industry Group (Ai Group);

  • the Australian Retailers Association (ARA),the National Retail Association (NRA) and the Master Grocers Association (MGA) (collectively,the Retail Employers);and

  • the Pharmacy Guild of Australia (PGA).

[303] The NRA was party to both a joint application with the other Retail Employers,to vary the General Retail Industry Award 2010 and made a separate application to vary the Fast Food Industry Award 2010. We only refer to the NRA in instances where it was acting separately,rather than in concert with the other Retail Employers. Some uncertainty remains as to the exact nature of the NRA’s role in these proceedings. While the NRA filed a draft determination on 13 February 2015 outlining the changes it sought to the Fast Food Award, 179 its final written submissions noted that:

    ‘At the outset of these proceedings,the National Retail Association (“NRA”) sought to vary the weekend and public holiday penalty rates in relation to the Fast Food Industry Award 2010 (“Fast Food Award”). However,because of similar claims having also been filed by other employer parties and in order to avoid duplication,the NRA determined that it would be more practical for it to adopt a supporting role in relation to the claims for the reduction of Sunday penalties in the Fast Food Award and to act as an interested party in these proceedings.’ 180

[304] The Commission published a draft summary of the claims before the Full Bench and directed that corrections or amendments to that summary be filed in the Commission’s registry. 181 The draft summary included the NRA’s proposal,and the NRA did not advise the Commission that this was incorrect. A final version of the summary of claims was subsequently published by the Commission.182

[305] As it is unclear exactly what the NRA means when it states that its role will be ‘to act as an interested party’and,given the NRA did not dispute the accuracy of the Commission’s summary,we have proceeded on the basis that the NRA is still an active party to these proceedings and is seeking the variations outlined in the summary of claims published by the Commission.

[306] We also note that ACCI supported the applications advanced by ABI and joined in ABI’s submissions.

[307] The claims of the principal employer parties were opposed by the Shop,Distributive and Allied Employees Association (SDA) and United Voice. The Association of Professional Engineers,Scientists and Managers,Australia (APESMA) and the Australian Council of Trade Unions (ACTU) made submissions in support of the positions put by the SDA and United Voice. APESMA called one lay witness in relation to the Pharmacy Industry Award 2010,and the ACTU called one expert witness,Professor Markey 183 to give evidence in response to the expert evidence by Ms Lynne Pezzullo.184

      5.2 Productivity Commission Inquiry Report: Workplace Relations Framework

5.2.1 Admissibility and Overview

[308] The Productivity Commission Inquiry Report:Workplace Relations Framework (the PC Final Report) was published by the Productivity Commission on 30 November 2015 following an inquiry into the ‘Workplace Relations Framework’arising from a request made by the Commonwealth Government pursuant to Parts 2 and 3 of the Productivity Commission Act 1998 (Cth). The terms of reference for the Productivity Commission inquiry are set out at Attachment D.

[309] Ai Group sought to tender the PC Final Report in totality,for completeness,but only sought to rely on Chapters 9,10,11,12,13,14 and 15 and Appendix F of that report. These Chapters and the Appendix deal with,among other things,penalty rates for ‘long hours and night work’and the ‘level of weekend penalty rates’. They also include data and information about Australia’s social,working and consumer demographics,as well as expressing views about the appropriate level of penalty rates in Australian workplaces. Ai Group’s application was supported by a number of other employer parties (RCI,PGA,ARA,NRA,MGA and ABI) and opposed by the SDA and United Voice.

[310] In a decision 185 issued on 12 February 2016 we admitted Chapters 9,10,11,12,13,14 and 15 and Appendix F of the PC Final Report as part of the common evidence in these proceedings,noting that:

    ‘The PC Final Report contains information and discussion that is properly regarded as evidentiary in nature and some elements that should properly be considered as submissions. It contains considerable factual material based upon sources that are also set out in the report. These matters are relevant to the factual context for this Review. The report also contains the views of the Productivity Commission,including specific recommendations that it makes to the Commonwealth Government. To the extent that the Productivity Commission comments upon some of the evidence that has been presented us as part of this Review and expresses its views about what we should do as a result of this Review these observations are in the nature of submissions,rather than evidence,and will be considered as such by us. We note that to the extent that the PC Final Report considers the expert evidence given in these proceedings the employer parties place no reliance on such consideration.’ 186

[311] Four points may be made about the basis upon which the PC Final Report has been admitted:

    (i) The Employer parties did not seek to have the PC Final Report treated as expert opinion evidence and accordingly it was not admitted on that basis.

    (ii) The Employer parties place no reliance on those aspects of the PC Final Report which considers the expert evidence given in these proceedings.

    (iii) The opinions expressed by the Productivity Commission as to the appropriateness of current penalty rates will be treated as submissions,not evidence.

    (iv) The PC Final Report contains factual material and data that is relevant to the review of penalty rates in the awards before us. We refer to this material in more detail in Chapter 6.

[312] Penalty rates for long hours and night work are considered in Chapter 9 and weekend penalty rates are considered in Chapters 10,13,14,15 and Appendix F of the report. Chapters 11 and 12 dealt with the shift to a 7 day consumer economy and the social effects of weekend work.

[313] The consideration of penalty rates in the PC Final Report was limited to penalty rates that apply to the hospitality,entertainment,retail,restaurant and café industries,referred to as the HERRC industries in the report. While acknowledging that there are good reasons to take different approaches to different industries,the Productivity Commission report suggested that the HERRC industries have some distinctive features in terms of their business environments,labour market and employees. The Productivity Commission explains the rationale for focussing on the HERRC industries,as follows:

    ‘…the appropriate level for regulated penalty rates for weekend work —particularly on Sundays in a number of discretionary consumer service industries —has become a highly contested and controversial issue. The industries of greatest concern are hospitality,entertainment,retail,restaurants and cafes (HERRC). These are industries where consumer expectations of access to services has expanded over time so that the costs of penalty rates affect consumer amenity in ways they did not when penalty rates were first introduced. Such industries are also important sources of entry-level jobs for,among others,relatively unskilled casual employees and young people (particularly students) needing flexible working arrangements. The provision of discretionary,and therefore demand responsive,services on weekends is less frequent in most other industries,which is a key (but not only) rationale for a focus of concerns on the HERRC industries. It is notable that the FWC is currently also considering appropriate penalty rates in awards,and that their focus almost exactly matches the group of industries that the Productivity Commission has identified as the most relevant.’ 187 (footnotes omitted)

[314] The modern awards considered by the Productivity Commission to be applicable to the HERRC industries are:

  • Restaurant Industry Award 2010;

  • Registered and Licensed Clubs Award 2010;

  • General Retail Industry Award 2010;

  • Hospitality Industry (General) Award 2010;

  • Amusement,Events and Recreation Award 2010;

  • Fast Food Industry Award 2010;

  • Pharmacy Industry Award 2010;and

  • Hair and Beauty Industry Award 2010. 188

[315] In this part of our decision we consider those aspects of the PC Final Report dealing with weekend penalty rates,public holidays and penalty rates for night work. As mentioned,Chapters 11 and 12 of the PC Final Report deal with the shift to a 7 day consumer economy and the social effects of weekend work. We refer to some of that material in Chapter 6 of this decision.

5.2.2 Weekend penalty rates

[316] In relation to weekend penalty rates the central recommendation in the PC Final Report (Recommendation 15.1) is that the Fair Work Commission should,as part of its current award review process:

  • set Sunday penalty rates that are not part of overtime or shiftwork at the higher rate of 125 per cent and the existing Saturday award rate for permanent employees in the hospitality,entertainment,retail,restaurant and café industries;

  • set weekend penalty rates to achieve greater consistency between the above industries,but without the expectation of a single rate across all of them;and

  • investigate whether weekend penalty rates for casuals in these industries should be set so that casual penalty rates on weekends would be the sum of the casual loading and the revised penalty rates applying to permanent employees,with the principle being that there should be a clear rationale for departing from this. 189

[317] The PC Final Report concluded that penalty rates for weekend work that does not involve shift or overtime work are justified and ‘a legitimate and continuing feature of the safety net for all non-standard hours across all industries’. 190

[318] We deal with each of the proposed changes below.

      (i) Reduced rates for Sunday work

[319] It is important to appreciate that the Productivity Commission’s recommendations in respect of the reduction of Sunday penalty rates are confined to the HERRC industries. In particular the PC Final Report states:

    ‘There is no case for common penalty rates across all industries The Commission is not recommending a reduction in the Sunday penalty rates beyond HERRC. Regulated penalty rates as currently constructed for essential services and many other industries are justifiable. The original justifications have not altered materially:they align with working arrangements that often involve rotating shifts across the whole week,are not likely to reduce service availability meaningfully,are commensurate with the skills of the employees,and are unlikely to lead to job losses.’ 191

[320] The arguments advanced in the PC Final Report in support of the reduction of Sunday penalty rates in the HERRC industries fall into three broad categories:

  • the asocial impacts of Sunday work are similar to working on Saturdays;

  • consumer benefits;and

  • employment effects.

[321] The Productivity Commission acknowledges that lower Sunday penalty rates will reduce the income of existing employees in the HERRC industries. 192

[322] We deal with each of these matters below.

      (a) Sunday vs Saturday work

[323] In Chapter 13 of the PC Final Report,the Productivity Commission deals with the level of weekend penalty rates and observes that:

    ‘The present Sunday rates for these industries seem to be much less clearly justified either on economic grounds or according to community norms compared with other working times …the social disabilities associated with weekend work —for which there is sound evidence (chapter 12) —does not strongly support the large gap between penalty rates on Saturdays and Sundays.’ 193

[324] The social effects of weekend work are dealt with in Chapter 12 of the PC Final Report and we refer to some of that material in Chapter 6 of this decision.

      (b) Consumer benefits194

[325] The Productivity Commission contends that consumers (including tourists) would be major beneficiaries for the proposed reduction in Sunday penalty rates in the HERRC industries:

    ‘With lower Sunday penalty rates,consumers would gain access to more services for longer hours and with higher staffing ratios. Sunday surcharges would be likely to disappear,and average prices for consumer services throughout the week would be likely to be a little lower.’ 195

[326] The Productivity Commission also notes that there would be potential productivity improvements from reform:

    ‘…as the fixed costs of running a business would be spread over greater opening times and demand …[and that] [b]etter capital utilisation would put further downward pressure on average unit costs and prices. Moreover,the lower labour costs associated with reduced penalty rates may permit the payment of targeted incentive based payments that motivate staff and enhance productivity…All of these will benefit consumers.’ 196

    (c) Employment effects197

[327] The Productivity Commission concludes that there would be significant employment effects associated with its proposed reduction in Sunday penalty rates:

    ‘Given the characteristics of the demand for HERRC goods and services,and the high labour shares in these industries (chapter 11 and table 15.1 in chapter 15),it seems very likely that there would be considerable growth in hours worked and,to a lesser extent,employment on Sundays from lowering penalty rates on these days. If a labour demand elasticity for Sunday of -0.6 (a hypothetical,but probably conservative estimate) were to apply,the anticipated increase in hours from say a 33 per cent reduction in wage rates would be around 27 per cent. The change would also be likely to reduce the trend towards capital substitution in the relevant industries (noting that the scope for automation and self-service is rising). A shift in total hours of this magnitude would take the form of greater hours for existing staff and hiring of new employees. The mix is unclear and would depend on the characteristics of labour supply and demand for would-be employees and existing employees in each sub-market.’ 198 (footnotes omitted)

      (d) The impact on the earnings of existing employees199

[328] The Productivity Commission observes that the degree to which the labour earnings change for people currently employed on Sundays depends on the:

  • new regulated Sunday penalty rate for each relevant award;

  • extent to which some negotiated weekend wages might lie above a new lower penalty rate for Sundays;

  • timing of new enterprise agreements,as any penalty rates in existing agreements would continue to apply;

  • relative proportion of an employee’s time spent working on Sundays;and

  • extent to which lower wage rates induced greater demand for labour on Sundays. 200

[329] As to the last point,the Productivity Commission concludes that,in general,most existing employees would probably face reduced earnings as it is improbable that,as a group,existing workers’hours on Sundays would rise sufficiently to offset the income effects of penalty rate reductions. 201

[330] While acknowledging that lower Sunday penalty rates will reduce the income of existing employees in the HERRC industries,the Productivity Commission notes that:

  • only the minority of HERRC employees work only on weekends,which reduces the importance of lower wage rates on Sundays;

  • the reduction in wage rates for casual employees is less than for permanent employees because of existing anomalies in the interaction of casual loadings and premium rates for Sunday work;

  • the net effect would be lower given offsets through the tax and transfer system;and

  • many HERRC employees do not come from low paid households. Many are in households with two other income earners. 202

      (ii) Greater consistency in weekend penalty rates

[331] There is a wide disparity in the weekend penalty rates in the HERRC industries,as the Productivity Commission notes in Table 10.1 (reproduced below as Table 4). 203

Table 4

Penalty rate arrangements for selected modern awards

    Permanent

    Casual

     

    Percentage of permanent

    base rate

      Percentage of permanent

      base rate

     

    Award applying in 2015

    Base

    rate

    Sat

    Sun

    Base

    rate

    Sat

    Sun

     

    %

    %

    %

    %

    %

    %

    Restaurant Industry

    100

    125

    150

    125

    150

    150

    (175)

    Registered and Licensed Clubs

    100

    150

    175

    125

    150

    175

    General Retail Industry

    100

    125

    200

    125

    135

    200

    Hospitality Industry (General)

    100

    125

    175

    125

    150

    175

    Amusement Events and Recreation

    100

    100

    150

    125

     

    125

    175

    Fast Food Industry

    100

    125

    150

    125

     

    150

    175

    Pharmacy Award

    100

    125,150

    200

    200

    125

    150

    175,225

    225

    Hair and Beauty

    100

    133

    200

    125

    133

    200

[332] The Productivity Commission states that there are grounds for greater consistency (short of uniformity) between penalty rates across the HERRC industries,noting that ‘Differences in rates create compliance costs and uncertainty for employers and employees’. 204

      (iii) Weekend penalty rates for casuals

[333] The PC Final Report made reference to the interaction of penalty rates and casual loadings and concluded:

    ‘In some awards,penalty rates for casual employees fail to take into account the casual loading,which distorts the relative wage cost of casuals over permanent employees on weekends (and particularly Sundays). The wage regulator should reassess casual penalty rates on weekends,with the goal of delivering full cost neutrality between permanent and casual rates on weekends,unless clearly adverse outcomes can be demonstrated. This would imply that casual penalty rates on weekends would be the sum of the casual loading and the penalty rates applying to permanent employees.’ 205

[334] The Productivity Commission recommended that modern awards be amended to ensure that casual loadings are applied to penalty rates in the same way across all awards. It stated:

    ‘For neutrality of treatment,the casual loading should be added to the penalty rate of a permanent employee when calculating the premium rate of pay over the basic wage rate for weekend work. This would make an employer indifferent,at the margin,between hiring a permanent employee over a casual employee. It would also be consistent with the desirability of ‘equal pay for equal’work.’ 206

[335] The PC Final Report sets out the three methods currently used for determining the rate of pay for casual employees in the modern awards relevant to the penalty rates case. Each method arrives at a different rate of pay for casual employees during times when weekend penalty rates apply. The methods are set out below.

  • the ‘default’approach where the casual loading is always set as a percentage of the ordinary/base wage (and not the ordinary wage plus the penalty rate). The rate of pay for a casual employee is therefore always 25 percentage points above the rate of pay for non-casual employees;

  • casual loading applies to the rate of pay once penalty rates are applied to the ordinary/base wage;and

  • in some instances,casual employees do not receive a loading as well as the penalty rate,so their rate of pay on weekends is the same as permanent employees.

[336] The casual loading for weekend work for the modern awards relevant to the penalty rates case is determined using different methods across the modern awards and,in some cases,different methods within the same modern award. These are described below:

  • Fast Food Industry Award 2010:the casual loading applies to the rate of pay once penalty rates are applied on Saturdays. The casual loading is applied as per the ‘default’method on Sundays.

  • Restaurant Industry Award 2010:the casual loading is applied as per the ‘default’method on Saturdays and Levels 3 to 6 on both Saturdays and Sundays;there is no casual loading for Levels 1 and 2 on Sundays (the penalty rate is inclusive of casual loading).

  • General Retail Industry Award 2010: 207 a casual loading of 10 per cent is applied per the default approach on Saturdays. No casual loading applies on Sundays (the penalty rate is inclusive of casual loading).

  • Registered and Licensed Clubs Award 2010:no casual loading applies on weekends (the penalty rate is inclusive of casual loading).

  • Hospitality Industry (General) Award 2010:a casual loading is applied on Saturdays as per the ‘default’approach. No casual loading applies on Sundays (the penalty rate is inclusive of casual loading).

  • Pharmacy Industry Award 2010:the casual loading is applied as per the ‘default’approach on both Saturdays and Sundays.

[337] The PC Final Report argued that,in order for employers to be indifferent or neutral (at the margin) in choosing between a permanent and casual employee, 208 the ‘default’method should be preferred. As we observe later,the casual loading is paid to compensate casual employees for the nature of their employment and the fact that they do not receive the range of entitlements provided to full-time and part-time employees,such as annual leave,personal/carer’s leave,notice of termination and redundancy benefits.

[338] For our part we would observe that the ‘default’approach is also consistent with one of the considerations we are required to take into account in determining whether a modern award satisfies the modern awards objective,in that it provides a casual loading that is simple and easy to understand,consistent with s.134(1)(g) of the FW Act.

5.2.3 Penalty rates for long hours and night work

[339] Chapter 9 of the PC Final Report focuses on penalty rates for long hours and night (and associated shift) work. The Productivity Commission’s observations about night work penalties are relevant to the current proceedings as there are applications to vary the late night penalties in a number of the modern awards before us.

[340] In 2013–14 almost 1.2 million Australian employees (about 11 per cent of employees) reported working schedules likely to involve night work (including regular night shifts and rotating shifts). 209 The incidence of night work varies substantially across industries ranging from 38.8 per cent in Accommodation and food services and 21.1 per cent in Retail trade to 5.3 per cent in Financial and insurance services.210

[341] The Productivity Commission comments on the adverse health effects of night work, 211 and concludes:

    ‘There is strong evidence that night work has adverse health costs. Moreover,these costs are unlikely to be factored into freely negotiated wages given the imbalance of market power between many employers and employees. Given that night shift loadings likely reduce the incidence of night work,and compensate employees for the additional costs associated with working these hours,there is a case for a regulated wage premium associated with night work.’ 212

5.2.4 Public holiday penalty rates

[342] The Productivity Commission recommended that:‘The Fair Work Commission should not reduce penalty rates for existing public holidays’, 213 noting that,by definition:

    ‘…genuine public holidays are intended to serve a special community role and,as such,there are strong grounds to limit the expectation that they are for working. In that sense,the original concept of deterrence continues to have relevance’. 214

    5.2.5 Conclusion

[343] The PC Final Report contains useful references and research material that is of assistance to us in our present task.

[344] We observe that the Productivity Commission considered reports and materials authored by some of the expert witnesses who gave evidence in this matter. However,unlike the Productivity Commission,the Commission has had the benefit of having that material challenged through the process of expert witnesses giving evidence and being subject to cross-examination. Further,the expert witnesses have also given direct evidence in response to contrary views and this has permitted us to fully consider the competing assumptions and approaches underpinning that material. We have also heard the direct evidence of many business proprietors and employees as part of this Review.

[345] Further,whilst the Productivity Commission assessed various considerations,it was not required to apply the particular statutory considerations which we are obliged to apply in the Review. The Productivity Commission’s role in the present context was substantially to inquire and make policy recommendations to Government215 and this is to be contrasted with the determinative role of this Commission. In that regard,in our earlier decision concerning this matter we noted that the PC Final Report was not advanced by the employer parties as expert evidence.216 This does not mean that the Productivity Commission is not comprised of experts,rather,the authors of the PC Final Report were not called to give evidence in relation to the matters before us and the parties advancing the report as part of their respective cases did not do so on that basis.

[346] In sum,we have had regard to the relevant material and propositions published by the Productivity Commission as part of the PC Final Report in reaching our findings in these matters,subject to the evidence before the Commission and the statutory considerations bearing upon our present task.

[347] For reasons outlined in Chapter 9 of our decision,we do not consider that the observations of the Productivity Commission regarding public holidays take account of the impact of s.114 of the FW Act upon the operation of public holidays under the relevant modern awards.

[348] We also note that the Productivity Commission treated all of the industries under its HERRC grouping on a common basis. As would be clear from our decision,whilst we have grouped the modern awards in the hospitality and retail industries together for convenience,we have considered each of the awards in their own right,consistent with the statutory directive in s.156(5) of the FW Act,217 and found that there are some differentiating factors that bear upon the current issues. These include the composition of the workforce and the context in which some of the modern awards operate.

    5.3 Other Submissions

[349] Some 36 submissions were filed by a range of organisations,community groups,State and Territory Governments,and other entities. These submissions can be characterised as either supporting or opposing the claims advanced by the principal employer parties.

      5.3.1 Submissions supporting Employer claims

[350] A number of state-based employer associations provided submissions in support of the claims advanced by the principal employer parties. These associations were:the Chamber of Commerce and Industry of Western Australia (CCIWA);Chamber of Commerce and Industry of Queensland (CCIQ) Victorian Chamber of Commerce and Industry (VECCI) and the South Australian Employers Chamber of Commerce and Industry Inc T/A Business SA (BSA).

[351] CCIWA supports the employer applications to reduce penalty rates in the modern awards before us. In summary terms CCIWA submits:

    ‘…the current penalty rates for Sunday work reflect out-dated cultural norms which contemplate Sunday as a day of rest and for religious observance,in which work was to be discouraged.

    However,cultural norms have since changed across the bulk of Australian society. While for large parts of the workforce “Saturdays and Sundays remain a focal point for community and family interactions”,there is no longer any significant distinction between the way people treat and view Sundays as opposed to Saturdays.

    The changing way in which people spend their leisure time has also increased the demand for retail and hospitality services on Sundays and public holidays…

    the current regime of high penalties for work performed on Sundays and public holidays is limiting the number of jobs because of the impact it has on the operation of many retail and hospitality businesses…

    For those businesses which do trade,it also impacts upon staffing levels:with many businesses rostering fewer staff;utilising cheaper less experienced junior staff;choosing to work the hours themselves;or enlisting the support of family members.

    CCIWA members in the retail and hospitality industry have identified that a reduction in these penalty rates will have a positive impact on their employment decisions,both in term of how many people they employ and the number of hours offered to staff.’ 218 (footnotes omitted)

[352] In support of its submissions CCIWA relied extensively on the Productivity Commission Inquiry Report:Workplace Relations Framework. We deal with that report in Chapter 5.2.

[353] CCIWA also relies on a survey of its retail and hospitality members. The survey was undertaken for the purpose of establishing the views of businesses on the impact of penalty rates. An overview of the survey and the survey results are set out at Appendices A,B and C to the CCIWA submission. A summary of the survey results is set out at paragraphs 48–58 and 63 of the submission.

[354] As to the impact of a reduction in Sunday penalty rates,CCIWA submits that the survey results reveal that:

    ‘If Sunday penalty rates were reduced to the levels sought in these applications 10.5 per cent of respondents in the retail sector would choose open on Sunday and 31.5 per cent would open for more hours. In the case of hospitality employers,15.8 per cent would choose to open and 26.3 per cent would open for more hours on a Sunday.

    The respondents also identified that this would generally have a positive impact upon their employment decisions. Of the retail members,36.8 per cent identified that they would employ more staff whilst 21 per cent would opt to roster a staff member instead of working themselves. Similar level of response was also recorded for hospitality members,with 37.9 per cent indicating that they would employ more staff,whilst 31 per cent would roster a staff member instead of themselves.’ 219

[355] We note that the figures quoted above in respect of the responses of the hospitality employers are incorrect. The references to 15.8 per cent and 26.3 per cent footnote the responses to questions 17,21 and 25 from Appendix C. Survey Question 17 asks:‘If penalty rates were reduced to base rate + 25 % loading on Sundays,what impact would that have on your opening hours on that day?’It will be recalled that the extract from CCIWA’s submissions set out above is prefaced with the words ‘If Sunday penalty rates were reduced to the levels sought in these applications…’. Contrary to what is suggested in Survey Question 17,in these proceedings the Hospitality Employers are seeking to reduce the Sunday penalty rate in the Hospitality Industry (General) Award 2010 from 175 per cent to 150 per cent,for all employees.

[356] The relevant responses are those made to Survey Question 21,which asks:‘If penalty rates were reduced to base rate + 50 % loading on Sundays,what impact would this have on your opening hours on that day?’. There were only 34 responses to this question,as set out below:

 

Responses

 

No.

%

Would open Sunday

4

11.76

Would close Sunday

1

2.94

Open for more hours on Sunday

5

14.71

Open for less hours on Sunday

1

2.94

No influence

20

58.82

Other

5

14.71

[357] These results are somewhat curious. For example,2 of the 34 employers who responded say that they would close or open for less hours on Sunday if penalty rates were reduced. Four of the respondents say they would open on Sundays if penalty rates were reduced. This too is curious,given that of the 49 Hospitality Employers who responded to the survey,46 said that they currently regularly trade on Sunday. 220

[358] Almost 60 per cent of the Hospitality Employers who responded to this question said that the reduction in Sunday penalty rates sought by the Hospitality Employers would have no influence on Sunday opening hours in their business.

[359] It is not apparent to us how CCIWA arrived at the figures in respect of the responses from hospitality employers which are in the extract from its submission set out at [354] above.

[360] The SDA submits that we should not consider the survey material contained in CCIWA’s submission,essentially on the basis that it had not been tendered as evidence and hence they have not had the opportunity to test it. 221

[361] We note from CCIWA’s written submission of 8 February 2016,and its reply submission of 1 May 2016,that the survey material was not submitted as evidence:‘Rather,it is provided as indicative data on the views and experience of Western Australian employers in these industries’. 222

[362] Contrary to the SDA’s submission,we propose to consider the CCIWA survey material,but for the reasons which follow,the survey data is of limited assistance.

[363] The CCIWA survey was conducted online through ‘Survey Monkey’and sent to 8,500 WA businesses via CCIWA’s weekly e-newsletter. CCIWA only analysed complete responses from respondents who identified themselves as being in either the retail or hospitality industry –there were only 50 such responses from retail businesses and 49 from hospitality businesses. No information is provided as to the survey response rate among retail and hospitality businesses.

[364] Given the small number of respondents to the relevant survey questions and the limited information provided in relation to the survey methodology,response rates and results,the CCIWA survey data is of limited assistance. It may be regarded as providing some indicative anecdotal data,rather than anything that can be said to be representative of the views of retail and hospitality businesses in WA.

[365] The Busselton Chamber of Commerce and Industry (BCCI) made a submission supporting the submission advanced by CCIWA regarding the impact of the current weekend and public holiday penalty rates on regional tourism. BCCI submits:

    ‘In many instances the significant costs associated with engaging staff on Sundays and public holidays makes it unviable for local businesses to operate on these days. In this situation the business simply closes. Not only does this negatively impact on the revenue for the business concerned,but it also translates to reduced employment opportunities for the local community…

    Weekend and public holiday penalty rates currently act as a brake on the development of the local tourism industry,and in doing so limits employment opportunities for the local community.’ 223

[366] The BCCI submission also set out some comments by local businesses about the impact of the current Sunday and public holiday penalty rates. 224 These businesses are only identified in a generic way,‘a café restaurant’,‘a clothing retailer’etc.,rather than identifying the specific business. BCCI submits that this material ‘is not intended as evidence,but is reflective of the general views of many of our members on the impact of weekend and public holiday penalty rates on local businesses,employees and the broader community’.

[367] We have had regard to this material but accord it little weight as the relevant businesses were not identified and hence there was no opportunity to test the views expressed.

[368] CCIQ filed 2 submissions,dated 29 June 2015 and 9 November 2015. The June 2015 submission is said to ‘provide high level commentary on the impact of penalty rates on the hospitality and retail sectors in Queensland’. 225 CCIQ submits that ‘penalty rates need to be more pragmatic in order to effectively deal with emerging economic,social and demographic trends facing Australia’s working landscape’.226 In support of its submission,CCIQ relies on a survey of Queensland businesses conducted between 11 February and 13 March 2015,‘to assess the impact of the FW Act,including penalty rates provisions’(the CCIQ March 2015 Survey). In addition to the CCIQ March 2015 Survey,CCIQ hosted an ‘Industry Roundtable’and several consultative forums across regional Queensland,though little detail was provided in respect of this qualitative material.

[369] CCIQ also relied on the CCIQ March 2015 Survey data in its final submission of 9 November 2015. We summarise that data below.

[370] Around 58 per cent of businesses who responded to the survey said that penalty rates and public holiday entitlements are a major or critical concern. 227 A higher proportion of retail businesses (17 per cent) reported that penalty rates and overtime increased substantially as a result of the creation of modern awards compared with businesses in other industries (6 per cent).228 The majority of responses in retail and other industries reported reduced employment or operating hours,particularly employment hours.229 This was more evident among small retail businesses,while a higher proportion of small hospitality businesses reduced both employment and opening hours.230

[371] When asked about reforms to penalty rates,80 per cent of the responses from businesses in the hospitality sector and 70 per cent of businesses in retail sector supported the continued regulation of penalty rates but with reduced loadings. 231

[372] The CCIQ March 2015 Survey reports on the 1,038 responses received and provides a breakdown by business size and industry. But no information is provided about the number of businesses contacted to undertake the survey or how the survey sample was constructed. As a consequence,response rates cannot be calculated and nor can we reach any sensible conclusions about the representativeness of the survey results. We also note that small business respondents to the survey appear to have included non-employing businesses.

[373] CCIQ conducted another survey in September 2015 ‘to assess the adequacy of a number of the proposed recommendations,particularly regarding penalty rates in the retail and hospitality sectors’from the Productivity Commission Draft Report. CCIQ reported that around 28 per cent of those who responded to that survey were from the HERRC industries. 232 Over one quarter of these businesses did not open on Sundays,with the majority (71 per cent) responding that it was due to the level of penalty rates.233

[374] Some 62 per cent of the responses from businesses in HERRC industries that already opened on Sundays said that they would increase their staffing levels if Sunday penalty rates were reduced to the Saturday rate. 234

[375] The CCIQ September 2015 Survey has the same limitations as the CCIQ March 2015 Survey. Given these limitations,we propose to treat the results as indicative or anecdotal in character.

[376] We would also observe that the September 2015 survey poses questions predicated on the equalisation of Saturday and Sunday penalty rates,as proposed by the Productivity Commission. Yet the claims in respect of the General Retail Industry Award 2010 and the Hospitality Industry General Award 2010 propose a reduction in Sunday penalty rates,short of equalisation with the penalty rate for Saturday work.

[377] VECCI and BSA 235 also made submissions supporting the claims filed by ABI in these proceedings. In addition,VECCI submits:

    ‘Furthermore,the Victorian Chamber has advocated strongly on behalf of Victorian business regarding the deleterious effect of State governments gazetting further public holidays which impose significant additional costs to Victorian business for negligible economic benefit or productivity gains. As we submitted to the Productivity Commission in the recent review of the Workplace Relations framework,the cost to pay many of Victoria’s almost 2 million full time employees not to come to work on the ‘Friday before Grand Final public holiday’could reach $543 million.’ 236

[378] A number of regional chambers of commerce and individual businesses also made submissions in support of ABI’s claims in these proceedings:Bangalow Chamber of Commerce;Coffs Harbour Deep Sea Fishing Club;Coopers Surf Australia;eGoli Day Spa;Gosford City Chamber;Mayfield Business Association;the Moonee Beach Tavern &Bottle Shop and the Yamba District Chamber of Commerce. These submissions,and those made by VECCI and BSA,have a certain template character in that they all include the following statement:

    ‘We have reviewed the written submissions filed on behalf of Australian Chamber of Commerce and Industry (ACCI),the New South Wales Business Chamber (NSWBC) and Australian Business Industrial (ABI) in the above proceedings on 2 February 2016.

    We understand that ABI and NSWBC have filed claims seeking:

    1. to reduce the public holiday penalty rate for full-time and part-time employees employed under the Restaurant Industry Award 2010 (Restaurant Award) and the General Retail Industry Award 2010 (Retail Award) from 250% to 200%;
    2. to reduce the public holiday penalty rate for casual employees employed under the Restaurant Award and the Retail Award from 250% to 125% (including the casual loading);
    3. to reduce the Sunday penalty rate for all employees employed under the Retail Award from 200% to 150% (inclusive of casual loading for casual employees);and
    4. to vary the relevant pay rates for employees who receive time off in lieu when they work a public holiday under the Restaurant Award so that employees would receive 100% of their ordinary pay for working the public holiday,whilst also receiving time off in lieu.
    We support all of these claims.

    Based on feedback from our membership,[name of organisation making the submission] has become aware that the present regime of penalty rates is currently constraining:

    (a) the number of hours that our members open;
    (b) the number of trading days that our members operate;
    (c) the number of employees that our members can hire and keep employed;
    (d) the number of hours that our members can offer their employees to work;and
    (e) the revenue and profit generated by our members.

    If the NSWBC and ABI claims are granted,we envisage that the adverse effects discussed above would be lessened.’ 237

[379] The template character of these submissions reduces the weight we attach to them.

[380] The Federal Member for Durack,Ms Melissa Price MP,also made a short submissions in which she says:

    ‘I met with some small business owners from Geraldton to discuss issues they face and a common concern was the complex penalty rate system for employees…

    I found that many businesses in the retail and hospitality industries simply do not open on a Sunday or public holiday due to increased wage costs. This is a concern to me as I believe in Durack,Sunday and Public Holiday trading is desired by the constituents.’ 238

[381] The submission refers to a proposal put by a small business owner in Geraldton involving ‘a change from the current multi-tiered penalty rate system to a two-tiered penalty rate system one rate for normal hours …then a rate for non-standard hours,including public holidays’. Ms Price asks that we consider this proposal as part of these proceedings and submits that the proposal ‘has merit and would result in an increase in business opening hours and therefore employment in Durack’. 239

[382] No details were provided as to the particular penalties that would operate in the proposed ‘two-tiered penalty rate system’. Further,to the extent that the proposal seeks a common penalty rate for all work performed on Saturdays,Sundays and public holidays,that is not a proposal being advanced by any of the principal employer parties in these proceedings.

[383] As to the expressed concern about the complexity of the current penalty rate system,that is a matter we deal with in Chapter 12:Next Steps.

      5.3.2 Submissions opposing Employer claims

[384] Some 22 submissions were received in opposition to a reduction in Sunday penalty rates sought by the principal employer parties. These submissions may be categorised into the following broad groups:

  • State and Territory governments;

  • Church based organisations;

  • Political entities;

  • Women’s organisations;and

  • Other organisations.

(i) State and Territory Governments

[385] The Governments of Victoria,Queensland,South Australia and the ACT all oppose the reduction of penalty rates.

[386] The Victorian Government submits that:

    ‘…a change to penalty rates,while providing some financial benefit to business,comes at too high a price. Many employees face the prospect of losing a significant proportion of their income. The businesses that will benefit from a lower wages bill may find that people have less discretionary income to spend on their products. A long-term implication is that further pressure may be placed on the social security system as low paid workers seek assistance from the government to make up for their lost wages.’ 240

[387] The Appendix to the Victorian Government’s submission contains material about the impact of the proposed reductions in penalty rates on employees covered by the General Retail Industry Award 2010;the Restaurant Industry Award 2010;the Fast Food Industry Award 2010 and the Hospitality Industry (General) Award 2010 (also see Figure 3 on p. 26 of the submission).

[388] The Queensland Government submits:

    ‘Workers in the Hospitality,Restaurant,Retail and related industries are some of the lowest paid in Australia. These workers rely upon penalty rates to provide the basics for their families and themselves. The hours they work on evenings,weekends and public holidays have a significant impact on them and their family. Existing penalty rates go some way to compensate these workers for giving up this valuable time with their family and friends. This is time the rest of the community accepts as the norm.

    Reducing penalty rates may also have a negative impact on the economy with low income earners more likely to spend a far greater proportion of their income –including that derived from penalty rate –on local goods and services. Any reduction in spending in local Queensland economies –especially in regional communities where businesses are doing it tough –would have a negative impact.’ 241

[389] The South Australian Government submits:

    ‘Penalty rates play a critical role in compensating employees working long or unsociable hours. Thousands of South Australians rely on penalty rates to make ends meet. Removing or reducing penalty rates will have a negative impact on South Australian workers and their families.

    It is vitally important that penalty rates are upheld to maintain workers’take home pay. Many of those paid penalty rates rely on them financially –to pay their bills,put food on their tables or pay for theirs or their children’s education. Reducing penalty rates will have the effect of increasing inequity in Australian society.

    Further,reducing penalty rates is likely to have a negative impact on South Australia’s economy. Our economy is in a state of transition and we face challenges ahead. To reduce the pay of many South Australians will reduce consumption and serve to exacerbate those challenges.’ 242

    [390] The ACT Government opposed changing the penalty rate arrangements in the modern awards under review:

    ‘Penalty rates have an important and legitimate role in compensating employees and should be maintained for those working long hours or at unsociable times…

    A reduction in penalty rates is effectively asking some of the lowest paid and most vulnerable workers in our community to take a pay cut.’ 243

(ii) Church based organisations

[391] The Anglican Church Diocese of Melbourne expresses concern about the proposal to cut Sunday penalty rates to the level of those applying to Saturday work noting that weekend penalty rates are a significant part of the income of low paid workers and that Sundays remain days of special significance:

    ‘Sunday is a time when we can slow down to the pace of the very young,old,and disabled. Sunday is most often the day when these vulnerable people are paid attention or are visited or called. It is a day that resists today’s pervasive fragmentation and social erosion…

    Sunday is not just a day for the devout –it’s a day for rest,families,friends,young and old.

    Sunday penalty rates recognise the special nature of Sunday as a shared day of rest for what should be kept as a minority who miss out for emergency work or economic necessity.’ 244

[392] A similar submission is made by the Social Issues Committee of the Anglican Church Diocese of Sydney.

[393] Baptist Churches NSW-ACT,said to represent over 100,000 people,also affirmed its support for the existing Sunday penalty rates regime:

    ‘In Australian culture,Sundays are a day for rest,worship,family and community…

      Reductions in Sunday penalty rates will increase both time and financial pressure on low-paid households…

    Sunday penalty rates in low-skilled industries such as hospitality and retail allow students,immigrants,low-paid workers,and people trying to escape poverty to accumulate some savings or make ends meet. Reducing Sunday penalty rates leaves marginal households more precarious and makes it harder for people to escape or stay out of poverty…

    We do not support any action which increases Sunday trading beyond the current levels. Despite the employer group rhetoric,plenty of businesses currently open on Sunday. Reductions in penalty rates will simply transfer wealth from the have nots to the haves.’ 245

[394] The Burwood-Croydon Uniting Church and the Leichardt Uniting Church also made submissions supporting the existing Sunday penalty rates regime. 246

[395] The Uniting Church Synod of NSW &ACT calls on the Commission ‘to maintain the current Australian tradition of compensating workers for being available on Sundays’and ‘do not support any action which increases Sunday trading beyond the current levels’. 247

[396] The Justice and Peace Office of the Catholic Archdiocese of Sydney strongly oppose the Productivity Commission’s recommendation to reduce Sunday penalty rates in the retail and hospitality industries and submit:

    ‘We are concerned that the recommendation does not provide a proper balance between the rights of employers and the rights of employees in several respects. As Christians we are also troubled by the effort to encroach further on time with family and communities as well as time for rest,recreation and worship on Sundays…

    Reducing penalty rates will punish some of Australia’s already most vulnerable and low-paid workers.’ 248

[397] The Justice,Peace and Integrity Creation Commission of the Australia Timor Leste Carmelite Order,a religious order within the Catholic Church,opposes reduction in Sunday penalty rates ,for similar reasons to those set out above and submits:

    ‘Sunday,a day of rest and recreation,does remain important for a wholesome social life and builds on community cohesion. The vast majority of the Australian community spends time with friends or in community groups. We believe that this day is a day made for the good of all people,not just a select few who do not enjoy higher economic comfort’ 249

[398] The Bosco Social Justice Group,mainly compromising of parishioners of St John Bosco Parish,Engadine NSW,also oppose the reduction of penalty rates for Sunday work for both social justice and religious reasons. 250

(iii) Political Entities

[399] The Federal Opposition and the State Labor Oppositions in NSW,Tasmania and WA,oppose the employer applications before us.

[400] The Federal Opposition notes that changes to penalty rates:

    ‘…will represent significant changes to the total earnings and income of workers in hospitality and retail industries that have a higher prevalence of casualisation,and accordingly impact on fairness across our society and the performance of the Australian economy…

    In short,there is clear and well-founded evidence that reducing the take home pay of low paid Australian workers will have a negative impact on domestic consumption. At the same time,it is highly unlikely that the benefits claimed by individual businesses will be seen across the aggregate economy.’ 251

[401] The Federal Opposition also submits that:

‘Penalty rates continue to be a fundamental part of a strong safety net for Australia workers,enabling low income workers and workers in highly casualised industries to share in the nation’s economic prosperity…[and] in the context of current economic circumstances and in the interests of supporting inclusive and fair growth,any changes to the modern awards should not cut the take home pay of affected workers.’ 252

[402] We deal with the potential use of ‘take home pay orders’in Chapter 11,Transitional Arrangements.

(iv) Women’s organisations

[403] Asian Women at Work Inc (AW@W) is a community organisation which provides assistance and support to over 2,000 low paid Asian women in precarious employment. AW@W supports the retention of weekend penalty rates and opposes the reduction or abolition of those rates. It submits:

    ‘Migrant women workers in low paid and precarious employment are already very vulnerable and are under considerable financial stress. They do not need more stresses that can worsen their situations in the workplaces,bring about more family tension,drive them into poverty,impact on their health.’ 253

[404] The National Foundation for Australian Women (NFAW) submits that there are no grounds for changing existing penalty rates in the modern awards before us. 254 The NFAW advances a number of points in support of its central contention that the PC Final Report does not provide a sufficient basis for change,in particular it submits:

  • the Productivity Commission is not bound to take into account the full range of considerations set out in the modern awards objective and it has not done so in reaching its recommendations;

  • women would be disproportionately affected by a reduction in Sunday penalty rates in the HERRC industries;and

  • the Productivity Commission contention that the negative impact of working on Sundays is no different to that associated with Saturday work is wrong (citing Skinner and Pocock 255 and the Expert Report of Professor Sara Charlesworth and Dr Fiona Macdonald in these proceedings.256

(v) Other organisations

[405] The National Union of Students (NUS) supports the retention of the existing regulatory arrangements regarding penalty rates. The submission focuses on the impact of a reduction in penalty rates on students and provides information about the interaction between student employment income and various student income support programs. The NUS submits:

    ‘Hundreds of thousands of university students are juggling work and study commitments to the point where their academic performance is being adversely affected. A loss or reduction in penalty rates will mean that students will have to work longer hours to maintain current income levels [which]…will exacerbate existing problems with student academic performance and campus engagement. It is also likely to lead to an increase in student withdrawal/deferment from university study as the knife-edge juggle being paying bills and study gets too hard.’ 257

[406] The Curtin Student Guild raised similar concerns and contended that there was a relationship between the cost of living,income from employment and student attrition rates. 258

[407] The Queensland Police Union of Employees (QPU) submits that:

    ‘…any proposal to reduce penalty rates is nothing more than an unfair and unjust money grab that will disadvantage the employees most deserving of just recompense for the impact shiftwork has on their health and lifestyle.’ 259

[408] The QPU expresses its concern that a reduction in penalty rates arising from these proceedings will flow on to police officers –‘thereby affecting their income and negatively impacting on the efficient operation of the Queensland Police Service’. 260

    5.4 Public contributions

[409] On 15 January 2016 261 we issued directions which provided that:

    ‘Any interested person who is not a party to the proceedings may put forward a position (and file material in support of their position) in relation to varying the penalty rate provisions in the above awards by no later than 4.00pm Wednesday 17 February 2016.’

[410] The above direction was advertised in major newspapers nationally on 20 January 2016 262,as set out below:

    4 yearly review of modern awards –Penalty rates

    Since January 2014,the Fair Work Commission has been conducting a four yearly review of all modern awards in accordance with s.156 of the Fair Work Act 2009.

    Following the publication of an Issues Paper in January 2014 and a public conference,any interested persons were invited to make submissions relating to the conduct of the review including any claims which affected multiple modern awards.

    One of the common issues identified as a result of the consultation process involved applications by a number of organisations to vary penalty rates in certain awards.

    As a result,the Commission is currently reviewing penalty rates in the following awards:

    Hospitality group Retail group

    - Hospitality Industry (General) Award 2010 - Fast Food Industry Award 2010

    - Registered and Licensed Clubs Award 2010 - General Retail Industry Award 2010

    - Restaurant Industry Award 2010 - Hair and Beauty Industry Award 2010

    - Pharmacy Industry Award 2010

    All directions for filing and the schedule of hearings have been published on a dedicated Penalty Rates page on the Commission’s website [www.fwc.gov.au]. Material filed by interested parties has also been made publically available on this webpage.

    The Penalty Rates Review is nearing completion and directions have been issued for the filing of final submissions. There is a further opportunity for any interested person who is not a party to the proceedings to put forward a position (and file material in support of their position) in relation to varying the penalty rate provisions in the above awards in accordance with those directions.

    Material is to be filed electronically by email to amod@fwc.gov.au

    Those persons wishing to put forward a position are encouraged to view the Commission’s website for further information.

[411] In response to the invitation to make submissions,some 5,960 public contributions from individual employees and employers were received and 5,845 published on the Commission’s website. The remaining 115 contributions were confidential 263 and were provided to the principal parties (in redacted form) but not published.

[412] ABI and a number of employer parties 264 undertook a review of the public contributions and filed a joint submission.265 Attached to the submission was a spreadsheet outlining their analysis. The review assessed the public contributions available for review266 against the following questions:

  • Is it impossible to identify what industry the contribution relates to?

  • If it is possible to identify the relevant industry,what industry does the contribution relate to?

  • Is the identified industry relevant to the present proceedings?

  • Is the identified industry relevant to the restaurant and retail industries?

  • Does the contribution seek to oppose the abolition of penalty rates?

  • Does the contribution seek to oppose the reduction of penalty rates?

  • Does the contribution differentiate between Saturdays and Sundays?

  • Does the contribution refer to church or religious observance?

  • Does the contribution identify that the author works Sundays?

[413] On the basis of their joint review,the employer parties submit:

    (i) The clear majority of contributions reviewed (3513 out of 5873 or just under 60 per cent) do not indicate the industry to which the contribution relates.

    (ii) Of those contributions that do indicate the industry referred to,approximately 45 per cent do not relate to the industries affected by these proceedings.

    (iii) Accordingly,in total,only 1291 of 5873 contributions reviewed (approximately 22 per cent) actually relate to the industries affected by the present proceedings.

    (iv) Of the 1291 contributions which actually relate to the industries affected by the present proceedings,682 (approximately 53 per cent) appear to assume that the employer claims include a proposal to abolish penalty rates,rather than reducing penalty rates.

    (v) Once all contributions that are not identifiably relevant to the current proceedings are removed including those which misunderstand the employer party claims,only 823 of the 5873 contributions (approximately 14 per cent) have potential relevance to the proceedings.

[414] The employer parties also submit that none of the 823 contributions of potential relevance are supported by evidence.

[415] Ai Group (which was one of the employer groups who undertook the review of the public contributions) filed a separate submission in which it observed that the contributions were general in nature,lacked supporting evidence and ‘in some cases are quite emotive rather than considered’. 267

[416] United Voice 268 and the SDA269 conducted their own analysis of the public contributions and commented on the review undertaken by the employer parties.

[417] United Voice submit that the review conducted by the employer parties demonstrates systematic errors and mischaracterisations. 270 It submits that the employer parties sought to artificially limit the number of contributions that are relevant (in particular by disregarding those where the industry of the individual had not been identified),inappropriately relied upon redactions and mischaracterised the contributions on the basis of whether the contribution opposes the abolition or reduction of penalty rates. United Voice submits that the employer parties’adopted a systematically inaccurate approach to the characterisation of the public contributions such as to render the employer review ‘unreliable and lacking credibility’.271

[418] We accept that the approach adopted in employer review of the public contributions may have excluded some relevant contributions. The analysis appears to disregard those contributions which do not identify the industry in which the individual concerned works. While one cannot presume that all of these individuals are employed in the hospitality or retail sectors,it is reasonable to presume that at least some of them are. Such a presumption is reasonable having regard to both the size of these sectors (in terms of persons employed) and the fact that the contributions were made in response to an advertisement which specified the modern awards which are the subject of these proceedings.

[419] But it seems to us that undertaking a further review of these contributions for the purpose of determining the precise number which are of direct relevance to these proceedings would be an arid exercise. We accept the submission advanced by the SDA in this regard:

    ‘…the SDA has endeavoured to ensure that the analysis undertaken reflects the contributions,the SDA accepts that its analysis will contain errors just as there are errors in the Joint Employers’submissions. The Commission should view the analysis of the Union parties and the Employer parties as providing a broad overview or impression of some of the sentiments expressed’. 272

[420] In particular we accept that a broad,impressionistic,view of this material is appropriate. In that regard we note that the overwhelming majority of the contributions received opposed the reduction or abolition of penalty rates. 273

[421] As acknowledged by all parties,the public contributions do not constitute evidence and,importantly,the views expressed have not been tested in cross-examination. These considerations are relevant to the weight we attach to this material and,plainly,we attach less weight to these contributions than we give to the evidence advanced in the proceedings. But we do not propose to simply disregard the views expressed.

[422] Those who responded to the public call for submissions provided various reasons for opposing cuts to penalty rates. In its submission the SDA summarises these views and in doing so limited its analysis to those contributions which can be attributed to one of the modern awards which are the subject of these proceedings. Based on its analysis the SDA submits:

    ‘The broad themes which emerge from this material are that the contributors express that there are real disabilities associated with working on Sundays and the loss of opportunities to spend time with family,to socialise and to relax,and that there are real concerns about the financial impact upon them of cuts to penalty rate entitlements in their work.’ 274

[423] The themes identified by the SDA as emerging from the public contributions form part of the broad context of the proceedings and can be said to provide some support for the evidence before us about the disability of working at times when penalty rates apply and about the financial impact upon individual workers of reducing those penalty rates.

6. Weekend work

6.1 Overview of data and evidence

[424] Parties called a number of witnesses and referred to several reports when discussing social changes in Australia across,and in particular,the incidence and effects of weekend work. Data and evidence in this section are drawn from the following:

  • Fair Work Commission,Changing work patterns,material to assist the AM2014/305 Penalty rates case (Changing work patterns Report).

  • Exhibit ABI 3:Professor Lewis,Penalty rates and the retail and café restaurant;and hairdressing and beauty industries,a report prepared for ABI (Lewis Report).

  • Exhibit UV 25:Professor Borland,Report by Professor Jeff Borland,(Borland Report).

  • Exhibit ABI 1:Professor Rose,Value of Time and Value of Work Time during Public Holidays (Rose Report).

  • Common Exhibit 1:Productivity Commission Inquiry Report:Workplace Relations Framework –Chapters 9,10,11,12,13,14,15 and Appendix F (PC Final Report).

  • Exhibit Retail 2;Dr Sean Sands,Retail award research report,(Sands Report).

  • Bittman M (2005),‘Sunday working and family time’,Labour &Industry,Vol. 16,No. 1,pp. 59–81.

  • Exhibit ABI 13;Craig L and Brown JE (2014),Weekend work and leisure time with family and friends:who misses out?, Journal of Marriage and Family,Vol. 76,pp. 710–727.

  • Exhibit Ai Group 26:ABS,Australian Social Trends,Nov 2013:Losing my religion,Catalogue No. 4102.0.

  • Exhibit SDA 36:Dr Ian Watson and Professor David Peetz,Characteristics of the workforce in the national retail industry:with regard to age,weekend work and student status.

[425] The Commission’s Changing work patterns Report 275 was published to assist the parties and present data on changes in the labour market,work arrangements and preferences,and how people spend their time when not working. Data were sourced from the ABS and the Household,Income and Labour Dynamics in Australia (HILDA) survey.

[426] The HILDA Survey is a longitudinal household-based panel study that collects information on economic and subjective well-being,labour market dynamics and family dynamics. Interviews are conducted annually with all adult members of each household who are followed over time. The survey began in 2001 and includes 15 waves of data that cover the period from 2001 to 2015.

[427] The Changing work patterns Report 276 was first published in December 2015 and updated with new data in January,March,September and October 2016. The Report was updated for the most recent wave of the HILDA survey in January 2017 and that update included additional data from the ABS. Parties were invited to make submissions on this report in late October 2016 and were also given an opportunity to comment on additional data which was included in the report in January 2017.

6.1.1 Trends in the labour market

[428] Labour market indicators were presented in the Commission’s Changing work patterns Report and in the Lewis Report. The first two parts of the Lewis Report provided an overview of the trends in the Australian labour market and the economic environment in which the retail,cafe and restaurant industries operate. This material is largely uncontentious. The contentious part of the Lewis Report is that part dealing with the employment effects of introducing penalty rates on Sundays and public holidays. We deal with that aspect of the Lewis Report in Chapter 6.3.1.

[429] The data from the Lewis Report is sourced from the ABS. In some instances,the data presented in the Lewis Report captured trends over a longer period to show how much the labour market has changed since the late 1970s. 277

[430] The composition of the labour market has changed significantly over the last 25 years or so and this has contributed to the changing nature of weekend work. Between 1978 and 2016,the participation rate for females increased by around 15 percentage points,while the participation rate for males decreased by around 8 percentage points (Chart 1).

Chart 1 278:

Participation rate—male and female,per cent,1978–2016

[431] The increase in the female participation rate has been associated with changes in the composition of employment and,in particular,a rise in part-time employment (Chart 2). The Lewis Report notes that there has been a substitution of female employment,particularly part-time,for male full-time employment. 279 Lewis added that flexibility in hours worked is required to meet peaks in demand in the services sector which is facilitated by part-time employees.280

[432] Part-time employment is defined as those who usually worked less than 35 hours a week (in all jobs) and either did so during the reference week,or did not work in the reference week. 281The ABS define full-time employment as those who usually work 35 hours or more a week (in all jobs) and those who,although usually working less than 35 hours a week,worked 35 hours or more during the reference week.

[433] Chart 2 shows that male full-time employment decreased from 61.5 per cent of total employment in February 1978 to 43.5 per cent in August 2016. This decrease was offset by an increase in male part-time employment (from 3.2 per cent to 10.1 per cent) and female part-time employment (from 11.9 per cent to 21.7 per cent). Female full-time employment remained relatively steady over the period at around 25 per cent of total employment.

Chart 2 282:

Composition of employment,per cent of total employed,1978–2016

[434] The Lewis Report explains that the more recent increase in part-time employment for males is likely to be due to the effects of the global financial crisis,as businesses preferred to reduce hours worked rather than the number of employees. 283 The increase in part-time employment has contributed to a fall in average hours worked per month from a peak of 150.3 hours in December 1999 to 138.5 hours worked per month in August 2016 (Chart 3).

[435] The most recent labour force data released by the ABS shows that strong growth in part-time work continues,increasing by 3.5 per cent over the year to January 2017,while full-time employment fell by 0.5 per cent. 284

Chart 3 285:

Proportion of employment by full-time and part-time status and average monthly hours worked,August 1991 to August 2016

[436] There have also been changes over time in the status of employment categories considered by the ABS and whether employees have paid sick and/or holiday leave entitlements.

[437] The ABS categorises employed persons into employment types according to the reported employment relationship or contract. The categories separate employed people who operate their own business into owner managers of incorporated enterprises (OMIEs) or owner managers of unincorporated enterprises (OMUEs). 286 OMIEs are people who operate an incorporated enterprise,which is a business entity registered as a separate legal entity to its members or owners. OMUEs are people who operate an unincorporated enterprise,which is a business entity in which the owner and the business are legally inseparable and includes those engaged independently in a profession or trade.287 The remaining workers are made up of employees who are grouped into whether they have sick and/or holiday leave entitlements (i.e. permanent employees) or not (i.e. casual employees). This group is reported separately to full-time and part-time employment.

[438] In 2015,over 60 per cent of employed persons were employed on a permanent basis,around 20 per cent were casual,7 per cent were OMIEs and 11 per cent were OMUEs (Chart 4). Between August 1995 and August 2015 the proportion of casual employees had increased more than other employment types with most of the increase in the first half of the period.

Chart 4 288:

Proportion of total employment by employment type,1995,2005 and 2015

Note: Estimates are for August of each year. OMIEs are people who work in their own incorporated enterprises,that is,a business entity which is registered as a separate legal entity to its members or owners. OMUEs are persons who operate their own unincorporated enterprise or engage independently in a profession or trade.

[439] Chart 5 reproduces and updates Figure 4 from the Lewis Report and shows the proportion of employees working on a casual basis from 1985 to 2015. It shows that casuals increased from over 15 per cent of all employees in 1985 to about 25 per cent in 2000 and has remained relatively stable since. 289

Chart 5 290:

Casual employment,per cent of employees

[440] Much of the demand for part-time and casual employment has come from the services sector. The services sector comprises the remaining industries not specifically identified in Chart 6:Wholesale trade;Retail trade;Accommodation and food services;Financial and insurance services;Rental,hiring and real estate services;Professional,scientific and technical services;Administrative and support services;Public administration and safety;Education and training;Health care and social assistance;Arts and recreation services;and Other services.

[441] The Lewis Report shows that employment in the services sector increased from around 50 per cent of total employment in 1975 to over 70 per cent of total employment in 2014 (Chart 6). 291

Chart 6 292:

Proportion of total employment by industry,1975 to 2014

[442] Chart 7 presents a separate breakdown of industries to show the growth in the services sector. It shows that Household services increased from around 27 per cent of total employment in 1990–91 to around one third of total employment in 2015–16,while Business services rose from over 15 per cent in 1990–91 to around 19 per cent in 2015–16 (Chart 7).

Chart 7 293:

Proportion of total employment by industry,1990–91,2000–01 and 2015–16

Note: Total employment and employment for each industry is calculated by taking the average of the four quarters over the year. Business services are Information media and telecommunications;Financial and insurance services;Rental,hiring and real estate services;Professional,scientific and technical services and Administrative and support services. Household services are Accommodation and food services;Education and training;Health care and social assistance;Arts and recreation services and Other services.

[443] The above data provides an indication of the extent of change in the Australian labour market. These changes have occurred in response to shifts in consumer demand and preferences for goods and services (largely confined to the hospitality and retail sectors),that are often accessed on weekends,as discussed in the overview of the hospitality sector at Chapter 7.1 and the retail sector at Chapter 8.1.

6.1.2 Changing nature of weekend work

[444] The PC Final Report presented data showing that the proportion of employees working weekends has increased over the period between 1993 and 2013 (Chart 8 below). 294

Chart 8 295:

Patterns of working weekends over time,employeesa,1993 to 2013

 


Figure F.2 Patterns of working weekends over time,1993 to 2013,employees only.This shows patterns of weekend working over time for three different surveys. The total span of years is from 1993 to 2013. The first survey shows that weekend working increased from around 27 per cent of employees to around 31 per cent by 2003. The second shows that weekend working increased from 30.3 per cent in 2006 to 31.1 per cent in 2012. The third survey shows weekend working increased from 30.4 per cent in 2008 to 31.8 per cent in 2013. The surveys use different methodologies,which explain some of their divergence from each other.

Note:a) While substantially overlapping,the surveys employ different definitions for employees and jobs,which should be noted. Survey 1 is the ABS Forms of Employment survey and only covers people employed as wage and salary earners under a contract of service (an employment contract). The data relate to people categorised as such employees in their main job,but includes periods of work in all their jobs if they are multiple jobholders. Survey 2 is the Working Time Arrangements survey (WTA),and includes owner managers of incorporated enterprises as ‘employees’. As for survey 1,the data cover people working in single and multiple jobs. Survey 3 is the Working Arrangements survey,the predecessor to the WTA,and uses the same definition of employees,but only relates to periods of work in the employee’s main job.

[445] Similar data in the Changing work patterns Report analysed changes in work arrangements and the prevalence of weekend work. Analysis of ABS data on days of the week and number of days worked showed that the majority of employees worked Monday to Friday and that this had remained constant over recent times,as shown in Table 5 below.

Table 5 296:

Days of the week and number of days worked in all jobs,employees,November 2008,November 2013,and August 2015

 

November 2008

November 2013

*August 2015

 

(%)

(%)

(%)

Days of the week usually worked in all jobs^

   

Monday to Friday

64.8

63.2

61.7

Monday

9.6

13.5

10.1

Tuesday

10.9

14.7

11.3

Wednesday

11.3

15.0

11.6

Thursday

12.0

15.0

12.0

Friday

10.0

13.0

10.2

Saturday

15.3

15.3

15.4

Sunday

8.8

9.8

9.8

Days varied

14.7

16.0

17.1

Whether worked weekdays and/or weekends in all jobs

  

Weekdays only

69.6

68.2

73.7

Weekends only

1.7

1.6

2.7

Both weekdays and weekends

28.7

30.2

23.5

Total

100

100

100

Note: For multiple jobholders,the responses refer to their total pattern of work in all their jobs. ^Refers to the days of the week people usually worked,therefore people may appear in more than one category. People who reported that they worked from Monday to Friday inclusive were categorised as working Monday to Friday. These people may have reported that they also worked on Saturday and Sunday in the job/s. People who reported that the usual days of the week worked varied were categorised only to days varied. A response of days varied could not be provided with any other response. For multiple jobholders,the responses refer to their total pattern of work in all their jobs. *The status of employment categories for August 2015 are different to the previous years.

[446] The PC Final Report also presented the same data from the ABS,but included and combined all other non-employee categories (independent contractors and other business operators) to compare the days of the week worked. This appears as Figure F.1 in the PC Final Report and is reproduced below as Chart 9.

[447] Chart 9 shows that the share of employed persons that work on weekends is far below the share of employed persons who work on weekdays,while the share that work on Saturdays is also higher than the share that work on Sundays. The figure also shows that,compared with non-employees,employees are less likely to work across each day,particularly on weekends.

Chart 9 297:

Patterns of work by the day,share of the employed working on given days,per cent,November 2013

Figure F.1 Patterns of work by the day,share of the employed working given days (per cent). This shows that Monday to Friday working is still the dominant working form,with around 75 per cent of employees and 85 per cent of other employed people working on any given day of Monday to Friday. The share of people working Saturdays and Sundays is much less. 15.3 per cent and 32.9 per cent of employees and other employed people respectively work on Saturdays. The comparable figures for Sundays is 16 and 17.8 per cent.

[448] Further evidence showing that employees are less likely to work on weekends compared with non-employees is provided in Table 6,which is reproduced from Table F.1 in the PC Final Report. The data from November 2013 shows that employees are more likely to work Monday to Friday only,while non-employees are more likely to work 5 weekdays and 1–2 weekend days than other periods.

Table 6 298:

Who works on weekends?,November 2013

Period working

Employees

Independent contractors

Other business operators

Share of group in each working time arrangement

 

%

%

%

Worked Monday to Friday only

54.8

44.5

35.3

Worked between 1 and 4 days weekdays only

13.4

11.6

9.4

People who only worked weekends

1.6

0.4

0.7

People who worked 5 weekdays and 1–2 weekend days

8.3

22.6

35.2

People who worked 4 or less weekdays and 1–2 weekend days

21.9

20.9

19.4

Total

100.0

100.0

100.0

Worked Saturdays

15.3

25.3

40.3

Worked Sundays

9.8

12.7

24.4

Note:The data relate to the nature of working in a reference week.

[449] Providing a comparison between 2008 and 2013,the PC Final Report presented the change in the total numbers of employees on Saturdays and Sundays with all workers. Chart 10 shows that over the period,the number of employees increased by around 11 per cent,as did the increase in employees working on Saturdays. However,the percentage increase in the number of employees on Sundays was twice as much,at almost 24 per cent.

Chart 10 299:

Relative growth in Saturday and Sunday work,percentage change in numbers employed,2008 to 2013

Figure F.4 Relative growth in Saturday and Sunday work,percentage change in numbers employed (2008 to 2013). This shows the growth rate in the numbers of people employed by class of worker. The classes are employees,independent contractors,other business operators,and the total employed. The most notable feature was the higher growth in the numbers of employees working on Saturdays and Sundays both relative to growth on all days,and relative to other employee groups. The key statistics are that employee numbers between 2008 and 2013 increased by 10.8 per cent for Saturdays,23.8 per cent for Sundays and 11.1 per cent for all days.

Note:In some cases,people said that their days of work varied,in which case they could not be identified as usually working on Sundays,and are therefore excluded from the calculations for Sundays.

[450] In an ABS article,data from the Forms of Employment Survey 2008 showed that casual employees were more likely to work on weekends than other employees,who were more likely to work on weekdays. 300 However,no more recent data has been published on casual employees working weekends by the ABS.

[451] The Changing work patterns Report also presented data from the HILDA survey on the nature of weekend work. From a series of questions asked in the survey,employed persons could be classified by whether they usually worked weekends or whether they worked weekdays only. Changes in the proportions of these two groups are presented in the following tables.

[452] Table 7 shows that around one in three employed persons usually worked weekends in both 2006 and 2015.

Table 7 301:

Whether usually worked weekends,all employed persons

 

2006

2015

 

(%)

(%)

Worked weekdays only

66.5

66.8

Usually worked weekends

33.5

33.2

Total

100

100

Note: The data in this table are for all employed persons.

[453] Table 8 shows that,overall,around half of employed persons worked Monday to Friday,around one in three employed persons worked other regular days,and the remaining employed persons working days varied. Between 2006 and 2015,the proportion of employed persons whose working days varied increased while the proportion who worked other regular days (that were not Monday to Friday) decreased.

[454] The data shows that around three-quarters of employed persons who worked weekdays only worked from Monday to Friday and,of the remaining employed persons,around three times as many worked other regular days than varied days.

[455] Most employed persons who usually worked weekends worked on regular days. However,this proportion decreased between 2006 and 2015 and the proportion for those whose working days varied increased. Employed persons who worked on weekends were relatively more likely to have their work days vary than those who worked weekdays only.

Table 8 302:

Type of work schedule

 

Worked weekdays only

Usually worked weekends

Total

 

2006

2015

2006

2015

2006

2015

 

(%)

(%)

(%)

(%)

(%)

(%)

Monday to Friday

76.6

76.3

50.9

51.0

Days vary

5.8

5.5

29.4

38.8

13.7

16.5

Other regular days

17.6

18.3

70.6

61.2

35.3

32.5

Total

100

100

100

100

100

100

Note: ‘Days vary’refers to responses ‘nine day fortnight’,‘days vary from week to week’and ‘day vary from month to month’.

[456] Table 9 shows the proportion of employees that work on weekends from 2002 to 2016 by industry,comparing the first half of the period with the second. The table ranks the industries by the proportion of employees that usually worked weekends in the second period. The table shows that across all industries at least one in four employees work on weekends,with a slight increase between the two periods.

[457] The highest proportion of employees that work on weekends was in Accommodation and food services and Retail trade,with a slight increase for both industries between the two periods.

Table 9 303:

Proportion of employees who work on weekends,by industry

Industry

2002–2008

2009–2016

Accommodation and food services

58.6

60.8

Retail trade

44.4

47.6

Mining

34.9

46.9

Arts and recreation services

44.1

45.1

Agriculture,forestry and fishing

32.0

35.2

Other services

31.9

30.9

Rental,hiring and real estate services

35.5

30.7

Transport,postal and warehousing

28.0

30.1

Health care and social assistance

25.3

27.8

Construction

24.3

23.8

Administrative and support services

21.0

19.9

Information media and telecommunications

18.5

19.6

Manufacturing

19.2

18.4

Electricity,gas,water and waste services

18.5

18.1

Public administration and safety

13.4

16.9

Wholesale trade

16.2

15.6

Education and training

11.4

12.9

Professional,scientific and technical services

10.9

11.7

Financial and insurance services

7.5

8.6

All employees

25.9

27.5

[458] Using the HILDA survey,both the Changing work patterns Report and research undertaken by Dr Ian Watson in his report with Professor David Peetz (Characteristics of the Workforce in the National Retail Industry with regard to age,weekend work and student status) showed that at least 60 per cent of employees in Retail trade usually worked weekends. 304

[459] A paper 305 by Commission staff provides a framework for ‘mapping’modern award coverage to the Australian and New Zealand Standard Industrial Classification (ANZSIC).

[460] More detailed data for some industries that have been mapped to the relevant modern awards are shown in Table 10. For most of these industries,over half of employees work on weekends and,for all of them,the proportion increased between the two periods. 306

Table 10 307:

Proportion of employees who work on weekends,by selected industry subdivisions and groups

Industry

2002–2008

2009–2016

Industry subdivisions

  

Food retailing

50.6

54.3

Other store-based retailing

43.5

46.4

Industry groups

  

Pharmaceuticals and other store-based retailing

39.5

42.1

Accommodation

52.8

53.8

Cafes,restaurants and take away food services

57.4

59.9

Pubs,taverns and bars

67.6

68.9

Clubs (hospitality)

63.7

67.1

[461] Overall,the data show that employees in the industries that align most with the hospitality and retail group of awards are more likely to work on weekends than other industries,suggesting that weekend work is more common in these industries. In many of these industries,more than half of employees work on weekends.

[462] Although weekend work has increased over recent times,the number of employees working on weekends is still far below the number of employees that work on weekdays,and working on Saturdays is still more common than working on Sundays.

6.1.3 Shifts in consumer demand and preferences

[463] We set out material on trends in consumer preferences in relation to the Retail sector in Chapter 8,which incorporates data from the PC Final Report and the Sands Report.

[464] The PC Final Report highlighted that employment on weekends has increased with the rise in consumer demand,with a greater share of the workforce working on weekends and a “non-trivial”share only working on weekends. 308 The PC Final Report stated that employment patterns in the HERRC industries have developed with the shift in consumer demand,noting that:

    “…the customer is buying convenience and variety as much as the good itself,and cost increases frustrate the extent to which those consumer preferences can be met by businesses.” 309

[465] Data from the ABS presented in the PC Final Report compared the share of weekly retail sales by each day of the week (Chart 57 at [1589]) and which suggested that although consumer demand for shopping on Sundays has increased significantly since the early 1980s,the preference to shop still remains higher on Saturdays than Sundays.

[466] In further analysis,the PC Final Report showed that growth in average daily foot traffic in shopping centres between 2009 and 2014 was greatest for Sunday. Data on shopping by days of the week as measured by supermarket trips and transactions provided similar results to the ABS data in Chart 58. Although transaction values were greater on Sunday than Monday and Tuesday,they were lower than on Saturday 310 (see below at [1590]).

6.1.4 Changing role of weekends

[467] This section considers the time use surveys undertaken by the ABS and analysed in academic papers,the Lewis Report and the PC Final Report as well as additional evidence provided in the Rose Report. Fair Work Commission staff published a Research reference list of academic papers cited in the expert evidence and the submissions (set out in Attachment D).

[468] An important consideration is not just the days of the week that people work but also the differences in the activities that are performed on weekdays and weekends and how this has changed over time. This assists in determining the importance of weekends and is relevant to the assessment of the appropriate compensation for working on weekends.

[469] Time use surveys collect information on the daily activities of people to determine how they allocate time. They are able to provide data on the patterns of paid work,as well as unpaid household and community work,and the way people balance work and family obligations. Time use surveys rely on respondents completing diaries which record their activities in five-minute intervals (including the nature,timing and duration) over particular days. Other information collected include for whom the activity was done,who else was present and where the activity took place. 311

[470] The ABS has conducted three time use surveys—in 1992,1997 and 2006. Changes were made between the 1992 and 1997 surveys and the 1997 and 2006 surveys,although the ABS considered the 2006 survey to be highly comparable with the 1997 survey. Unfortunately these data have not been updated in the last ten years.

[471] Two Australian studies which utilised the Time Use Survey,Bittman 312 and Craig and Brown,313 found that more time was allocated to leisure and family on weekends than weekdays,demonstrating the continuing importance of weekends and how activities undertaken on weekends differ from those undertaken on weekdays.

[472] Bittman found that,over time,there was a gradual increase in the proportion of Sunday workers,although the chance of working on a Sunday was much lower than a weekday. Sunday was found to be the day on which the most time was allocated to personal care activities,recreation and leisure,and the most critical day for families to spend time together. 314 In the first model,Bittman found that those who worked at least 2 hours on Sundays had fewer opportunities for family time and social contacts than those who did not work on Sundays.315 In the second model,Bittman tested whether those who worked on Sundays made up family time and social contacts relative to those who only worked on weekdays. After controlling for a number of factors,Bittman found that,compared with those that work on weekdays,‘Sunday workers miss out on key types of social participation and have less opportunity to balance the demands of work and family’.316

[473] Craig and Brown (2014) 317 incorporated the more recent 2006 Time Use Survey to assess total daily minutes spent on social and community interaction as well as recreation and leisure while in the company of others among different household types.

[474] Craig and Brown found that weekend work was negatively associated with shared leisure activities on weekdays across all household types. However,for couples and singles without children,no significant differences were found between Saturdays and Sundays in terms of displacing shared leisure time,while for couples with children,Sunday work was associated with more displaced leisure time than Saturdays:

    ‘For parents only,Sunday work had an extra negative association,beyond that of Saturday. The forms of shared leisure most displaced on Sundays were with spouse and children. We also found that,on average,less Sunday leisure time was spent with friends,so the results confirmed our expectation that the two days have a different flavor and that Sunday in particular is a day for sharing leisure time with family.’ 318

[475] Overall,Craig and Brown did not find large differences in time allocation between Saturdays and Sundays. Craig and Brown concluded that making up shared leisure time is also contingent on other people’s schedules and there are limited opportunities to make up this time if others are not available on weekdays.

[476] United Voice called Dr Olav Muurlink to provide expert evidence on the impact of weekend and public holiday work. Dr Muurlink provided a report:‘The impact of weekend work:consecutivity,overload,uncontrollability,unpredictability,asynchronicity and arrhythmia’ (‘the Muurlink Report’). Dr Muurlink claimed that the Craig and Brown paper:

    ‘…strongly suggests that Saturday and Sunday work reduces the time spent with children and on social activities,and workers are not able to ‘make up’the time during the working week in the way that those who work purely Monday to Friday ‘make up’time with their children on the weekends’. 319

[477] However,as Dr Muurlink acknowledged in cross examination,in two of the three family types examined,Craig and Brown did not find differences between Saturdays and Sundays. 320

[478] SDA and United Voice cautioned against relying on the Bittman and Craig and Brown papers. They argued that Dr Bittman did not focus on the overall equivalence between Saturdays and Sundays,while Craig and Brown provides commentary and not analysis of the disability experienced by weekend workers. 321

[479] Dr Bittman’s study is of limited assistance as it refers to data from 1997. In addition,as noted by the SDA, 322 the main focus of the paper is on the impact of working on Sundays,not on a comparison between Saturdays and Sundays.

[480] Craig and Brown used more recent data and considered whether individuals worked on Saturday or Sunday. It is limited in that it considered only one aspect of weekend work,whether shared leisure time is made up during the week,for certain household types. While it did not find large differences between Saturday and Sunday work,this is only one aspect of time allocation for weekend workers.

[481] In his analysis of the 2006 Time Use Survey,Professor Lewis claimed that the amount of time spent on sport and outdoor activity increased by only 17 minutes per day on the weekend for men and by only five minutes per day for women 323 compared with during the week. Professor Lewis argued that “for most working on weekends [it] would not significantly impose on their time spent on sport and outdoor activities.”324

[482] Table 11 is reproduced from the Lewis Report. 325 It shows that total free time spent on leisure activities increased by 133 minutes (49 per cent) on weekends for males and 87 minutes (34 per cent) for females. In fact,the time spent on all leisure activities,except for community participation,is higher on weekends compared with weekdays.

[483] Professor Jeff Borland from the Department of Economics,The University of Melbourne,provided a response to the Lewis Report:‘Report by Professor Jeff Borland’ (‘the Borland Report’). 326 He claimed that expressing the differences in activities in minutes rather than percentages obscures the actual extent of differences in activities between weekdays and weekends.327 Professor Borland also suggested that any judgement about how extra work on weekends affects recreation and leisure activities requires individual-level data rather than averages.328

Table 11 329:

Average time spent on leisure activities,2006,minutes per day

 

Males

Females

 

Weekday

Weekend

Weekday

Weekend

Socialising

6

20

7

19

Visiting entertainment venues (a)

2

8

4

8

Attendance at sports event

*1

6

4

Religious activities (b)

*2

8

4

10

Community participation

8

7

11

9

Associated travel

7

22

9

21

Social and community interaction (c)

27

71

35

73

Sport and outdoor activity

20

37

16

21

Games,hobbies,arts,crafts

13

18

11

15

Reading

19

25

23

29

Audio/visual media

144

181

117

134

Other free time

20

29

16

24

Talking and correspondence (d)

21

31

34

43

Associated travel

5

10

4

6

Recreation and Leisure (c)

243

332

223

273

Total free time

270

403

259

346

Note:*estimate has a relative standard error of 25 per cent to 50 per cent and should be used with caution. –nil or rounded to zero (including null cells). (a) includes cultural venues. (b) includes ritual ceremonies. (c) includes additional activities not separately included. (d) includes talking on phone or reading/writing own correspondence.

[484] The conclusions that Professor Lewis draws from this table are not unexpected as weekends are meant for social and leisure activities. Using an approach similar to that suggested by Professor Borland,the PC Final Report provided charts showing the difference in the number of hours spent on weekend days compared with average weekdays for time spent with different categories of people and different activities. 330

[485] However,the tables in the Lewis Report and the charts from the PC Final Report both present data that refer to all people and not only those who work on weekends 331 and therefore should be considered as a guide to understanding the types of activities undertaken across the entire community rather than for weekend workers.

[486] Chart 11 shows that more time is spent with friends and family on weekends than weekdays,with more time spent with friends on Saturday. More time is spent with shop personnel and services providers on Saturdays and less on Sundays. Chart 12 shows that more time is spent on social and community interaction on weekends and less time on employment and education. More time is spent purchasing goods and services on Saturdays than weekdays,whereas less time is spent doing this on Sundays than weekdays.

Chart 11 332:

Who do people spend time with,deviation of hours per day on weekend from the average weekday,per cent

Figure 12.1 Who do people spend time with? Deviation of hours per day on weekends from the average weekday (per cent). This shows who people spend their time with on Saturdays and Sundays relative to weekdays. One critical pattern is that the percentage deviation from weekdays of hours spent with colleagues,neighbours and acquaintances on Sundays and Saturdays is -65.3 and -75.7 per cent respectively. On the other hand,the percentage deviation from weekdays of hours spent with friends on Sundays and Saturdays is 104.6 and 78 per cent respectively.

Chart 12 333:

What do people do with their time,deviation of hours per day on weekend from the average weekday,per cent

Figure 12.2 What do people do with their time? Deviation of hours per day on weekends from the average weekday (per cent). This shows what people do with their time with on Saturdays and Sundays relative to weekdays. One key pattern is that the percentage deviation from weekdays of hours spent in social and community interaction on Sundays and Saturdays is 138.7 and 125.8 per cent respectively. The percentage deviation from weekdays of hours spent in education on Sundays and Saturdays is -67.6 and -64.9 per cent respectively. The percentage deviation from weekdays of hours spent in employment-related activities on Sundays and Saturdays is –63.6 and -75.2 per cent respectively.

[487] The SDA submits that the assertions made in the PC Final Report that ‘there is very little difference in the degree to which people engage in social activities between Saturdays and Sundays (compared to weekdays)’and ‘the largest deviation in social activities between weekdays and weekends –“social and community interaction”–is actually higher on Saturdays’say nothing ‘about the level of disamenity experienced by employees who work on Sundays’and note,correctly,that the data in Chart 12 above ‘shows that the largest deviation in “recreation and leisure”between weekdays and weekends is higher on Sundays than Saturdays’. 334

[488] We accept that this is so,but the differences are not large. The difference between Saturdays and Sundays is generally smaller than between weekends and the average weekday. In addition,as we have explained above,the usefulness of the data are limited as the sample is not restricted to people who work on weekends or even to employed persons,so the SDA is correct to highlight that Sunday workers are not identified in the data.

[489] ABI and the NSWBC called Professor John Rose,Institute for Choice,University of South Australia who provided a report Value of Time and Value of Work Time during Public Holidays (Rose Report). 335 The first part of the Rose Report sought to determine the importance of times of the day and days of the week. Survey respondents filled in an activity diary that captured information related to the activities they undertook during the week prior to the survey and were required to indicate the importance of the activity. Importance was defined as “an ability or desire to change that activity should a conflicting event,such as a work shift,arise at the time of the activity”.336

[490] The Rose Report activity diary results showed little variation across days of the week and greater variation within days. Thursday was rated the most important day,while Sunday was found to be marginally less important than Saturday. 337 In our view these data do not provide a basis for the fixation on penalty rates. Indeed if the data were used for that purpose then pay rates would vary for different times on each day. Nor does the diary data sit conformably with the choice experiment data in that report. The remaining part of the Rose Report is discussed in Chapter 6.2.2.

[491] As an explanation for the finding that weekend days are not the most important days,Bittman and Craig and Brown found that more time is spent with friends and family on weekends and hence such activities may be more amenable to change to suit work requirements. This may result in a lower importance being attributed to weekends than is actually the case. Whether an activity can be changed does not directly indicate the importance of an activity,although it is clearly a relevant consideration.

[492] While the evidence referred to in this section is not without limitations,it points to a clear difference of time use between weekdays and weekends. However,based on limited data before us,it is difficult to discern the differences in time use between Saturdays and Sundays for weekend workers compared with other workers.

6.1.5 Religious observance

[493] This section uses data drawn from the ABS,the Lewis Report,the Changing work patterns Report and the National Church Life Survey to assess changes in religious observance over time.

[494] The ABS explains that the number of people reporting “no religion”has “increased substantially over the past hundred years,from one in 250 people to one in five.” 338 Data from the ABS Census of Population and Housing (Census) shows that since the 1971 Census (which first included the specific instruction “no religion,write none”),the proportion of people reporting no religion increased from 6.7 per cent to 22 per cent in 2011. The greatest increase of 6.8 percentage points was reported between 2001 and 2011.

[495] Although a majority of people report a religious affiliation and most of them Christian,the ABS contend that “a religious affiliation is not the same as actively participating in religious activities.” 339 Data from the National Church Life Survey (NCLS)340 shows that the proportion of the population attending “church regularly”has fallen over time,from 44 per cent in 1950 to 17 per cent in 2007 (Chart 13).341

Chart 13 342:

Regular church attenders,per cent of population

[496] Chart 13 is consistent with data presented in the Changing work patterns Report,using the HILDA survey,which demonstrates that a majority of Australians attended church as rarely as once a year or less, 343 with almost half of respondents reporting “never”in 2014 (Table 12). However,we acknowledge the point made by United Voice that these data do not identify whether attendance is on Saturday,Sunday or another day.344

Table 12 345:

Frequency of attendance at religious services

 

2004

2014

 

(%)

(%)

Never

44.9

49.5

Less than once a year

13.0

12.4

About once a year

10.8

9.5

Several times a year

11.4

10.5

About once a month

3.1

3.0

2 or 3 times a month

3.0

3.2

About once a week

10.2

9.0

Several times a week

3.3

2.4

Every day

0.4

0.5

Total

100

100

[497] Analysis undertaken using the ABS Time Use Survey in the Lewis Report also showed that the average time spent on religious activities was minor compared with time spent on activities such as “Audio visual and media”and “Talking and correspondence”,which occupied most time spent on weekdays and weekends for both males and females. 346

[498] Census data provides evidence that “the rising trend of reporting no religion is driven by younger people.” 347 Chart 14 shows that people aged between 15 to 34 years reported a significant increase in “no religion”in 2011. The ABS note that the proportion of 20–24 year olds with no religion in 2011 was nearly 11 percentage points higher than the proportion of 15–19 year olds in 2006.348

Chart 14 349:

Change in proportion of people reporting no religion between 2006 and 2011 by age group in 2011

Note:Percentage of people that reported no religion in 2006 compared with percentage of people with no religion in the age cohort they would be part of in 2011. Negative numbers mean a decrease of reporting no religion between 2006 and 2011,positive numbers mean an increase. Excludes people who were not residents in Australia in 2006.

[499] This was also evident in data obtained from the NCLS 2010 which found that a small percentage of young people aged 15–19 years and 20–29 attended church,less than 6 and 9 per cent,respectively. 350

[500] The evidence suggests that there is a decline in religious observance. The cohort driving this trend are young people aged between 15 to 34 years,which comprise a significant proportion of those employed in the Retail trade and Accommodation and food services industries and covered by the modern awards which are the subject of these proceedings.

[501] While the data also show that a majority of the population continue to report a religious affiliation,most of them Christian,it is likely that only a minority of this group consider attending church an important activity. For this group,weekend work may interfere with their religious observance.

6.1.6 Summary

[502] The Australian labour market has changed markedly over the last 40 years. These changes have been dominated by an increase in female and part-time employment and an increase in employment in the services industries.

[503] The data has also shown that the number of employees working on weekends is still far below the number of employees that work on weekdays,and working on Saturdays is still more common than working on Sundays.

[504] Data from the ABS and the HILDA survey show that employees in the industries that align most with the Hospitality and Retail awards are more likely to work on weekends than employees in other industries. More than half of employees in Accommodation and food services usually work on weekends,the highest of all the industries,and almost half of Retail trade employees usually work on weekends,the second highest proportion of all the industries in recent time. Further,weekend work appears to have increased in these industries more than many other industries.

[505] In part,these changes have occurred in the context of shifts in consumer demand and preferences for goods and services (largely confined to the hospitality and retail sectors) that are often accessed on weekends,as presented in the PC Final Report and discussed in detail in Chapter 8. The share of weekly retail sales and supermarket trips and transactions on Sunday are comparable to that of Monday and Tuesday,although still below Saturday. The share of weekly retail sales on Sunday has more than doubled over the last few decades. This suggests that while consumer demand for retail shopping on Sundays has increased over time,there remains a preference to do so on Saturdays than Sundays. As a result,weekend work is more prevalent in these industries.

[506] In relation to religious activities,the data suggests that the decline in religious observance has been driven by young people aged between 15 to 34 years who are more likely to work in the retail and hospitality sectors and are amenable to working on weekends. Nonetheless,a majority of the population continue to report faith in a religion most of them Christian, 351 although it is likely that only a minority of this group attend church regularly,it is for this group that weekend work may interfere with their religious observance.

[507] The data and evidence on time use presented in the PC Final Report and the papers by Bittman and Craig and Brown indicate that work and leisure activities remain largely separated between weekdays and weekends. Further,while the differences between Saturdays and Sundays have converged over time,there remain significant differences in the activities performed on these days. Sunday is more reserved for family time than Saturdays,when spending time with friends and shopping is preferred to Sundays. The nature and role of Sundays therefore makes it a day that remains unique to Saturdays. However,the lack of information in regards to weekend workers means it is difficult to discern how they would use their time on Saturdays and Sundays differently to the remainder of the population.

6.2 Expert evidence

[508] Parties called a number of expert witnesses to provide reports on weekend work. This section discusses the following expert evidence and responses:

  • Ms Margaret Lynne Pezzullo,Lead Partner and Director,Health Economic and Social Policy,Deloitte Access Economics,provided a report titled The modern face of weekend work:survey results and analysis (the Pezzullo Weekend Work Report). 352

  • Responses to the Pezzullo Weekend Work Report were received from:

  • Professor Raymond Markey,Director,Centre for Workforce Futures,Faculty of Business and Economics,Macquarie University,who provided a response called The continuing importance of penalty rates for weekend work:a review of the evidence. 353

  • Ms Helen Bartley of Bartley Consulting (the Bartley Report) 354

  • Professor Sara Charlesworth,Centre for Sustainable Organisations &Work,RMIT University. (Ms Pezzullo also responded to the expert reports which critiqued the Pezzullo Weekend Work Report). 355

  • Professor John Rose,Institute for Choice,University of South Australia who provided a report Value of Time and Value of Work Time during Public Holidays (Rose Report). 356

  • Responses to the Rose Report were received from:

  • Professor Morris Altman,Dean and Head,Newcastle Business School and Professor of Behavioural &Institutional Economics,University of Newcastle. 357

  • Professor Rose also provided a comment on Professor Altman’s response. 358

  • Professor Sara Charlesworth and Dr Fiona Macdonald of RMIT University provided a report to the SDA. 359

  • Dr Olav Muurlink,senior research fellow (adjunct) at Griffith University and senior lecturer in organisational behaviour at Central Queensland University,provided a report The impact of weekend work:consecutivity,overload,uncontrollability,unpredictability,asynchronicity and arrhythmia. 360

6.2.1 The Pezzullo Weekend Work Report

[509] In support of their applications to reduce Sunday penalty rates,ABI,the Retail Employers and others rely on the report by Ms Lynne Pezzullo:The Modern Face of Weekend Work:Survey Results and Analysis (the Pezzullo Weekend Work Report) 361. Ms Pezzullo is the Lead Partner,Health Economics and Social Policy with Deloitte Access Economics (Deloittes). Deloittes was engaged by the PGA to produce the Pezzullo Weekend Work Report for use in these proceedings.

[510] The Pezzullo Weekend Report is comprised of a literature review and the results of two surveys. On the basis of that material,the report draws various conclusions and expresses opinions about matters including time use patterns,preferences,characteristics and consumer behaviour of weekend and non-weekend workers.

[511] The literature review was limited and added little to the material already before us –either in primary sources or referred to in submissions.

[512] The first survey collected information from 1000 weekend workers to understand their time use patterns,the frequency and duration of their weekend work and their attitudes to working on weekends. The second survey used a sample of 1100,drawn from non-weekend workers and asked a series of questions related to their time use and their use of services undertaken by the relevant industries as well as their preferred time for accessing these services. 362 A sample of 500 weekend workers also participated in the second survey for comparative purposes.

[513] The survey sample was obtained from approximately 282,000 members of an online survey population. The report explains that the survey was emailed to 18,312 people,of whom 5375 (29 per cent) participated and 3154 completed the survey. 363

[514] ABI,the Retail Employers and others rely extensively on the weekend worker survey,but place no reliance on the survey of non-weekend workers.

[515] The weekend worker survey found that around one-third of weekend workers had “no real problem”working on either Saturday or Sunday,with more responses having “no real problem”on Saturdays than Sundays. The respondent’s main concerns with working on weekends were that it “interferes with socialising or spending time with friends or family”and that “it makes it hard to maintain work/life balance”. 364

[516] For those that had “some problem working on the weekend”,the following reasons were listed,in order of number of respondents:

  • interferes with socialising or spending time with friends or family;

  • interferes with responsibilities or activities outside of work (e.g. sport);

  • makes it hard to maintain work/life balance;

  • interferes with religious observance;and

  • none of the above.

[517] The results were similar between Saturdays and Sundays for the number of respondents reporting a problem,although there was a higher number reporting that it interferes with religious observance on Sundays.

[518] Over half of casual workers reported “no real problem”with Saturday work and half reported “no real problem”with Sunday work,while over two in five part-time workers reported “no real problem”with Saturday or Sunday work. 365

[519] The report concludes that a large percentage of weekend workers were untroubled by weekend work even when specifically prompted to list their difficulties with their work schedules. 366 When including responses of “minor”,this resulted in over half of weekend workers reporting either no or minor difficulties working on Saturdays or Sundays.

[520] Weekend workers were also asked their reasons for working on weekends. Over half of respondents answered that they were required to by their employer or there is an expectation of weekend work in their industry. The next most common responses were higher hourly pay (just over one quarter) and to earn additional disposable income (around one quarter). Fewer than one in five reported they worked weekends to cover expenses. 367

[521] The report concludes that “most weekend workers do not choose to work weekends primarily on the basis of penalty rates”and that “casual workers were even less concerned about penalty rates than other weekend workers”. 368

[522] Respondents were also asked which day of the weekend was more important to keep mostly free from work. These data are set out in Table 4.4 of the Pezzullo Weekend Work report,reproduced below as Table 13.

Table 13 369

Most valuable weekend day –all weekend workers

Day

Total No.

%

Saturday

139

13.9%

Sunday

309

30.9%

Both equal

552

55.2%

[523] The report also found some evidence that the amount of staff on weekends did not align with workloads and concluded that penalty rates may have an impact on labour demand. 370

[524] As to the proper process for survey data collection,and the conduct of surveys more generally,the SDA and United Voice relied upon the expert evidence of Ms Helen Bartley 371 (the Bartley Report). Ms Bartley contended that because the survey participants were required to be an internet user,individuals who did not have internet access were excluded,which could lead to biased results.372 Ms Bartley also explained that registered members of the online survey are paid to complete surveys and can choose how often they participate in a survey,introducing sampling bias that could also affect the reliability of the results.373

[525] Ms Bartley concluded that she could not be confident that the weekend worker survey in the Pezzullo Weekend Work Report was a representative sample and considered the response rate to be low such that the responses by individuals who did not participate in the survey could potentially be different to those that did participate. 374

[526] We deal later with the Bartley report in more detail ([1091][1097]) but it suffices to note here that the Productivity Commission characterises the reliability test proposed by Bartley as ‘overly stringent’. We agree with that observation and as we note in our consideration of the RCI survey evidence in Chapter 7.4.4,most survey evidence has methodological limitations,the central issue is the extent to which those limitations impact on the reliability of the results and the weight to be attributed to the survey data.

[527] As mentioned above,United Voice called Dr Olav Muurlink to provide evidence on the impact of weekend work,in particular Sundays. Dr Muurlink was also asked to comment on the Pezzullo Weekend Work report. 375

[528] Dr Muurlink considered the age demographic of the sample to be a “major limitation”as the dataset is not representative of 15–18 year olds who account for over one-fifth of the target population 376 despite the sample size being “more than adequate”.377 We deal later with some other aspects of the Muurlink Report.

[529] The central problem with the weekend worker survey is that it is plainly not representative of the views of the employees covered by the modern awards which are the subject of these proceedings. This is made clear from Chart 4.2 on page 44 of Exhibit PG 34 –almost two thirds (64.3 per cent) of the employee respondents to the weekend worker survey work in ‘other’industries,that is,industries which are not covered by the modern awards before us. Ms Pezzullo accepted that only 357 of the 1000 weekend workers were from the hotels,cafes,fast food,retail or pharmacy industries. 378

[530] While the Pezzullo Weekend Work survey has its limitations,its findings support other studies which have found that while differences between Saturdays and Sundays are not as large as they once were,there are still differences in the activities undertaken on Sundays.

[531] The report also attempted to determine indirectly labour demand issues by assessing how staffing levels,workloads and operating hours on weekends compared with weekdays. However,the information obtained from workers is only about their perceptions of labour demand and should be interpreted with caution as the data are subjective and collected from a secondary source. This was highlighted in the Markey Report which noted the higher non-response rate for this question. 379 Data on business operations are generally more reliable if obtained from employers.

[532] It is convenient to now return to the Muurlink Report.

[533] The Muurlink Report examined the impact,if any,on the physical,psychological and social well-being of a person who works on Saturdays,Sundays or public holidays and whether people are able to recover,mitigate or compensate for any negative impact identified. 380 The report is an extensive but not exhaustive381 literature review that contains numerous Australian and international studies.

[534] The Muurlink Report focused on six characteristics that relate to weekend work:consecutivity,overload,uncontrollability,unpredictability,synchronicity and arrhythmia and suggests that the impact of weekend work effects such workers through a range of factors including:

  • working patterns being out of step with the majority of society;

  • lower predictability in the working week;

  • lower sense of control,or actual control,over working hours;

  • increased chance of working more than five consecutive days in a row;and

  • increased chance of working more than 40 hours a week. 382

[535] United Voice relied on the Muurlink Report to support the following propositions:

    “(i) Working on weekends is associated with…negative health …The presence of these factors also spill over into a negative impact on the wellbeing,social life,and relationships of the worker.

    (ii) Weekend work disrupts social patterns,because the majority of social and leisure activity takes place on weekends,and particularly on Sundays. Research shows that Sunday is traditionally reserved to a degree greater than Saturday to rest and family activities and there are elevated well-being consequences that are particular to Sunday. The negative impact of weekend work on the employee also has a secondary impact on the partner and/or the children of the worker.

    (iii) Weekend workers are not able to fully off-set or mitigate the negative effects of weekend work by reshuffling activities usually done on weekends done on other days. Sunday workers in particular lose even more recreation time relative to standard workers.” 383

[536] Dr Muurlink was cross-examined about a number of the international studies referred to in his report and conceded that the following matters would be different in other countries to Australia:

  • labour laws or employment conditions;

  • cultural or societal values;

  • wage rates;

  • unemployment rates;

  • social welfare systems;and

  • occupational health and safety laws. 384

[537] Dr Muurlink also agreed that the studies in his report do not separately identify the four industries in which he was asked to report on although,where possible,he included research related to industries that “heavily overlap”with the four industries 385 and he was “very confident”that his conclusion is representative of the target populations and relevant industries.386

[538] SDA and United Voice submitted that the general principles in the Muurlink Report have broad application and that there is no evidence that the consequences of weekend work would be different across occupations or that only Australian studies are relevant. 387

[539] In this context,United Voice submit that the choice to work weekends is illusory as it fails to recognise that many hospitality employees work on weekends because that is when they are available in light of their other commitments and because the weekends are when work is available. 388 We have considered these submissions and agree that employees exercising a ‘choice’to work on weekends are likely not doing so free of other considerations,including their availability. However,the fact that availability,or any other factor,is a consideration or a ‘fetter’in exercising the choice to work on a weekend,does not alter the fact that employees are exercising a choice,albeit one that is constrained by other considerations.

[540] Ai Group made a number of submissions about the limitations of the Muurlink Report. These included that the information in the Muurlink Report:

  • is not related to employees in an industry,particularly the fast food industry;

  • focuses on association and does not establish causation between weekend work and adverse health consequences;

  • assumes that weekend workers undertake long hours and work during abnormal hours;

  • is premised on weekend workers being overworked or overloaded;and

  • is premised on weekend workers being subject to night work. 389

[541] The Hospitality Employers submit that the Muurlink Report is general in nature and does not address the claims proposed. 390

[542] ABI submit that it is the six characteristics examined in the Muurlink Report that cause adverse health consequences,not Saturday or Sunday work,as these characteristics would affect all of their days of work and not only weekends. 391

[543] The issues canvassed by the papers in the Muurlink report do not focus on the effects of weekend work in the relevant industries. As conceded by Dr Muurlink:

    “…to be quite clear weekends and public holidays do not magically cause negative effects. The body does not somehow sniff that it's Saturday.” 392

[544] We therefore agree with the critique from ABI that all that we can take from the report is that it is the six characteristics examined that cause adverse health consequences,rather than Saturday or Sunday work of itself. 393 The report’s relevance to the matters before us is limited as it does not focus on weekend work in the relevant industries.

6.2.2 Rose Report

[545] In essence the Rose Report seeks to:

    ‘…examine the importance and value employees covered by the Restaurant Industry Award 2010 and the General Retail Industry Award 2010,place on time. Of particular interest is the importance and value employees covered by these two awards have for working ‘unsocial hours’,with particular emphasis on working on a public holiday.’ 394

[546] ABI,the Retail Employers and others rely on the Rose Report to support their claims for a reduction in the Sunday and public holiday penalty rates under,in particular,the Pharmacy,Retail and Restaurants Awards. In this section we focus on those aspects of the Rose Report relevant to Sunday penalty rates. In Chapter 9 we deal with those parts of the Rose Report which deal with public holidays.

[547] On the basis of the conclusions in the Rose Report,the various employer interests contend that employees do wish to be paid a premium to work Sundays,however the premiums sought by employees are lower than the premiums presently imposed by the Retail Award and that the disability associated with working on Saturdays is the same or substantially similar to the disability associated with working on Sundays.

[548] These contentions primarily rest on the following conclusion from the Rose Report:

    ‘The results of this modelling exercise suggest that the average threshold value of hourly pay at which they would elect to work is actually the average level of pay currently being paid to the sample. This suggests that the employees value their time at precisely their current wage rate. Also based on the model results,it was found that on average,respondents value working on Saturdays as being somewhere between 106 to 135 per cent of their current normal hourly pay,and for working on Sundays somewhere between 126 and 165 per cent of the average current normal hourly pay rate. The hourly rate for working on a public holiday was valued as being between 124 and 224 per cent of the average current normal hourly pay rate,with the later higher value being for working on a Public holiday that falls on a Sunday.’ 395

[549] The above conclusion is based on survey data from 443 respondents. The ‘centrepiece’ 396 of the survey data upon which the Rose Report conclusions rest consisted of two discrete choice experiments designed to recover the hourly pay rate for which employees were willing to work during both a normal work week and during a week in which one or more public holidays fall.397

[550] The Rose Report attempts to estimate,through a set of questions put to a sample of employees covered by the Restaurants and Retail Awards,the lowest wage that an individual is willing to accept for a job and the value that an individual attaches to the labour she or he supplies. The Rose Report assumes that the willingness to accept (WTA) is identical to the value that an individual places on work time.

[551] As noted above the average threshold value of hourly pay at which the respondents would be willing to work on Saturdays is ‘somewhere between 106 per cent to 135 per cent of the average current normal hourly pay rate’,and for working on Sundays,‘somewhere between 126 and 165 per cent of the average current normal hourly pay rate’. The various employer interests latch onto this finding to support their contention that the existing Sunday penalty rates in the Restaurants and Retail Awards are too high. As ABI puts it:

    ‘The inference that arises from the above analysis is that employees do wish to be paid a premium for working on Sundays as compared to their weekday pay. However,the value of the premium sought by employees is substantially less than the premium presently applicable under the Retail Award,where the penalty for Sunday work amounts to 200 per cent of the normal weekly rate of pay. 398

[552] We note that ABI focuses on a comparison between the Rose Report results and the current Sunday penalty rate in the Retail Award. The same comparison in respect of the Restaurants Award does not yield the same conclusion. In fact,for Restaurant employees the value of the premium sought by the Rose Report sample closely equates to the current Sunday penalty rate in the Restaurants Award for most employees (that is,150 per cent). 399 Indeed if one were to mechanistically apply the Rose Report results to the fixation of Sunday penalty rates then the Sunday rates for level 1 and 2 casuals in the Restaurants Award would need to increase.

[553] In any event there are a number of reasons for treating the conclusions in the Rose Report with caution.

[554] As mentioned above,the Rose Report was critiqued by Professor Altman (the Altman Report) 400 and referred to by Professor Borland in the course of his reply evidence to that of Professor Lewis401. The various criticisms are extensively canvassed in the SDA and United Voice written submissions. We only propose to mention two matters. The first concerns the survey sample and questions.

[555] The socio-demographic characteristics of the Rose Report survey sample are set out in Table 5 of the report. We note that just over 10 per cent of the survey respondents (45 out of the 437 who disclose their income) had an income in excess of $52,000 which is not representative of the earnings distribution of Hospitality and Retail employees (see particularly (Charts 22 and 52 of this decision). On any view of it the sample in the Rose Report survey cannot be said to be representative of employees covered by the Retail and Restaurants Awards.

[556] In addition,the sample of respondents across the States and Territories does not appear to be representative. For example,there were more respondents from both Western Australia and Queensland,than from Victoria. Professor Rose considered that the survey was not representative of the States and Territories when the issue was put to him in cross-examination. 402 The gender characteristics also differed from employees covered by the Restaurant and Retail Awards,as presented later in Tables 41 and 67.

[557] There are also a number of issues which arise from how the survey questions were structured and contextualised. These issues are canvassed in the Altman Report,relevantly Professor Altman concludes:

    ‘The reference points used in the Rose report would be expected to generate relatively low WTA values’. 403

[558] Survey responses are influenced by the reference points contained in the survey and how the survey questions are structured and framed. During the course of cross examination Professor Rose acknowledged that if survey participants were presented with a question that asked if they would work for a rate lower than the rate in the relevant modern award then their analysis ‘would have definitely generated different results’. 404

[559] The second substantive limitation on the conclusions reached in the Rose Report is that it reports on the average value the respondent employees place on their time on,relevantly,Saturdays and Sundays. Importantly,the Rose Report does not report the actual value the respondents place on their time and,as such,the values reported are less than the actual range. As noted in the Altman Report:

    ‘…amongst the key findings of the Rose Report based on the survey population,Sunday work is valued between 126 and 165 per cent of the average current normal (normal weekday) hourly penalty rate…This range of values is not the actual range of values of work time across the sample population. It is rather the range of highly likely ‘averages’across this sample population. But it is the range of actual values that is of critical importance here,where the upper band of this range would be much greater than the range of averages’. 405

[560] Similarly,the Rose Report itself notes that the range of actual values differ from the average values:

    ‘The above discussion has been limited to an explanation of the average marginal rates of substitution (MRS) obtained from the models. It is noteworthy however that the standard derivation parameters associated with the various normally distributed MRS,are all statistically significant suggesting that there exists significant heterogeneity in the results. This suggests that not all employees share the same remuneration preferences,with some desiring more pay,whilst others would accept less’. 406 (emphasis added)

[561] Further,evidence of this issue is that,while the average WTA presented in the results suggest a WTA of between 126 per cent to 165 per cent for Sunday,the range of responses,as measured by the 95 per cent confidence intervals,are likely to be much greater,highlighting the difficulties in interpreting these results with any precision.

[562] There are plainly limitations to the Rose Report and the modelling results should not be mechanistically applied as a means of fixing an appropriate penalty rate. But the results do provide an insight into the relative disutility of Saturday,Sunday and public holiday work. Relevantly,the value the employee respondents place on their time on a Sunday (126 –165 per cent) is significantly higher than the value attributed to Saturday (106 –135 per cent). The Rose Report suggests differences in the disutility of Saturday and Sunday work,a point acknowledged in a number of employer submissions.

[563] The results of the Rose Report provide indicative evidence of the relative disutility of weekend work of Sundays compared to Saturdays.

6.2.3 Charlesworth and Macdonald reports (Australian Work and Life Index)

[564] The SDA called Professor Sara Charlesworth and Dr Fiona Macdonald of RMIT University who provided a report to the SDA 407 (the Charlesworth/Macdonald Report). The report examines the relative impact of working on Sundays compared to Saturdays on the work-life interference experienced by employees.408

[565] The report is divided in two parts,both focusing on retail employees. The first part,undertaken by Professor Charlesworth,provides an analysis of the 2014 Australian Work and Life Index (AWALI) survey which uses a measure of work-life interference developed by Professor Barbara Pocock,Dr Philippa Williams and Dr Natalie Skinner at the Centre for Work &Life,University of South Australia. 409 The second part,undertaken by Dr Macdonald,is a qualitative study that draws on follow-up telephone interviews with 25 employee respondents to the 2014 AWALI survey that reported working in the retail industry and indicated that they sometimes,often or always worked on Sundays.410

[566] The AWALI is an annual survey that began in 2007 to provide a ‘snapshot’of the major influences and consequences of work-life interaction. The AWALI defines ‘work’as paid work and ‘life’as the activities outside of paid work. 411

[567] The survey is a nationally random stratified sample of Australian households for persons aged 18 years or older. Respondents to the AWALI survey are different each year. In 2014,the AWALI sample comprised 2690 workers,of which 2279 were employees and 411 self-employed persons,surveyed over four weekends in March. The survey was conducted using a computer-assisted telephone interview (CATI) whereby household telephone numbers were selected using random digit dialling and then a random selection of individuals in each household were chosen to participate in the survey. 412 During her oral evidence,Professor Charlesworth explained that the survey was run over Fridays,Saturdays and Sundays.413

[568] In cross examination,Professor Charlesworth conceded that,being a telephone survey,the AWALI is biased against young people who are unlikely to have landlines and more likely to have mobile phones. 414

[569] The AWALI survey contains the perceptions of the following five measures of work-life interference that form the index:

  • ‘general interference’(i.e. the frequency that work interferes with responsibilities or activities outside of work);

  • ‘time strain’(i.e. the frequency that work restricts time with family or friends);

  • ‘work-to-community interference’(i.e. the frequency that work affects workers’ability to develop or maintain connections and friendships in their local community);

  • satisfaction with overall ‘work-life balance’;and

  • frequency of ‘feeling rushed or pressed for time’. 415

[570] To create one score for the index,responses to the five measures were averaged and standardised. A score of 0 for the index indicates the lowest work-life interference and the maximum score of 100 indicates the highest work-life interference. The average score for the index in 2014 was 42.1 and the median was 40 (the middle score whereby half of respondents had higher scores and another half had lower scores). 416

[571] Analysis of the 2014 AWALI survey was also provided in a report by Dr Skinner and Professor Pocock of the Centre for Work + Life,University of South Australia. 417 The report found that 62 per cent of respondents worked standard hours (weekdays before 9pm),30 per cent worked ‘often’or ‘almost always’on Saturdays and 18 per cent worked ‘often’or ‘almost always’on Sundays.418

[572] Skinner and Pocock investigated if any particular day of the weekend was associated with greater work-life interference across all employees and found that regular (that is,‘often’or ‘almost always’) working on Sundays is “clearly associated”with greater work-life interference,whether employees also work on Saturdays or not. Work-life interference was lower for employees who work regular Saturdays and not regular Sundays and lowest for employees who do not work regular Saturdays or Sundays. 419

[573] Professor Charlesworth explained that weighted estimates of the 2014 AWALI survey contained 223 employees in the retail industry of which 127 worked ‘sometimes’,‘often’or ‘almost always’on Saturdays and 103 worked ‘sometimes’,‘often’or ‘almost always’on Sundays. 420 Professor Charlesworth found that retail employees who ‘sometimes’,‘often’or ‘almost always’worked on Sundays reported a higher average AWALI score than those who ‘rarely’or ‘never’worked on Sundays,and this difference was statistically significant.421

[574] That is,retail employees that work on Sundays were found to have greater work-life interference than retail employees who ‘never’or ‘rarely’work on Sundays.

[575] While employees who ‘sometimes’,‘often’or ‘almost always’worked on Saturdays also reported a higher average AWALI score than those who ‘rarely’or ‘never’worked on Saturdays,this difference was not found to be statistically significant. 422

[576] Professor Charlesworth suggested that the number of hours worked can impact on work-life interference. 423 After controlling for hours worked,working ‘sometimes’,‘often’or ‘almost always’on either Saturdays or Sundays was found to be associated with higher AWALI scores,and therefore greater work-life interference,than ‘never’or ‘rarely’working on these days.424

[577] Professor Charlesworth found that the average AWALI scores for retail employees were not significantly different from the average AWALI scores for all employees and concluded that the influence of working on Saturdays or Sundays was not affected by working in the retail industry. 425

[578] In summarising the data,Professor Charlesworth concluded that employees who ‘sometimes’,‘often’or ‘almost always’worked on Saturdays or Sundays experienced greater work-life interference than employees who ‘rarely’or ‘never’worked on these days. 426 The data for Sundays are presented in Table 14. Although data are presented on employees working in retail,it should be noted that the AWALI survey is not designed to be representative at the industry level.427 This means that the survey was not designed to be representative of employees working in the retail industry.428

Table 14 429:

AWALI scores and Sunday work,all and retail employees

 

All employees

Retail employees

 

Mean

Number

Std dev.

Mean

Number

Std dev.

Never/rarely

37.6908

1522

20.51435

34.4397

120

20.60154

Sometimes,often,almost always

50.0403

772

21.75977

45.2990

102

22.73461

Total

41.8474

2294

21.73544

39.4368

222

22.23156

[579] The SDA and United Voice submit that the Commission should consider the following findings from the 2014 AWALI survey:

    ‘(a) Employees sometimes,often or almost always working on Saturdays or on Sundays experience worse work-life interference than employees who rarely or never work these hours.
    (b) Employees sometimes,often or almost always working Sundays alone or in combination with working Saturdays experience worse work-life interference than employees who sometimes,often,almost always work Saturdays alone.
    (c) There is no significant difference between retail and non-retail employees in the impact of working on Saturdays or on Sundays;retail employees have similar work-life interference patterns in respect of Saturday and Sunday work as non-retail employees.
    (d) There is no significant difference between work-life interference in 2008 and 2014 for employees working sometimes,often or almost always on the weekend.’ 430

[580] In its final submission,the Retail Employers submit that the evidence provided by Professor Charlesworth shows that:

    ‘Significantly fewer retail industry employees who sometimes,often or almost always work on Sundays than employees generally who sometimes,often or almost always work on Sundays,report…

    (a) work interferes with activities outside work sometimes,often or almost always (56.8% for retail employees compared to 70% for all employees);
    (b) work keeps them from spending the amount of time they would like with family and friends sometimes,often or almost always (41.9% for retail employees compared to 69.9% for all employees);
    (c) work interferes with their ability to develop or maintain friendships in their community sometimes,often or almost always (47.1% compared to 56.9% for all employees);and
    (d) they feel rushed or pressed for time sometimes,often or almost always (82.3% compared to 85.6% for all employees).’ 431

[581] The Retail Employers submit that retail employees had lower AWALI scores in relation to weekend work when compared with all employees. 432 However,the SDA referred to Professor Charlesworth’s evidence that the influence of working on Saturdays or Sundays on work-life interference was not affected by working in the retail sector433 and that measuring each of the five measures of work-life interference was not possible for retail employees due to small sample sizes.434

[582] ABI identified the following issues with the AWALI survey:

  • there was no information provided on the non-work activities being interfered with or the importance of these activities;

  • there was no information on whether employees who worked weekends also worked during the week;

  • no indication was provided on how much non-working time is interfered with,only how often work interfered with non-work activities;and

  • no data was provided on the positive aspects of work. 435

[583] The PGA submit that the analysis did not include relevant findings for the retail industry,particularly due to a small sample size. 436 Further,that the regression analysis by Professor Charlesworth suggests there are other factors affecting work-life interference which are not reflected in the AWALI scores,such as caring responsibilities,commuting times,local economic and social conditions and combining education and work.437

[584] The PGA also commented on the survey design and composition of the AWALI and submitted that:

  • it is biased against young people:

  • who use mobile telephones;

  • who may not be home on weekends,possibly because they are working;

  • as it excludes those under 18 years;

  • who are a key group that are more likely to work on weekends;

  • it is biased against weekend workers who are likely to be busier or feel more stressed working on weekends;

  • it is biased against unemployed people who are excluded;

  • the questions had a tendency to elicit a negative response; 438

  • the AWALI measures only negative outcomes associated with work when it is appropriate to balance both positive and negative impacts of weekend work,while positive impacts are not measured; 439

  • it does not take into account any compensatory strategies that weekend workers may adopt; 440 and

  • it does not measure work-life interference during different times of the day or relative to other days of the week. 441

[585] The 2014 AWALI survey and its findings were discussed in the PC Final Report. 442 In discussing the development of the index,the Productivity Commission noted that using an unweighted sum of the five measures is problematic as it was not clear that each would have an equal impact on work-life interference. However,the Productivity Commission did note that the index is less subjective than anecdotal evidence and conjecture.443

[586] The Productivity Commission undertook its own analysis of the 2014 AWALI survey. The results did not often accord with those of Professor Charlesworth and found that most people did not experience major problems with their work-life interactions except for feeling rushed. In this analysis,those who responded that they ‘sometimes’experienced interference were grouped with those who ‘never’or ‘rarely’experienced interference. 444

[587] The Productivity Commission modelled the outcomes ‘never’,‘rarely’,‘sometimes’,‘often’or ‘almost always’while controlling for a series of factors including hours worked,industry,single status,gender,age,and the presence of young children. This was used to estimate the likelihood of an employee experiencing some impact for the five dimensions of the AWALI if they worked at unsocial times (Saturday,Sunday or evening) compared with standard times (Monday to Friday and not evenings). The PC Final Report highlighted that for two of the five dimensions,regular Sunday work had less impacts than regular Saturday work. In fact,higher dissatisfaction was found for working regularly on evenings. 445 These results are presented in Chart 15.

Chart 15 446:

Degree to which employees ‘often’or ‘almost always’experience impacts work

Figure 12.3 Degree to which employees ‘often or almost always’experience work impacts,outcomes relative to standard hours. This shows the degree to which employees often or always experience adverse social impacts depending on whether they work on a weekday evening,a Saturday or a Sunday. The results are shown as the percentage difference in the likelihood of experiencing social impacts compared with someone working on a normal weekday during daytime. It shows that for the problem of feeling rushed,the percentages are 4,-2.9,and 6.3 percentage points for Saturday,Sunday and Evenings respectively. It shows that for the problem of work interfering with outside activities,the percentages are 2.8,10.9,and 13.2 percentage points for Saturday,Sunday and Evenings respectively. It shows that for adversely affect life balance,the percentages are 2.5,1.7 and 6.2 percentage points for Saturday,Sunday and Evenings respectively. It shows that for work interfering with interaction with family and friends,the percentages are 4.6,8.2 and 12.9 percentage points for Saturday,Sunday and Evenings respectively. It shows that for work interfering with maintaining community connections,the percentages are 4.6,8.2 and 12.9 percentage points for Saturday,Sunday and Evenings respectively.

Note:Outcomes relative to standard hours. These results are estimates from an ordered logit of the various measures of work impacts against a series of independent variables,including whether a person works mostly (often or almost always) on Saturdays,on Sundays or on evenings. Other regressors included gender,age and whether an employee had young children. Each of the dependent variables were based on a Likert scale of never,rarely,sometimes,often or almost always (or in life balance terms,a satisfaction measure from very satisfied to not at all satisfied). The logit regression was used to estimate the likelihood that an employee was often or almost always experiencing some impact if they worked at a non-standard time compared with a standard time (Mondays to Fridays). For example,there was around a 4 percentage point difference between the share of people feeling often or almost always rushed for time if they worked on a Saturday (but not a Sunday or evening) compared with those working at standard times.

[588] The SDA contended that “the Commission should not place any weight on the Productivity Commission’s analysis of the AWALI data in making findings about the disability experienced by weekend workers in Australia”. 447 The SDA argued that the most accurate approach is to use the comprehensive AWALI measure and to control for the number of hours worked,448 as undertaken by Professor Charlesworth. We note that even on the approach taken by the Productivity Commission,the relative disutility of Sunday work (compared to Saturday work) is still greater on 3 out of the 5 measures.

[589] The qualitative study by Dr Macdonald involved telephone interviews with 25 retail employees who regularly worked on Sundays to investigate the nature of any work-life interference experienced by retail employees. These employees were randomly selected from the 81 out of 102 retail employees who responded that they ‘sometimes’,‘often’or ‘almost always’work on Sundays and provided contact details. 449

[590] Dr Macdonald found that higher pay on Sundays is important to employees and was considered to be the most positive aspect of working on Sundays. Employees discussed that they worked on Sundays as it was a requirement of their employer to work weekends or because of study or family commitments during the week. 450 Others preferred the higher pay to working on Saturdays,including some young people who were combining work and study who also reported less work-life interference from Sunday work than other employees.451 Attitudes towards working on weekends were also dependent on whether employees had any flexibility with their working time,their co-workers and how hard they were required to work.452

[591] Sunday was considered to be different to other days as employees felt excluded and missed out on socialising and relaxing with friends and family on a day when people get together. Dr Macdonald concluded that Sundays were viewed as not being a regular work day,were different to Saturdays,and had a more negative effect on work-life balance. 453

[592] The SDA submit that Dr Macdonald’s qualitative survey used a ‘grounded’approach to obtaining themes to discuss with interviewees. The SDA explained that this process ‘minimises the risk of selectivity or omission in reporting upon the key themes’and that the sample of 25 retail employees was large enough to reach “saturation”point whereby collecting further data would not add new information. 454 The SDA also argue that the sampling framework was representative of retail employees in the AWALI survey who responded that they worked ‘sometimes’,‘often’or ‘almost always’on weekends by way of sex,age and employment status.455

[593] According to the SDA,the main themes from the interviews of employees who work ‘sometimes’,‘often’or ‘almost always’on weekends,were that:

  • Sunday is different to other days and is not a regular work day;

  • Sunday is different from Saturday;

  • working on Sundays is more negative in its effect on work-life interaction than working on Saturdays because:

  • for most of the community,Sunday is a day off,a “free”day and/or a “family and friends”day;

  • Sunday work is perceived by retail employees as interfering with relaxation and as isolating or excluding them from “life”;and

  • work-life interference experienced by retail and other employees from working on Sundays has ripple effects beyond the employee concerned,impacting adversely on families and on relationships with friends. 456

[594] The Retail Employers commented that the findings in Dr Macdonald’s Report showed that retail employees considered that working on Sunday does not ‘often’interfere with family responsibilities;social interactions;or recreational and community activities. 457 They also added that many retail employees choose,or are happy,to work on Sundays;458 that retail employees view Saturdays and Sundays as similar or in equal in terms of work-life interference;459 and that retail employees will continue to work on Sundays if the penalty rate is reduced to 50 per cent.460 In terms of the work,the Retail Employers commented that a number of retail employees view Sunday as more relaxed than Saturday461 and that retail employees that work on Sundays experience difficulties due to a limited number of staff.462

[595] ABI and the PGA submit that the findings from Dr Macdonald are unreliable because:

  • as it is a qualitative study,the findings cannot represent the whole population and the only conclusion is that the issues reported are the types of issues affecting employees in the retail industry 463;

  • respondents were asked leading questions,which were biased towards the premise that Sunday work interferes with other activities more than Saturdays; 464

  • the interview transcripts show there was no difference in the disability associated with Saturday and Sunday work; 465

  • comments which viewed Saturdays and Sundays as similar or equivalent were not reported by Dr Macdonald; 466

  • the order and number of questions about Sundays were likely to produce answers about the negative impact of Sunday work; 467 and

  • the evidence provided by Dr Macdonald is highly selective and not a true representation of the views of the interviewees. 468

6.2.4 Conclusions on the Expert Evidence

[596] As shown in the overview of data,changes in the composition of employment have been dominated by an increase in female and part-time employment and an increase in employment in the services industries. These changes have in part occurred in response to shifts in consumer demand and preferences for goods and services that are often accessed on weekends,particularly in the retail and hospitality sectors. Together with the data showing that employees in these industries are more likely to work on weekends,it follows that weekend work is relatively important in these industries.

[597] With regard to the importance of spending time on work and leisure activities,the data and evidence presented before us which refer to time use surveys (the PC Final Report,the Lewis Report and the papers by Bittman and Craig and Brown) indicate that work and leisure activities remain largely separated between weekdays and weekends. Further,while the differences between Saturdays and Sundays have converged over time,there remain differences in the activities performed on each of these days. Sundays is more reserved for family time than Saturdays,when consumer preference to shop is still higher. However,based on the limitations with these data it is difficult to discern the differences in time use between Saturdays and Sundays for weekend workers compared with others.

[598] While Sunday was traditionally regarded as a day of rest and for attending church,the data shows that the proportion of the population that attend church regularly has significantly declined over time. The decline in religious observance has largely been driven by young people.

[599] However,the data also show that a majority of the population report faith in a religion,most of them Christian. Although it is likely that only a minority of this group attend church regularly,it is for this group that weekend work will likely interfere with religious practice.

[600] The expert evidence presented in the Pezzullo Weekend Work Report and Rose Reports,as well as the analysis of the AWALI survey,provided recent information on the attitudes towards Saturdays and Sundays. This evidence,together with the overview of the data in the first part of this chapter that provides information over a longer period,highlighted that employment on weekends has increased with the rise in consumer demand. However,most of the evidence before us shows that there continues to be greater relative disutility with work on Sundays than Saturdays.

[601] We also note the following findings from the Sands report online survey of retail employees:

  • The ‘vast majority’of employees that do not work on Sundays state that nothing will motivate them to work on a Sunday; 469

  • The main difficulty with Sunday work is the impact on the ability to spend time with family/friends; 470

  • 86 per cent of Sunday employees hardly ever or never are able to make up time to attend community,sporting or cultural events during the week; 471 and

  • 29 per cent of Sunday employees with children believe that Sunday work has an adverse impact on the health and development of their children. 472

[602] We now turn to our conclusions in respect of the Charlesworth/Macdonald Report.

[603] Using the AWALI survey,Charlesworth and Macdonald undertake an analysis on the effects of working on Sundays compared with Saturdays on the work-life interference experienced by employees.

[604] A number of issues have been raised with the methodology used to capture the experiences of employees working in retail. With just over 100 employees reporting that they ‘sometimes’,‘often’or ‘almost always’work on Sundays,the sample of Sunday workers is relatively small and unlikely to be representative of employees working within the industry.

[605] Further,the survey may be omitting critical information related to the experience of those working on weekends,particularly in retail. This is because the survey is conducted on weekends when weekend workers are likely to be engaged at work and excludes workers aged below 18 years.

[606] However,as noted by SDA and United Voice,the AWALI survey is one of the few pieces of evidence put before us that examines the effect of unsociable working hours on work-life interference. Thus,while the results suggest that there is no significant difference on the impact of working on Saturdays or Sundays between retail and non-retail employees,the analysis put forward by Professor Charlesworth and also the analysis presented in the PC Final Report suggests that,for some measures of work-life interference,there may be some additional disutility associated with working on Sundays compared with Saturdays.

[607] The analysis in the PC Final Report of the likelihood that an employee experiences some impact from work at unsocial times controlled for a number of characteristics than just the number of hours worked as undertaken by Professor Charlesworth. This appears to be a sensible approach. However,this method still showed that for three of the five AWALI measures,the degree to which employees ‘often’or ‘almost always’experience impacts from work is higher on Sundays than Saturdays,and substantially so.

[608] As we note at [1599] and [1609],the Sands Report is also relevant in addressing the relative disutility of Sunday work compared with Saturday in the retail sector. The Sands Report found that the main difficulty with working on Sunday is the ability to spend time with family/friends,while a majority hardly ever or never are able to make up time for outside activities such as community,sporting or cultural events.

[609] As to Dr Macdonald’s qualitative study,although it was undertaken to provide greater context surrounding the experiences of retail employees working on weekends,the subjective nature of the study suggests it is not an accurate representation of weekend workers. As argued by the employer groups,the selective nature of the report did not provide a true representation of the survey participants,which would have showed relatively little difference in disutility between Saturdays and Sundays.

[610] An extensive amount of data,research and literature has been put before us describing the nature of work and non-week activities in relation to weekends. The evidence points towards a marked shift in the attitudes and nature of work on weekends,in particular Sundays.

6.3 Employment effects of changes to penalty rates

[611] A number of expert witnesses gave evidence in relation to the employment effects of penalty rates.

[612] ABI and others called Professor Phil Lewis,Director,Centre for Labour Market Research and Professor of Economics at the University of Canberra who provided a report on penalty rates in the retail,café and restaurant and hairdressing and beauty industries (the Lewis Report). 473

[613] The SDA and United Voice called expert evidence in response to the Lewis Report,from Professor John Quiggin,University of Queensland 474 (the Quiggin Report) and Professor Jeff Borland,Department of Economics,The University of Melbourne475 (the Borland Report). Professor Lewis also provided a report in response to these expert reports.476

[614] The replies and submissions responding to the Lewis Report focused on the studies cited by Lewis and the five assumptions which inform the modelling of the employment effects of penalty rates.

[615] SDA also called Dr Serena Yu,Senior Research Fellow,Centre for Health Economic Research and Evaluation at the University of Technology,Sydney,Business School,who provided a report Evaluating the impact of Sunday penalty rates in the NSW Retail industry (the Yu Report). The Retail Employers called Lynne Pezzullo,who provided a report Four Yearly Review of Modern Awards Penalty Rates Review 477 in response to the Yu Report.

6.3.1 The Lewis Report

[616] This section deals with the final part of the Lewis Report,involving a simulation model of the effects of introducing penalty rates on Sundays and public holidays on the demand for labour. We have dealt earlier with the other,less contentious aspects of the Lewis Report.

[617] The model considered the impact of a 1 per cent increase in real wages on the demand for labour,that is the elasticity of demand for labour. This was reflected in the model by the degree to which labour can be replaced by other inputs (known as the elasticity of substitution),labour’s share of total costs and how responsive demand is to changes in prices (known as the elasticity of demand for goods and services). 478 Professor Lewis estimated the long run elasticity of demand,whereby firms can vary all of their inputs,including capital,and the short run elasticity of demand,when capital is fixed,for both permanent and casual employees.

[618] Several assumptions underpin the model,including the degree of substitution between employees and the elasticity of demand for output. The model included a range of estimates on the elasticity of substitution of labour from previous Australian studies that examined labour’s response to changes in minimum or aggregate wages. 479

[619] The Lewis Report notes that there is little evidence for the magnitude of the elasticity of demand for output of the relevant industries (that is,the retail,café and restaurant,hairdressing and beauty industries). In discussing the different sub-sectors that form the retail sector—from areas such as groceries which is likely to be less responsive to price changes compared with demand for electronic goods,as well as the consideration that eating out is a “luxury good”—Professor Lewis considered a range of elasticities of demand for output which varied from –0.1 to –3.0. 480

[620] Tables 4a and 4b on pp. 29-30 of the Lewis Report present the range of assumptions and the results from the modelling in the Lewis Report. It shows that,with an elasticity of substitution of labour of 0.5 and an elasticity of output of –0.1,penalty rates on Sunday would reduce demand for hired labour in retail of permanent employees to 87 per cent of the level without penalty rates in the short run,when capital is fixed,and 78 per cent in the long run,when firms have time to adjust capital. Under the same assumptions,the demand for permanent employees on public holidays in retail would be 80 per cent of the level without penalty rates in the short run and 66 per cent in the long run. The full range of estimates is not presented as Professor Lewis found that in some scenarios firms would not choose to employ hired labour.

[621] The Lewis Report concluded that the effect of penalty rates is that employment would be lower for both permanent and casual employees than if there were no penalty rates. 481

[622] Professors Quiggin 482 and Borland483 both responded that the studies cited in the Lewis Report were either misleading or of limited value.484 In reference to Professor Borland’s arguments,SDA and United Voice submit that applying the elasticity of labour from minimum and aggregate wage studies to the analysis of penalty rates does not account for the differences between the two types of wage payments.485 This is said to be so because the population that receives penalty rates is different to the population that receives the minimum wage,and that penalty rates are payable at different times and days.486

[623] SDA and United Voice contend that the studies referred to by Professor Lewis provided ‘no useful insight into the appropriate elasticities to apply when performing penalty rate elasticity modelling’. 487

[624] ABI relied on Professor Lewis’response,namely that he adopted the findings of the impact of minimum wages on employment ‘to simply establish the principle that there is substitution between hired labour and other inputs in response to wage rates’. 488

[625] The difficulty with the proposition advanced by ABI (and other employer organisations) is that during the course of his cross-examination Lewis agreed ‘the elasticity of employment with respect to the minimum wage …[is clearly] not relevant to this penalty rate case’and that he relies on ‘the elasticities of substitution,some of which are a by-product of the minimum wage studies’. 489

[626] In reference to the elasticities of substitution used in the Lewis Report,ABI notes that Professor Lewis argued that the elasticities he adopted ‘fall within the range of estimates contained in the Australian literature’. 490

[627] However,as the SDA and United Voice submit,some of the elasticities used by Professor Lewis were unconvincing and in the PC Final Report the Productivity Commission regarded a labour demand elasticity of –3,as derived from a previous paper by Professor Lewis,to be “unrealistic”. 491

[628] SDA and United Voice criticised the five assumptions that “underpin”the modelling by Professor Lewis and which Professor Borland suggests ‘are so flawed as to render his modelling unreliable and not demonstrative of any negative effect on employment caused by penalty rates’. 492

[629] During the course of his evidence Professor Lewis acknowledged 493 that the conceptual basis for his conclusions is represented in the chart494 below.

A model of the scale effect

[630] SDA and United Voice criticised Professor Lewis’model for assuming perfect competition. This impacts the scale effect,or the size of the pass-through effect of a reduction in penalty rates on product prices.

[631] We note that during the course of cross examination Professor Lewis conceded that the markets for hospitality and retail are not perfectly competitive and but have a high degree of competition. On this basis it is reasonable to conclude that the projected decrease in prices will be less than claimed in the Lewis Report. 495

[632] It is also relevant to observe that the conceptual basis for Professor Lewis’model (lower wage costs →lower prices →increased demand →increased labour) was not supported by any of the employer lay evidence in the proceedings. The lay witnesses spoke of responding to penalty rate reductions by improving the range and level of services but not one suggested that prices would fall if penalty rates were reduced.

[633] Professor Lewis stated that his simulation modelling contains a range of estimates that ‘represent a very conservative scenario’and that whichever estimates are adopted,‘the employment effects of penalty rates are significant’. 496 However,SDA and United Voice claimed that in cross-examination Professor Lewis accepted that the estimates were “probably unduly biased upward”497 and therefore likely to overstate any employment response. Professor Quiggin discussed a number of Australian and international studies on minimum wages which provided lower estimates of the elasticity of labour demand than those cited by Lewis. This also supports the argument that the Lewis model overstates any employment effects.498

[634] Professor Borland argued that Professor Lewis did not consider how a reduction in penalty rates would affect the demand for output (and employment) across other industries using a general equilibrium model. 499 Professor Borland commented that a reduction in employment in other industries would occur if there was an increase in employment in the restaurant industry.500

[635] SDA and United Voice submit that a general equilibrium model is more appropriate as it ‘says that if demand,and therefore employment,increases in one area,such as restaurants,then it must decrease in another,such as supermarkets’. 501

[636] Professor Lewis acknowledged that “some ‘demand shifting’of output takes place to weekdays and away from Sundays and public holiday demand by consumers”,although “there are little available data on this and so it is difficult to predict what the effect of ‘demand shifting’is on employment.” 502

[637] We note that the minimum wage studies referred to estimate wage changes that are different to penalty rates and also to a group of workers not identical to those receiving penalty rates. Although workers receiving penalty rates or modern award minimum wages are more likely to be comparable as they tend to be employed in similar industries,minimum wage adjustments are very different to changes in penalty rates. Penalty rates are a form of extra payment received for working specific hours or days of the week,while minimum wages are not confined to these restrictions and must be paid on all days.

[638] The Lewis Report considered the effects of introducing penalty rates and thereby increasing wages. It is assumed that stemming from his results,Professor Lewis would conclude that any effects following a reduction in penalty rates would be of the same magnitude as his current findings,albeit in the opposite direction. However,as explained by Professors Borland and Professor Quiggin,and conceded by Professor Lewis,employers may need to provide additional remuneration to attract weekend workers,so that the effects of a reduction in penalty rates may not result in the suggested findings.

[639] Finally,as noted in the PC Final Report,the demand for goods and services on any day are partial substitutes for goods and services on other days so that,for example,consumers who shift their shopping or dining patterns to Sundays may reduce this on other days. 503

[640] SDA and United Voice referred to Professor Quiggin’s evidence “that if there is an increase in the number of establishments opening on Sunday or public holidays,any increase in consumer spending on such days would likely come at the expense of other times”. 504

[641] Professor Borland also commented that the model does not allow for consumers who were not able to buy from the firm on a particular day to shift their demand to the same firm on another day or to an alternative firm open on that particular day. Professor Borland stated that “if …a firm opens for an extra day,all of the consumers who now buy from it on that day previously bought from another firm on that day,then there is a zero net effect on employment.” 505

6.3.2 The Yu Report

[642] The Yu Report uses two empirical models to determine if there was any impact from the changes in Sunday penalty rates on employment and hours worked in the New South Wales (NSW) Retail trade industry.

[643] As a result of the award modernisation process,employees in Retail trade in NSW moved from the Shop Employees Award to the General Retail Industry Award 2010. Transitional arrangements were provided to employers in NSW so that the increase in the penalty rates could be phased in through five incremental annual instalments of 10 percentage points beginning 1 July 2010 and ending on 1 July 2014.

[644] Dr Yu examined the effect of an increase in penalty rates on employment by comparing outcomes in the NSW Retail trade industry (where Sunday penalty rates increased from 150 per cent to 200 per cent) with the Victorian Retail trade industry (where Sunday penalty rates remained unchanged). From this analysis,Dr Yu concluded that there was no systematic evidence of an adverse effect on employment following the transitional increases in the Sunday penalty rates in the NSW Retail trade industry.

[645] Using the ABS Labour Force Survey,the difference-in-difference method was applied to determine if there were any effects on aggregate employment or hours worked from the changes in Sunday penalty rates between two periods—February 2000 and June 2009 (pre penalty rate increase) and August 2010 and February 2015 (post penalty rate increase).

[646] This method compares the employment outcomes of a group of workers affected by the penalty rate increase (defined as the treatment group) with an otherwise comparable group of workers that are unaffected by the penalty rate increase (defined as the control group). The difference in outcomes between these two groups is used to determine the employment effect of an increase in penalty rates.

[647] The treatment group comprised Retail trade workers in NSW and the control group comprised Retail trade workers in Victoria. Victoria was selected as a control group because there was no change to penalty rates in this State for Sunday.

[648] To test the comparability of the treatment and control groups,Dr Yu used quarterly data from the ABS Labour Force Survey to compare trends in employment levels and both full-time and part-time hours worked between August 1991 and May 2010 (i.e. before the penalty rate increase). Dr Yu concluded that the two groups shared common trends and were therefore comparable.

[649] The model’s key assumption is that employment trends would be the same for both groups of employees in the absence of an increase in penalty rates after controlling for a number of factors. 506 Dr Yu also noted that “[w]hile the analysis is unable to isolate the effect of the Sunday penalty rates from other changes [in the award]…changes in other entitlements were relatively small or zero”.507

[650] Dr Yu found a negative employment effect in the first year of transitioning to modern awards while the effects in subsequent years were found to be inconsistent,contradictory,and not statistically different from zero. The total effect of the five increases was statistically insignificant. 508 Yu acknowledged that an employment effect may have occurred though it could be too small and therefore would not be statistically significant.509

[651] A second analysis was also performed using HILDA survey data to determine if employment shifted away from Sundays to other days of the week. If both analyses found an effect then that would be evidence that there were employment effects arising from the increases to Sunday penalty rates. If only one analysis found an effect then Dr Yu argued that this may be due to other factors or that any effects did not cause a net welfare loss. 510

[652] The second model used the HILDA Survey to take advantage of its longitudinal nature and also applied the difference-in-difference method to analyse the change in the probability of working on Sundays following each of the Sunday penalty rate increases between 2010 and 2013 arising from the transitional arrangements between NSW and Victorian retail employees. It also controlled for differences in demographic characteristics between the two states.

[653] In the second model,effects on employment were determined by analysing the period between 2008 –2009 (pre penalty rate increase) and 2010-2013 (post penalty rate increase).

[654] Results were compared between different groups of employees:full-time and part-time employees,employees in large businesses and those in small to medium businesses,and adult and junior employees. Dr Yu did not find a shift away from employment on Sundays. 511 Although Dr Yu found a ‘large positive effect’for junior workers,this was only for 2012,and Dr Yu also found that “there was no commensurate decline in non-junior employees working on Sundays”512 and argued that “other factors are motivating these preferences for deploying junior employees on Sunday.”513

[655] Overall,Dr Yu concluded that “the research showed no systematic evidence of an adverse effect on employment following the transitional increases in the Sunday penalty rates in the NSW retail industry”. 514

[656] The main contention among parties was the issue of comparability between the treatment and control groups.

[657] In reply,Ms Pezzullo argued that the two groups did not share common trends and that Victoria was not an appropriate control group. 515 Ms Pezzullo presented data on employment and hours worked from February 2000 to February 2015 and instead argued that employment trends between Victoria and NSW were “diverging”.516 Ms Pezzullo also found that her analysis of the employment trends “strongly”suggested that there was “a break in the trend,at around the end of 2007”to provide further evidence that employment trends were not comparable.517

[658] In response to Ms Pezzullo,Dr Yu revised her first model 518 and found a larger statistically significant negative effect of an increase in penalty rates on employment outcomes in NSW in the first year,and a “weakly significant positive effect”in the second year. 519 Other than these differences,Dr Yu noted that the revised estimates were consistent with the original analysis.520

[659] ABI submits that using Retail trade employment in Victoria as a control group was “fundamentally flawed” 521 as the analysis demonstrated marked differences in employment trends before 2010”.522 Ai Group referred to evidence from Ms Pezzullo on the “diverging trend”between the two states between February 2009 and May 2010,and that there were two structural changes in 2008 and 2010 in Victoria that were not replicated in New South Wales.523

[660] ABI also submits that even if employment trends between NSW and Victoria were comparable before 2010,differences remained between the two states after 2010 that were not controlled for in the analysis 524 and that “any number of factors could have influenced employment in New South Wales post-2010 and countered some of the dis-employment affect associated with the increasing penalty rates during the same period”.525

[661] Ai Group also argued that Dr Yu did not consider other factors relevant to assessing whether Victoria was an appropriate control group,such as demand-side factors,the location of employees between metropolitan and regional areas,profit margins and operating profits of businesses,and employee productivity. 526

[662] In contrast,SDA argued that the various differences referred to were “not relevant to the methodology”as the model requires only comparable or similar trends and not precisely the same trends. 527 However,Dr Yu conceded that factors raised by the employer parties may have affected employment trends post this period.528

[663] SDA argued that ABI failed to show any evidence of differences in economic conditions or in relation to differences in workers’compensation premiums and changes in payroll tax arrangements between the two states. SDA contended that “[i]t is entirely speculative that any of these changes would have affected employment outcomes in the NSW retail industry.” 529

[664] Ms Pezzullo undertakes her own difference-in-difference model designed to address the issues with Dr Yu’s first model and contended that her analysis revealed “a statistically significant and enduring reduction in both employment and hours worked resulting from the Award changes”. 530 However,SDA submitted Dr Yu’s argument that Ms Pezzullo’s model was “unable to establish a statistically significant difference between retail employment in NSW and Victoria post-2010”.531

[665] Ai Group submitted that the ANZSIC Retail trade division reflects different businesses covered by the General Retail Industry Award,and argued that “conclusions in the Yu Report are based on non-consistent data groups”. 532 Ai Group further commented that conclusions stemming from the Yu Report were “industry specific,State specific and time specific”and that there was “no evidence that the same conclusions would be reached if the experiment was applied to the fast food industry”.

[666] Identifying an appropriate control group that is comparable to the treatment group is important as it is the basis for the counterfactual—what would have happened in the absence of the policy change.

[667] In our view the divergent employment trends between NSW and Victorian Retail trade make it challenging to use a difference-in-difference methodology in such a context,as the methodology requires both groups to be comparable.

[668] Another limitation to Dr Yu’s model is that it uses the ABS Labour Force Survey,which cannot identify those award-reliant workers in the NSW retail industry that are affected by the increase in penalty rates or work on Sundays and their Victorian counterparts. 533

[669] Therefore,Dr Yu’s analysis would also capture workers not affected by the penalty rate increase. Despite her argument that all employees should be included—as she notes that changes in awards may flow on to collective and individual agreements 534—not identifying award-reliant workers would result in people allocated to the treatment group who are not affected by penalty rate changes. For example,these people may not be paid penalty rates,and/or work on Sundays.

6.3.3 Conclusion on Employment Effects

[670] At the outset it is important to note that both the Lewis and Yu Reports examine the employment effects from an increase in penalty rates,whereas the claims before us are for a decrease in penalty rates.

[671] As Professor Borland explained,for large changes in wages,the same absolute change can produce different percentage changes in employment when modelling an increase or decrease in wages. 535 This led Professor Borland to conclude that the approach by Professor Lewis provides an upper bound estimate of changes to employment due to penalty rates.536

[672] Professor Borland added that “[e]ven critics of penalty rates acknowledge that some part of penalty rates is a compensating differential for the disutility of working on weekends or public holidays which is necessary in order to induce sufficient labour supply on those days.” 537 That is,“prior to the imposition of penalty rates,the wage rate on weekends and public holidays would already need to be above the base weekday wage rate”538 and therefore “labour costs would not increase by the whole amount of the difference between the regulated penalty rate and the base weekday wage rate”which would overestimate the effect of penalty rates on labour costs from Professor Lewis’model.539

[673] Professor Lewis acknowledged the point made by Professor Borland and responded that “[t]o the extent that the actual market rates of pay,as determined by supply and demand,for work on Sundays and public holidays might be somewhat greater than the market rate for work in non-penalty time then the estimates are biased upwards”. 540

[674] As to the Lewis Report more generally,it seems to us that there is limited utility in applying aggregate elasticities to an assessment of the employment effects of reducing penalty rates which only apply to a segment of the workforce.

[675] The Lewis Report referred to estimates of the elasticity of labour demand with respect to aggregate wages and minimum wages which are in themselves drawn from two different populations and likely to cover industries that may not be relevant to this case. Further,the types of workers that receive penalty rates are different to the types of workers considered in the studies of aggregate wages and minimum wages,as penalty rates are payable at different times and days.

[676] Professor Quiggin argued that the studies relied upon by Professor Lewis produced relatively high estimates of the elasticity of labour demand with respect to wages and that the studies selected represented “a minority view and should not be regarded as an appropriate basis for wages policy”. The Productivity Commission agreed that a labour demand elasticity of –3,as assumed by Professor Lewis,would imply a very substantial and “unrealistic”increase in weekend employment.

[677] We also note that under cross-examination Professor Quiggin agreed that his criticism of Professor Lewis was that he had overstated the impact of minimum wages on labour demand and said that the dominant view is that there is a small impact and some mainstream studies maintain that there is no impact. 541 Professor Quiggin also agreed that the setting of wages levels can give different effects with respect to the impact on employment and there is a level of minimum wages at which increases have a substantial effect.542

[678] Professor Quiggin also agreed that there is a substantial difference in the penalty rates prescribed for Saturday and Sunday work in the Retail and Hairdressing Awards respectively and in response to the proposition that such a difference may have a substantial dis-employment effect said that there would be substantial lower employment on Sunday consistent with the intention of penalty rates to set aside Sunday in particular as a day when people are not expected to work. However,Professor Quiggin maintained that nearly all of this employment loss would be made up on other days of the week. 543

[679] In response to the proposition that if there is a substantial increase in the wage then it is likely that there would be a dis-employment effect that would be more than small,Professor Borland said that this depended on the wage elasticity. If there is a bigger wage change there will be a bigger change in employment and whether that is substantial or not depends on the elasticity. 544

[680] The Lewis Report is further limited due to several of the assumptions that underpin the model,each of which are likely to overstate any employment effects. Further,the employer lay evidence before us suggests that past penalty rate adjustments (up or down) have not had significant employment effects.

[681] As we note at [773][775] a number of the lay witnesses called by the Hospitality Employers were cross examined about the transitional provisions in respect of loadings an penalty rates for casual employees in South Australia (the effect of the S.A. transitional arrangements was that employers employing casuals may have had reduced labour costs as a result of the implementation of the modern award). As we observe at [775],that evidence may cast some doubt on the proposition that a reduction in weekend penalty rates will have a positive impact on employment.

[682] Indeed,some of the employer lay evidence suggests that,in the past,factors other than changes in weekend penalty rates must have had a greater impact on the demand for labour. For example,Mr Barron points to the fact that the allocated labour hours to Sundays for Sussan and Sportsgirl stores in NSW and Victoria fell between 2010/11 and 2014/15. The percentage fall in Sunday hours was higher in Victoria than in the NSW despite that fact that Sunday penalty rates have increased in NSW and had remained unchanged in Victoria. No satisfactory explanation is provided for this evident anomaly (see [1508][1509]).

[683] However the employer lay evidence also supports the general proposition that the current level of Sunday penalty rates has led employers to take measures to reduce the labour costs associated with trading on Sunday and that a lower Sunday penalty rate would increase service levels with a subsequent increase in employment (in terms of hours worked by existing employees or the engagement of new employees).

[684] In its consideration of changes to employment from reducing Sunday penalty rates to Saturday penalty rates,the PC Final Report concluded that there “are likely [to] be some positive employment impacts,though less than those sometimes claimed by the proponents of reduced penalty rates”. 545 We agree with that assessment,though it is difficult to quantify the precise effect.

[685] Further,as we have mentioned,in the context of minimum wages Professors Borland and Quiggin both conceded that there is greater potential of an employment effect from a larger or more substantive increase. 546 These conclusions support the view of the Expert Panel,stated in the Annual Wage Review 2015–16 decision,that “modest and regular increases in minimum wages have a small or even zero impact on employment”.547

[686] While we believe that the relevance of the Lewis Report to the matters before us is limited,due to,among other things the nature of the assumptions that underpin the model used,each of which are likely to overstate any employment effects,we are of the view that overall,there may be some modest gains in employment as a consequence of a reduction in penalty rates. Although as noted in the PC Final Report,the employment effects are likely to be less than estimates such as those suggested in the Lewis Report. However the magnitude of the employment effect is difficult to quantify as a result of the competing substitution effects described in the PC Final Report.

[687] Further,we agree with the view expressed by Professor Quiggin that many other factors affect employment,such as economic conditions. 548 Professor Lewis accepted that “[i]solating the impacts of changes in award wages are fraught with difficulty and is largely responsible for the lack of consensus on the employment impacts of changes to imposed wages such as awards,including minimum wages”.549

[688] On the basis of the evidence before us,we have concluded that reducing penalty rates may have a modest positive effect on employment.

6.4 Summary

[689] The following propositions emerge from the evidence before us:

    1. There is a disutility associated with weekend work,above that applicable to work performed from Monday to Friday. Generally speaking,for many workers Sunday work has a higher level of disutility than Saturday work,though the extent of the disutility is much less than in times past.

    2. We agree with the assessment in the PC Final Report that there are likely to be some positive employment effects from a reduction in penalty rates,though it is difficult to quantify the precise effect. Any potential positive employment effects from a reduction in penalty rates are likely to be reduced due to substitution and other effects.

[690] As to proposition 1,we are aware that our conclusion is different to that in the PC Final Report. However,in the proceedings before us we have had the opportunity to consider evidence not available to the Productivity Commission,such as the Pezzullo Weekend Work Report,the Rose Report and the Sands Report,in addition to a substantial amount of lay employer and employee evidence. None of the above Reports concluded that the activities conducted on,and attitudes towards,Saturdays and Sundays were identical.

7. The Hospitality Sector

      7.1 Overview

[691] This section presents data on the Hospitality group of modern awards,that is:

  • Hospitality Industry (General) Award 2010;

  • Registered and Licensed Clubs Award 2010;

  • Restaurant Industry Award 2010;and

  • Fast Food Industry Award 2010. 550

[692] The data are collected from five sources:the ABS,the Fair Work Commission’s AWRS and the Fair Work Commission’s Award Reliance Survey (ARS),the HILDA Survey and the Department of Employment’s Workplace Agreements Database (WAD). The ABS contains a number of surveys on the performance,structure and characteristics of industries. The AWRS,ARS and HILDA are large-scale quantitative surveys that collectively provide information on enterprises,employees and households. HILDA has the added advantage of presenting information over time. The WAD is a database that contains information of all Australian enterprise agreements. Further information on the Commission’s data sources is located on its website. 551

[693] A paper 552 by Commission staff provides a framework for ‘mapping’modern award coverage to the Australian and New Zealand Standard Industrial Classification (ANZSIC).

[694] There are 4 levels within the ANZSIC structure:division,subdivision,group and class. The most detailed level is the class (or 4 digit level) but data at this level is limited. The most readily available data is at the division level (or 1 digit level). In this instance,the relevant division of ANZSIC is Division H:Accommodation and food services. For convenience we refer to this collection of industries as ‘the Hospitality sector’. The subdivisions,groups and classes within Accommodation and food services are set out below:

  • 44 Accommodation
    • 440 Accommodation

      • 4400 Accommodation
  • 45 Food and beverage services

    • 451 Cafes,Restaurants and Takeaway Food Services

      • 4511 Cafes and restaurants

      • 4512 Takeaway food services

      • 4513 Catering services
    • 452 Pubs,Taverns and Bars

      • 4520 Pubs,Taverns and Bars
    • 453 Clubs (Hospitality)

      • 4530 Clubs (Hospitality)

[695] Table 15 shows how the modern awards in the Hospitality group ‘map’with the relevant industry class.

Table 15 553

Modern awards ‘mapped’to ANZSIC class

Hospitality group modern award

ANZSIC class within accommodation and food services

Hospitality Industry (General)

4400 –Accommodation
4511 –Cafes and restaurants
4513 –Catering services
4520 –Pubs,taverns and bars

Registered and Licensed Clubs

4530 –Clubs (Hospitality)

Restaurant Industry

4511 –Cafés and restaurants

Fast Food Industry

4512 –Takeaway food services

[696] We propose to first set out the data relating to the Hospitality sector and the employers who operate within it,before turning to the characteristics of employees in the sector. It should be noted that the data in some of the tables presented in this chapter may not add up to 100,due to rounding.

      7.1.1 Features of the Hospitality Sector

        (i) General economic indicators

[697] Key economic indicators of the Hospitality sector are presented in Table 16. The data show that the sector accounted for:

  • over $80 billion of sales and 2.5 per cent of value added to the economy;

  • 7 per cent of employment,almost 6 per cent of actual hours worked per week in all jobs and over 4 per cent of wages;

  • around 4 per cent of all businesses and 14 per cent of all award-reliant non-managerial employees;

  • 1 per cent of investment;

  • around 16 per cent of total underemployment;and

  • around $6.6 billion in company gross operating profit.

Table 16 554

Economic indicators of Hospitality sector

 

Hospitality sector

Percentage of all industries

Industry value added ($m) (June 2016)a

39 006

2.5

Sales ($m) (June 2016)a,c

84 799

3.3

Employment (‘000s) (August 2016)b

838

7.0

Actual hours worked per week in all jobs (‘000s)
(August 2016)b

22 509

5.6

Company gross operating profit ($m) (June 2016)a,c

6570

2.6

Wages ($m) (June 2016)a,d

22 527

4.4

Gross fixed capital formation ($m) (June 2015)a

3990

1.0

Businesses (June 2015)e

87 555

4.1

Award-reliant non-managerial employees (‘000s)
(May 2016)d

317

13.9

Underemployment (‘000s) (August 2016)b

172

16.1

Note:(a) sum of four quarters;(b) average over the four quarters;(c) All industries excluding Agriculture,forestry and fishing,Education and training,Health care and social assistance and some subdivisions of Finance and insurance services;(d) all industries excluding Agriculture,forestry and fishing;(e) All industries excluding the public sector.

Industry value added and sales are seasonally adjusted and expressed in real terms from chain volume estimates. Employment is expressed in seasonally adjusted terms. Actual hours worked per week in all jobs and underemployment are expressed in original terms. Company gross operating profits and wages are seasonally adjusted from current price estimates. Gross fixed capital formation is expressed in original and real terms,from chain volume estimates.

        (ii) Business size

[698] As shown in Table 17,businesses in the Hospitality sector were predominantly small and non-employing businesses businesses and more likely to be employing businesses compared with businesses across all industries.

Table 17 555
Percentage of businesses by business size,June 2015

 

Hospitality sector

All industries

 

(%)

(%)

All businesses

  

Non-employing

27.1

60.6

Small

64.5

36.9

Medium

8.0

2.4

Large

0.4

0.2

 

100.0

100.0

Employing businesses

  

Small

88.5

93.5

Medium

11.0

6.1

Large

0.5

0.4

 

100.0

100.0

Note:Small businesses employ less than 20 persons,medium businesses employ 20 to 199 persons and large businesses employ 200 or more persons. The publication only includes actively trading businesses in the market sector and hence excludes entities that are in the public sector.

[699] In June 2015,small businesses accounted for almost two-thirds of all businesses in the Hospitality sector. Small and medium businesses comprised a higher proportion of businesses in this sector than across all industries. Non-employing businesses comprised around 60 per cent of businesses across all industries and less than 30 per cent in the Hospitality sector.

      (iii) Industry concentration and competition

[700] Industry concentration refers to the degree with which a small number of firms provide a major proportion of total production within an industry and provides a measure of competition within an industry.

[701] As shown in Table 18,in the Hospitality sector,small and medium businesses accounted for similar proportions of wages and salaries,sales and service income and industry value added,ranging between 36 to 40 per cent. Both small and non-employing businesses and medium businesses accounted for a higher proportion than large businesses across each of these measures.

[702] Relative to total selected industries (i.e. all industries except for Financial and insurance services),small and non-employing businesses and medium businesses in the Hospitality sector accounted for higher proportions across each of these measures,while large businesses accounted for lower proportions.

Table 18 556

Wages and salaries,sales and service income,and industry value added by business size,
2014–15

 

Percentage of industry total

 

Wages and salaries

Sales and service income

Industry value added

 

(%)

(%)

(%)

Hospitality sector

   

    Small and non-employing

36.1

39.8

37.8

    Medium

37.6

37.3

36.7

    Large

26.3

22.9

25.6

 

100.0

100.0

100.0

Total selected industries

   

    Small and non-employing

28.2

35.3

35.6

    Medium

26.8

22.3

21.5

    Large

44.9

42.4

43.0

 

100.0

100.0

100.0

Note:Small businesses employ less than 20 persons,medium businesses employ 20 to 199 persons and large businesses employ 200 or more persons. Total selected industries exclude Financial and insurance services as businesses in this industry were not in the scope of the survey. Small and non-employing businesses cannot be disaggregated.

[703] Table 19 provides information on the nature of the market and measures of competition for enterprises in the Hospitality sector and across all industries in 2014. Subjective measures of market and competition include the number of direct competitors and the degree of competition observed for their major products and/or services during the last financial year.

Table 19 557
Market and competition,2014

 

Hospitality sector

All industries

 

(%)

(%)

Nature of market

  

Domestic only

97.9

83.6

Domestic with some export

2.0

14.6

Export with some domestic

np

1.4

Export only

0.5

 

100.0

100.0

Market focus

  

Immediate local area only

76.1

44.0

Intrastate

9.2

19.5

Interstate

2.7

9.1

Australia wide

12.0

27.4

Other

np

 

100.0

100.0

Number of direct competitors

  

1–4

22.9

21.7

5–9

24.0

23.6

10–19

22.5

18.9

20–49

12.7

12.8

50 or more

15.0

16.4

None/captive market/no effective competition

2.8

6.6

 

100.0

100.0

Degree of competition

  

Intense competition

28.9

29.6

Strong competition

46.4

42.3

Moderate competition

22.2

21.6

Limited competition

2.5

6.5

 

100.0

100.0

Note:np = not published due to estimate having a relative standard error of greater than 50 per cent.

[704] Most enterprises in the Hospitality sector operated in a domestic market only and a lower proportion operated in a market with exports compared with all industries. The market focus for most enterprises in the Hospitality sector was the immediate local area only and a lower proportion focused outside this area compared with all industries.

[705] The highest proportion of enterprises in the Hospitality sector and across all industries reported that the number of direct competitors was five to nine,while enterprises in the Hospitality sector were less likely to report no direct competitors. Further,while most enterprises reported strong or intense competition,enterprises in the Hospitality sector were less likely to report limited competition.

      (iv) Award reliance

[706] The most common method of setting pay in the Hospitality sector is awards. In the Hospitality sector,42.7 per cent of non-managerial employees were reliant on award wages. In contrast,only 24.5 per cent of non-managerial employees were reliant on award wages in all industries.

[707] Relative to all industries,this sector has a significantly higher proportion of non-managerial employees paid at the award rate,offset by lower proportions of non-managerial employees on collective agreements and individual arrangements (Table 20).

Table 20 558

Methods of setting pay,non-managerial employees,May 2016

 

Hospitality sector

All industries

 

(%)

(%)

Award only

42.7

24.5

Collective agreement

35.7

38.9

Individual arrangement

21.7

36.6

 

100.0

100.0

Note:Data may not sum to 100 due to rounding.

[708] The Commission’s Award Reliance Survey collected data on the number of organisations that use each modern award. The most common modern award used by
award-reliant organisations within the Hospitality sector in 2013 was the Hospitality Industry (General) Award 2010 (Table 21). This was used by more than six in 10 award-reliant organisations. It was also the third most common modern award used by award-reliant organisations across all industries.

Table 21 559

Top 10 modern awards used in Accommodation and food services,
percentage of award-reliant organisations,2013

 

Accommodation and food services

All industries

 

(%)

(%)

Hospitality Industry (General) Award 2010

64.2

13.3

Restaurant Industry Award 2010

17.8

3.7

Fast Food Industry Award 2010

8.1

1.8

Registered and Licensed Clubs Award 2010

3.4

1.4

Cleaning Services Award 2010

3.1

3.9

General Retail Industry Award 2010

2.0

15.1

Clerks—Private Sector Award 2010

2.0

16.0

Food,Beverage and Tobacco Manufacturing Award 2010

1.1

1.2

Road Transport and Distribution Award 2010

0.6

2.3

Social,Community,Home Care and Disability Services Industry Award 2010

0.4

1.2

Note:An award-reliant organisation has at least one employee that receives the exact award rate of pay.

      (v) Profitability

[709] Profit margins are operating profits before tax as a percentage of income received. Profit margins provide an indicator of profitability in an industry and may indicate the level of competition within an industry. Profit margins may also demonstrate the level of capital intensity.

[710] The profit margins of the Hospitality sector were lower than total selected industries for the period 2012–13 to 2014–15 (Chart 17). Profit margins in the Hospitality sector were around 8–9 per cent compared with around 11 per cent for total selected industries.

Chart 17 560
Profit margins,2012–13 to 2014–15

Note:Profit margins are calculated as the percentage of sales and service income available as operating profit before tax. Total selected industries exclude Financial and insurance services as businesses in this industry were not in the scope of the survey.

      (vi) Wages and salaries

[711] Wages and salaries as a percentage of total expenses for the Hospitality sector and all industries for the years 2012–13 to 2014–15 are presented in Chart 18. In 2014–15,wages and salaries as a percentage of total expenses were 8.2 percentage points higher in the Hospitality sector (26.9 per cent) than total selected industries (18.7 per cent).

Chart 18 561

Wages and salaries as a percentage of total expenses,2012–13 to 2014–15

Note:Total selected industries exclude Financial and insurance services as businesses in this industry were not in the scope of the survey.

      (vii) Productivity

[712] Average annual growth in productivity is presented for both labour and multifactor productivity over the two most recent productivity cycles,2003–04 to 2007–08 and 2007–08 to 2014–15 (Chart 19). This follows a common approach to measuring productivity by comparing average annual rates of growth in the market sector 562 between peaks in the productivity cycle (as identified by the ABS) rather than focusing on short-run (quarterly and annual) trends.

[713] The data show that average annual growth of both labour and multifactor productivity were higher in the Hospitality sector compared with the market sector for the productivity cycle 2003–04 to 2007–08. In the most recent productivity cycle between 2007–08 and 2014–15,average annual growth in labour productivity in the Hospitality sector was lower than the market sector,while average annual growth in multifactor productivity was higher.

Chart 19 563
Average annual growth rates of labour and multifactor productivity,2003–04 to 2014–15

Note:The 2007–08 to 2014–15 growth cycle is incomplete. Labour productivity measures the amount of output per unit of labour which is measured in terms of gross value added per hour worked on a quality adjusted hours basis. Multifactor productivity measures the ratio of growth in output to growth in two or more factor inputs and represents that part of the change in output that cannot be explained by changes in the inputs. Multifactor productivity,in this case,is based on the gross value added of capital and labour in production and is measured on a quality adjusted hours basis. The total market sector comprises all industries except for Public administration and safety,Education and training and Health care and social assistance.

      (viii) Business viability

[714] Chart 20 shows the survival rates in June 2015 of businesses that were operating in June 2011 by business size. By business size,survival rates increased with business size in the Hospitality sector and for all industries. However,survival rates in the Hospitality sector were lower than all industries across all business sizes except for large businesses.

Chart 20  564
Business survival rates,by employment size,June 2011 to June 2015

Note:Survival rates in June 2015 of businesses that were operating in June 2011. The publication only includes actively trading businesses in the market sector and hence excludes entities that are in the public sector.

      (ix) Enterprise characteristics

[715] Most enterprises in the Hospitality sector operated 7 days per week,while across all industries only about 3 out of every 10 enterprises operated 7 days per week and almost half of all industries operated on weekdays only (table 22).

Table 22 565

Structure and operations,2014

 

Hospitality sector

All industries

 

(%)

(%)

Operating days

  

Weekdays only

8.6

48.8

Weekdays and Saturday

5.3

17.5

Some weekdays and weekend

5.4

2.3

Operating 7 days

80.5

31.1

Other

np

0.4

 

100.0

100.0

Average number of operating days per week

6.7

5.8

Average years of operation under current ownership

15.6

18.5

Note:np = not published due to estimate having a relative standard error of greater than 50 per cent.

      (x) Labour market trends

[716] Table 23 shows how employment in the Hospitality sector industry groups changed between August 2011 and August 2016. Over the period,employment in the Hospitality sector increased by more than the total workforce,especially full-time employment.

Table 23 566

Average annual growth rate of employed persons,by full/part-time status,
August 2011 to August 2016

Industry group

Full-time

Part-time

Total

 

(%)

(%)

(%)

Hospitality sector

1.1

2.6

2.0

All industries

0.7

2.7

1.3

Note:All data are expressed in original terms.

    7.1.2 Hospitality sector employees

      (i) Composition of employment

[717] Employment in the Hospitality sector comprised around 7 per cent of total employment,in August 2016. As shown in Table 24,more than half of the workforce was female and employed part-time,which is above the proportions reported across all industries. Over one third of employees (35.7 per cent) were female and employed part-time,compared with 21.8 per cent of employees across all industries.

Table 24 567
Composition of employed persons,August 2016

 

Total employment

Percentage of total employment

  

Male

Female

Total

Total

  

Full time

Part time

Full time

Part time

Male

Female

Full time

Part time

 

(‘000s)

(%)

(%)

(%)

(%)

(%)

(%)

(%)

(%)

Hospitality sector

841.3

23.3

23.3

17.7

35.7

46.6

53.4

41.0

59.0

All industries

11 869.1

43.5

10.1

24.6

21.8

53.6

46.4

68.1

31.9

Note:Data may not sum to 100 due to rounding. All data are expressed in original terms.

[718] As shown in Table 25,young people aged between 15 and 24 years were more likely to be employed in the Hospitality sector,comprising almost half of employed persons,compared with around 1 in 6 employed persons across all industries.

Table 25 568

Employed persons by age,August 2016

Age

Hospitality sector

All industries

(Years)

No. (‘000s)

Percentage of industry employment

Percentage of total employment

15–19

211.7

25.2

5.3

20–24

160.0

19.0

9.7

25–34

185.5

22.0

23.5

35–44

109.1

13.0

21.8

45–54

96.5

11.5

21.2

55–59

38.9

4.6

8.7

60–64

23.2

2.8

5.9

65 and over

16.4

1.9

3.8

Total

841.3

100.0

100.0

Note:All data are expressed in original terms.

      (ii) Average hours worked

[719] Table 26 shows that the average hours actually worked per week in all jobs in August 2016 were lower for the Hospitality sector than across all industries.

[720] Full-time workers in the Hospitality sector worked longer hours per week on average than the total workforce;however,part-time workers worked fewer hours per week on average than the total workforce.

Table 26 569

Average hours actually worked in all jobs,by full/part-time status,August 2016

Industry group

Average hours actually worked in all jobs

 

Full-time

Part-time

Total

Hospitality sector

44.2

15.3

27.1

All industries

40.6

17.4

33.2

Note:Actual hours of work refers to the hours actually worked during normal periods of work (including overtime) over a specified reference week. It excludes meal breaks,paid/unpaid time ‘on call’,commuting time and time off during work hours to attend educational activities not connected to the job. The actual hours of work over a specified period may be affected if the person took personal/annual leave,went on strike,changed job,or similar reasons.

      (iii) Forms and conditions of employment

[721] Compared to all industries,a higher proportion of employees in the Hospitality sector did not have paid leave entitlements (Table 27).

Table 27 570

Employed persons by employment type in main job,August 2016

 

Hospitality sector

All industries

 

No. (‘000s)

Percentage of employment

Percentage of
employment

Employee

742.5

88.3

82.7

    With paid leave entitlements

255.9

30.4

62.0

    Without paid leave entitlements

486.7

57.9

20.8

Owner manager of enterprise with employees

69.1

8.2

6.2

Owner manager of enterprise without employees

26.6

3.2

10.9

Contributing family worker

3.1

0.4

0.2

Total

841.3

100.0

100.0

Note:All data are expressed in original terms.

[722] About 7 out of 10 full-time employees and over 1 in 7 part-time employees in the Hospitality sector had paid leave entitlements. Relative to all industries,both full-time and part-time employees in the Hospitality sector were more likely to be employed without paid leave entitlements (Table 28).

Table 28 571

Employees with and without paid leave,August 2016

 

Full-time

Part-time

All employees

 

With paid leave

Without paid leave

With paid leave

Without paid leave

With paid leave

Without paid leave

 

(%)

(%)

(%)

(%)

(%)

(%)

Hospitality sector

68.8

31.2

15.0

85.0

34.5

65.5

All industries

88.3

11.7

46.1

53.9

74.9

25.1

[723] An absence of paid leave entitlements is an indication of casual employment. It follows there are a higher proportion of casual employees in the Hospitality sector than in all industries.

      (iv) Employment tenure

[724] Workers in the Hospitality sector were more likely to experience a shorter duration of employment with an employer/business than workers across all industries. Chart 21 shows that almost 3 in 10 workers in the Hospitality sector had been with their current employer/business for ‘1–2 years’,while almost 1 in 3 workers had been with their employer/business for less than 12 months.

Chart 21 572

Duration of employment with current employer/business in Accommodation and food services,February 2015

Note:The duration categories have changed since the last version for the new ABS publication.

      (v) Work schedule

[725] Table 29 shows the prevalence and types of shiftwork arrangements used in enterprises in the Hospitality sector and across all industries,in 2014. Over half of enterprises in the sector used shiftwork arrangements compared with less than one quarter across all industries. The most common shiftwork arrangements among enterprises in the Hospitality sector were evening and night shifts,short shifts of four hours or less,afternoon shifts and eight-hour shifts. Across all industries,the most common shiftwork arrangements were eight-hour shifts and set rosters.

Table 29 573

Prevalence and types of shiftwork arrangements,2014

 

Hospitality sector

All industries

 

(%)

(%)

Uses shiftwork arrangements

58.7

23.8

Types of shiftwork arrangements

  

Rotating rosters

74.0

57.1

Set rosters

73.1

77.6

Early morning shifts

58.7

62.2

Afternoon shifts

83.8

71.9

Evening and night shifts

87.5

70.8

Standard business hours

48.5

69.7

Split/broken shifts

60.5

36.1

Standby/on call

31.8

39.8

8-hour shifts

80.0

80.3

12-hour shifts

21.0

27.8

Short shifts of 4 hours or less

86.0

53.7

Other

0.1

3.6

[726] Using the HILDA survey,Table 30 shows the current work schedule for employed persons in their main job in 2015. The most common schedule for employees in the Hospitality sector was a regular daytime schedule,although this proportion was less than for employed persons across all industries. Employed persons in the Hospitality sector were more likely to work a regular evening,night or rotating shift,or an irregular schedule compared with employed persons across all industries.

Table 30 574

Current work schedule in main job,employed persons,2015

 

Hospitality sector

All industries

 

(%)

(%)

A regular daytime schedule

39.1

75.5

A regular evening shift

19.7

3.7

A regular night shift

6.0

1.7

A rotating shift (changes from days to evenings to nights)

18.4

9.4

Split shift (two distinct periods each day)

5.9

1.4

On call

1.8

1.1

Irregular schedule

9.1

6.9

Other

0.0

0.2

 Total

100.0

100.0

        (vi) Earnings

[727] Most employees in the Hospitality sector received the adult rate of pay;however,the proportion was less than for all industries. Around one quarter of employees in the Hospitality sector were paid a junior rate of pay (Table 31).

Table 31 575

Employees by rate of pay,May 2016

 

Hospitality sector

All industries

 

(%)

(%)

Adult rate of pay

75.5

94.0

Junior rate of pay

23.3

4.1

Apprentice or trainee

np

1.9

Disability rate

np

0.1

All rates of pay

100.0

100.0

Note:np = not published but included in totals.

[728] Average weekly earnings of employees in the Hospitality sector were lower than for all industries across each measure set out in Table 32. While average weekly earnings were less than half of average weekly earnings across employees in all industries,this increased to around 70 per cent for full-time adult employees.

Table 32 576

Average weekly earnings,May 2016

 

Hospitality sector

All industries

Ratio of Accommodation and food services relative to all industries

 

($)

($)

(%)

Average weekly earnings,all employees

541.20

1160.90

46.6

Average weekly earnings,full-time adult employees

1079.50

1573.30

68.6

Average weekly ordinary time earnings,
full-time adult employees

1069.80

1516.00

70.6

Average weekly ordinary time earnings,
full-time adult male employees

1112.50

1613.50

68.9

Average weekly ordinary time earnings,
full-time adult female employees

999.60

1352.10

    73.9

Note:All data are expressed in original terms.

[729] Lower average hourly total cash earnings for adult employees in the Hospitality sector are also evident by the distribution shown in Chart 22. The distribution of hourly total cash earnings for adult employees in the sector are much more concentrated toward the lower end of the wage distribution than the earnings of adult employees as a whole. Relative to all industries,the Hospitality sector had a higher concentration of employees earning up to $23 per hour.

Chart 22 577

Distribution of hourly total cash earnings,adult employees,May 2014

Note:Earnings are calculated at $1 intervals up to and including the amount presented (e.g. $17 includes amounts over $16 per hour and up to and including $17 per hour) for adult employees in the federal jurisdiction. Earnings are discounted to take account of casual loading.

[730] Wages growth in the Hospitality sector has been lower than wages growth across all industries for most of the period between the June quarter 2011 and the June quarter 2016. However,since the September quarter 2014,wages growth in the Hospitality sector has mostly been higher than wages growth across all industries (see Chart 23 below).

Chart 23 578

Annual growth in Wage Price Index,June quarter 2011 to June quarter 2016

Note:All data are expressed in original terms.

      (vii) Penalty payments

[731] The Commission’s AWRS collected detailed data on employees’wages and can identify employees that received penalty rates. A higher proportion of employees working in the Hospitality sector received penalty rates compared with employees across all industries (see Table 33 below).

Table 33 579
Percentage of employees who receive penalty rates,by method of setting pay,2014

 

Hospitality sector

All industries

 

        (%)

        (%)

Award

        28.5

        22.0

Other methods

        3.7

        6.2

All employees

        19.1

        10.6

Note:‘Other methods’of setting pay include enterprise agreements and individual arrangements. The sample analysed was restricted to employees that reported working for businesses that either operated 6 or 7 days in a week,operated on weekends or used shiftwork arrangements. ‘Penalty rates’are collected in the AWRS by asking participants for the gross (before-tax) amount received for penalty payments (for work performed outside standard hours).

      (viii) ‘Low paid’employees in the Hospitality sector

[732] As mentioned earlier,a threshold of two-thirds of median full-time wages provides ‘a suitable and operational benchmark for identifying who is low paid’,within the meaning of s.134(1)(a) (see [165][168] above).

[733] The most recent data for median earnings is for May 2016 from the ABS EEH Survey. Data on median earnings are also available from the CoE survey in August 2015.

[734] The following charts present the minimum weekly wages of each classification in the Hospitality Industry (General) Award 2010,Registered and Licensed Clubs Award 2010,Restaurant Industry Award 2010,and Fast Food Industry Award 2010,and compare them with two-thirds of full-time median earnings. The minimum weekly wages presented from these awards are those determined from the Annual Wage Review 2014–15 on 2 June 2015.

[735] Chart 24 shows that the full-time weekly wage for each classification in the Hospitality Industry (General) Award 2010 was below the EEH measure of two-thirds of median full-time earnings. However,the full-time weekly wage for the Level 6 classification was above the CoE measure of two-thirds of median full-time earnings.

Chart 24 580

Comparison of minimum weekly wages in the Hospitality Industry (General) Award 2010 and two-thirds of median full-time earnings

Note:Weekly earnings from the CoE survey are earnings in the main job for full-time employees. Weekly earnings from the EEH survey are weekly total cash earnings for full-time adult non-managerial employees.

[736] Chart 25 shows that the full-time weekly wages for classifications between Introductory and Level 5 in the Registered and Licensed Clubs Award 2010 were below both the CoE and EEH measure of two-thirds of median full-time earnings. The full-time weekly wages for classifications between Level 6 and Level 9 were below the EEH measure of two-thirds of median full-time earnings.

Chart 25 581

Comparison of minimum weekly wages in the Registered and Licensed Clubs Award 2010 and two-thirds of median full-time earnings

Note:Weekly earnings from the CoE survey are earnings in the main job for full-time employees. Weekly earnings from the EEH survey are weekly total cash earnings for full-time adult non-managerial employees.

[737] Chart 26 shows that the full-time weekly wages for each classification in the Restaurant Industry Award 2010 were below the EEH measure of two-thirds of median full-time earnings. However,the full-time weekly wage for the Level 6 classification was above the CoE measure of two-thirds of median full-time earnings.

Chart 26 582

Comparison of minimum weekly wages in the Restaurant Industry Award 2010 and two-thirds of median full-time earnings

Note:Weekly earnings from the CoE survey are earnings in the main job for full-time employees. Weekly earnings from the EEH survey are weekly total cash earnings for full-time adult non-managerial employees.

[738] Chart 27 shows that the full-time weekly wage for each classification in the Fast Food Industry Award 2010 was below both measures of two-thirds of median full-time earnings.

Chart 27 583

Comparison of minimum weekly wages in the Fast Food Industry Award 2010 and two-thirds of median full-time earnings

Note:Weekly earnings from the CoE survey are earnings in the main job for full-time employees. Weekly earnings from the EEH survey are weekly total cash earnings for full-time adult non-managerial employees.

      (ix) Bargaining

[739] The WAD contains information on the average annualised wage increases (AAWIs) negotiated under enterprise agreements in each quarter. Some of this data are also published in the Trends in Federal Enterprise Bargaining quarterly report.

[740] AAWIs negotiated under enterprise agreements and approved in each quarter for the Hospitality sector between the June quarter 2011 and the June quarter 2016 were generally lower than across all industries (see Chart 28 below).

Chart 28 584

Average annualised wage increases for federal enterprise agreements approved in the quarter,June quarter 2011 to June quarter 2016

    7.1.3 Summary

[741] The Hospitality sector’s contribution to aggregate output,sales,profits and wages is relatively small,while its contribution to employment and hours worked is a little higher,and the sector is more likely to contain award-reliant employees.

[742] Key findings within this sector are that employers were relatively more likely to be characterised by:

  • small and medium businesses;

  • lower profit margins;

  • higher wages and salaries as a proportion of total expenses;

  • lower survival rates;

  • strong or intense competition;and

  • operating 7 days a week.

[743] Key findings within this sector are that employees were relatively more likely to be:

  • female;

  • part-time and casual workers;

  • award-reliant;

  • using shiftwork arrangements;

  • receiving penalty rates;

  • low-paid (based on two-thirds of median full-time earnings);and

  • employed by the same business for a shorter duration of time.

[744] We now turn to deal with the particular awards in the Hospitality sector.

7.2 Hospitality Industry (General) Award 2010

        7.2.1 The Claims

[745] The Australian Hotels Association and the Accommodation Association of Australia (the Hospitality Employers) seek to vary the terms of the Hospitality Industry (General) Award 2010 (the Hospitality Award) in relation to the penalty rates payable for work performed by employees on Sundays and public holidays.

[746] The Hospitality Employers propose that the penalty rate for work performed on a Sunday be reduced from 175 per cent to 150 per cent for all employees (inclusive of the 25 per cent loading for casual employees).

[747] The Hospitality Employers also seek to introduce a two-tiered regime in respect of public holiday penalty rates under which higher penalty rates are prescribed for work performed on the public holidays specified under s.115(1)(a) of the FW Act,than the penalty rates prescribed for work performed on public holidays which are declared or prescribed by or under a law of a State or Territory (under s.115(1)(b)).

[748] Further,the Hospitality Employers propose that the references to ‘penalty’and ‘penalty rates’in clause 32,including the clause title,be amended to expressions related to ‘additional remuneration’. The changes sought are set out below,in a marked up version of clause 32.1.

    32.1 An employee performing work on the following days will be paid the following percentage of the minimum hourly wage rate in clause 20—Minimum wages for the relevant classification:

     

    Monday to Friday

    %

    Saturday

    %

    Sunday

    %

    Public holiday

    %

    Additional holiday

    %

    Full-time and part-time

    100

    125

    175 150

    250 225

    250 200

    Casual (inclusive of the 25% casual loading)

    125

    150

    175 150

    275 175

    125

[749] We deal later with the proposed changes to public holiday penalty rates.

        7.2.2 Background to the Hospitality Award

[750] After an initial period of consultation,the Award Modernisation Full Bench determined that the ‘Catering industry,Liquor &accommodation industry,Restaurants (including Clubs)’would be a priority industry in the award modernisation process. 585 In its decision of 19 December 2008 the Award Modernisation Full Bench decided to make a single modern award for the hospitality industry,(excluding Clubs),noting that:

    ‘[117] We have considered the further submissions of Restaurant and Catering Australia,HMAA and other organisations involved in the consultations and decided to make a single modern award for the hospitality industry,as proposed in the exposure draft.

    [118] We accept that there are some differences in trading and staffing arrangements between various sectors within the hospitality industry. Equally,however,there is some commonality between the sectors. It is also significant that there is a level of diversity in the operations of various businesses within sectors of the industry.

    [119] There is also some diversity in terms and conditions in federal awards and NAPSAs operating within the hospitality industry,as defined in the exposure draft. However,such differences apply equally across awards within the smaller sectors proposed as they do across sectors. There is a high level of commonality in federal award provisions covering the hotel,accommodation and restaurant sectors and some but less commonality in the relevant NAPSAs.’ 586

[751] Despite RCI calling for a separate restaurant industry award,the Commission initially resolved to make a single modern award for the broader hospitality sector. 587 A separate Restaurant Award was later created following an amendment to the Ministerial Request (see Chapter 7.4.3).

[752] In submissions filed on 1 August 2008,the AHA and the Liquor,Hospitality and Miscellaneous Union (LHMU),(now United Voice),outlined their respective proposals for the content of the proposed Hospitality modern award. In relation to penalty rates for weekend and public holiday work,both the AHA and LHMU submitted that penalty rates under the Hospitality Award should be set as follows:

  • Permanent employees:

  • Saturday—125 per cent;

  • Sunday—175 per cent;

  • Public holidays—250 per cent,

  • Casual employees:

  • Saturday—150 per cent;

  • Sunday—175 per cent

  • Public holidays—275 per cent. 588

[753] The rates proposed by the AHA and LHMU reflected those that existed in the main federal award which provided that basis for the main terms of the modern award (The Hospitality Industry - Accommodation,Hotels,Resorts and Gaming Award 1998 589) (the ‘1998 Award’). The penalty rate conditions in the 1998 Award derive from the 1993 decision of Commissioner Gay in relation to the Hotels,Resorts and Hospitality Industry Award 1992590. We return to that decision in Chapter 7.2.6.

[754] The first exposure draft of the modern Hospitality Award was published on 12 September 2008. 591 While the Commission generally agreed with the submissions of AHA and the LHMU concerning weekend penalties and in respect of the penalties for full-time and part-time employees working on public holidays,the rates for casual employees performing work on public holidays were set at 175 per cent,rather than the rate of 275 per cent penalty rate in the 1998 Award.592

[755] After the publication of the exposure draft,the AHA expressed concern that the Sunday penalty of 175 per cent was too high,especially when viewed in light of an existing rate of 150 per cent under pre-reform awards in Queensland and Western Australia. 593

[756] The exposure draft was republished in its final form by the AIRC in December 2008. The penalty rates remained unchanged from the earlier exposure draft,except the rate for casual employees working on public holidays which was increased to 275 per cent,in line with the proposals of LHMU and AHA. 594 The accompanying Decision did not specify the rationale for the increase in the rate as between the exposure draft and the final version of the modern award.595

[757] In submissions filed in the current matter,the Hospitality Employers sought to emphasise that the award modernisation process was consultative,rather than adversarial in nature and that the Full Bench was principally informed by the parties’submissions,rather than by witness evidence. Further,to the extent witness statements were relied upon by the parties,the Full Bench treated these witness statements as submissions rather than evidence. 596

[758] United Voice draws the Commission’s attention to the fact that,at the time of making the modern award,the AHA and LHMU proposed the same penalty rates 597 and to the following comment made by Mr Clarke,acting for the AHA,at a public hearing on 22 June 2008:

    ‘…restaurants must not obtain better award conditions by having lower penalty rates or entitlements in the proposed modern Hospitality Award. Hotels have considerable investment within their operations such as investment in training and development of staff compared to restaurant and café businesses. Restaurants will have an unfair advantage and lower wage costs to service the same types of clients as hotels. Hotel meals will be more expensive resulting in loss of trade therefore unfair additional costs placed on hotels.’ 598

[759] As mentioned in Chapter 3,in conducting the Review it is appropriate that the Commission take into account previous decisions relevant to any contested issue and will proceed on the basis that prima facie the modern award being reviewed achieved the modern awards objective at the time it was made. The extent of a previous Full Bench’s consideration of a contested issue is relevant to assessing the weight to be attributed to that decision. The relevant award modernisation decisions show that in setting the penalty rates in the Hospitality Award the Award Modernisation Full Bench considered whether the modern award provisions reflected the existing penalty rates in the most widely-used pre-reform instruments,rather than undertaking a detailed or considered review of the appropriate penalty rates for the industry.

        7.2.3 The Hospitality Industry

[760] The ABS data of direct relevance to the Hospitality Award are limited.

[761] A paper 599 by Commission staff provides a framework for ‘mapping’modern award coverage to the ANZSIC. Using this framework,the Hospitality Award is mapped to six separate ANZSIC industry classes:

  • 4400—Accommodation;

  • 4511—Cafes and restaurants;

  • 4513—Catering services;

  • 4520—Pubs,taverns and bars;

  • 9201—Casino operation;and

  • 4123—Liquor retailing.

[762] The aggregation of these industry classes will be referred to as the Hospitality industry (general).

[763] The Census is the only data source that contains all of the employment characteristics in Table 34 for the Hospitality industry (general). The most recent Census data is from August 2011.

[764] The August 2011 Census data shows that there were around 360 000 employees in the Hospitality industry (general). Table 34 compares certain characteristics of employees in the Hospitality industry (general),with employees in ‘all industries’.

Table 34  600

Labour force characteristics of the Hospitality industry (general),ABS Census 9 August 2011

 

Hospitality Industry (General)

All industries

 

(No.)

(%)

(No.)

(%)

Gender

    

Male

155 034

43.0

4 207 586

50.8

Female

205 212

57.0

4 082 662

49.2

Total

360 246

100.0

8 290 248

100.0

Full-time/part-time status

    

Full-time

152 882

44.9

5 279 853

67.8

Part-time

187 564

55.1

2 507 786

32.2

Total

340 446

100.0

7 787 639

100.0

Highest year of school completed

   

Year 12 or equivalent

222 519

63.0

5 098 228

62.6

Year 11 or equivalent

39 529

11.2

885 404

10.9

Year 10 or equivalent

66 974

19.0

1 687 055

20.7

Year 9 or equivalent

15 373

4.4

317 447

3.9

Year 8 or below

7380

2.1

141 973

1.7

Did not go to school

1412

0.4

20 158

0.2

Total

353 187

100.0

8 150 265

100.0

Student status

    

Full-time student

75 836

21.3

612 990

7.5

Part-time student

20 529

5.8

506 120

6.2

Not attending

259 698

72.9

7 084 360

86.4

Total

356 063

100.0

8 203 470

100.0

Age (5 year groups)

    

15–19 years

51 749

14.4

547 666

6.6

20–24 years

78 271

21.7

927 865

11.2

25–29 years

54 235

15.1

1 020 678

12.3

30–34 years

37 534

10.4

933 827

11.3

35–39 years

30 150

8.4

934 448

11.3

40–44 years

27 323

7.6

938 386

11.3

45–49 years

25 876

7.2

911 739

11

50–54 years

23 037

6.4

848 223

10.2

55–59 years

16 966

4.7

652 190

7.9

60–64 years

10 695

3.0

404 470

4.9

65 years and over

4409

1.2

170 718

2.1

Total

360 245

100.0

8 290 210

100.0

Average age

33.0

 

38.8

 

Hours worked

    

1–15 hours

80 606

23.7

875 554

11.2

16–24 hours

56 808

16.7

792 539

10.2

25–34 hours

50 152

14.7

839 694

10.8

35–39 hours

50 173

14.7

1 676 920

21.5

40 hours

37 912

11.1

1 555 620

20

41–48 hours

27 166

8.0

895 619

11.5

49 hours and over

37 629

11.1

1 151 693

14.8

Total

340 446

100.0

7 787 639

100.0

Note:Part-time work in the Census is defined as employed persons who worked less than 35 hours in all jobs during the week prior to Census night. This group includes both part-time and casual workers. Information on employment type is collected for persons aged 15 years and over.

Totals may not sum to the same amount due to non-response. For full-time/part-time status and hours worked,data on employees that were currently away from work (that reported working zero hours),were not presented.

[765] The profile of the Hospitality industry (general) employees differs from the profile of employees in ‘All industries’in four important respects:

    (i) over half (55.1 per cent) of Hospitality industry (general) employees are employed on a part-time basis (i.e. less than 35 hours per week 601),compared with only 32.2 per cent of all employees;

    (ii) around 4 in 10 (40.4 per cent) of Hospitality industry (general) employees work 1–24 hours per week compared with only 21.4 per cent of all employees;

    (iii) over one-third (36.1 per cent) of Hospitality industry (general) employees are aged between 15 and 24 years compared with only 17.8 per cent of all employees;and

    (iv) over one quarter (27.1 per cent) of Hospitality industry (general) employees are students (21.3 per cent are full-time students and 5.8 per cent study part-time) compared with 13.7 per cent of all employees.

        7.2.4 The Evidence

        (i) The Hospitality Employers

[766] The Hospitality Employers rely on the evidence of 41 lay witnesses,who gave evidence during the proceedings:

  • Vanessa Anderson,human resources manager at the Pacific Hotel in Cairns,Queensland; 602

  • Graham Annovazzi,owner of the Capertee Royal Hotel in Capertee,NSW; 603

  • Timothy Bilston,General Manager of the Amora Hotel Riverwalk in Melbourne,Victoria; 604

  • Joanne Lesley Blair,Director of Zamovisa Pty Ltd which owns The Milestone Hotels in Dubbo,Leichhardt and Kingswood,NSW; 605

  • Jackie Booth,Chief Operating Officer of Zagame Corporation; 606

  • Darren Lea Brown,manager of the Shoreline Hotel in Howrah,Tasmania; 607

  • Andrew Bullock,CEO of 1834 Hotels; 608

  • Michael Burke,part-owner of the Malvern Hotel in Malvern,Victoria; 609

  • Tony Cakmar,General Manager of Clarion Suites Gateway in Melbourne,Victoria; 610

  • Susan Cameron,owner of the Lord Roberts Hotel in Sydney,NSW; 611

  • Will Cordwell,owner of the Ascot Hotel in North Rockhampton,Queensland; 612

  • Daniel Cronin,part-owner of The Western Hotel in Ballarat,Victoria; 613

  • John Andrew Dowd,owner of Lightning Ridge Outback Resort &Caravan Park in Lightning Ridge,NSW; 614

  • Kasie Ferguson,owner and manager of the Railway Hotel in Parkes,NSW; 615

  • Patrick Gallagher,owner of the Gallagher Group of Hotels; 616

  • David Gibson,owner of the Westcourt Tavern in Westcourt,Queensland; 617

  • Ian Green,owner of the Courthouse Hotel in Mudgee,NSW; 618

  • Darren Gunn,owner and manager of the Crescent Head Tavern in Crescent Head,NSW; 619

  • Albert Hakfoort,CEO of the Hakfoort Group; 620

  • Colin Johnson,owner of the Prince Alfred Hotel in Booval,Queensland; 621

  • Peter Johnston,owner of the Ulster Hotel in Ipswich,Queensland; 622

  • Michael Kearney,owner of Bar Petite in Newcastle,NSW; 623

  • Richard Lovell,owner of the Marryatville Hotel in Kensington,South Australia; 624

  • Dennis Madden,director and manager of Madden’s Commercial Hotel in Camperdown,Victoria; 625

  • Keith McCallum,owner and manager of the Lonsdale Hotel in Lonsdale,South Australia; 626

  • Fiona McDonald,accounts manager at the Timber Creek Hotel in Timber Creek,Northern Territory; 627

  • Samuel McInnes,General Manager of the Hurley Hotel Group; 628

  • Sue Mitchell,owner of the Victoria Tavern in Rockhampton,Queensland 629

  • Michelle Morrow,Financial Controller and Human Resources Manager of Hunter Management Services. 630

  • David Ovenden,Group Operations Manager of the Glen Hotel in Eight Mile Plains,Queensland; 631

  • Jim Ryan,owner and manager of The Gippsland Hotel in Sale,Victoria; 632

  • Helen Sergi,owner of the Steam Packet Hotel in Nelligen,NSW; 633

  • Peter Sullivan,owner of the Queensland Hotel Goondiwindi in Goondiwindi,Queensland; 634

  • Mel Tait,General Manager of the Murrumba Downs Tavern in Murrumba Downs,Queensland; 635

  • Dean Trengove,owner and manager of the Mulga Hill Tavern in Broken Hill,NSW; 636

  • Philip Tudor,owner of the Hotel Canobolas in Orange,NSW; 637

  • Belinda Usher,owner and manager of The Fitzroy Beer Garden in Fitzroy,Victoria; 638

  • Samantha Walder,Director of Human Resources at the InterContinental Sydney Double Bay in Sydney,NSW; 639

  • Colin Waller,owner and licensee of The Heads Hotel in Shoalhaven Heads,NSW; 640

  • Peter Williams,owner and manager of San Remo Hotel in San Remo,Victoria; 641 and

  • Ashleigh Winn,manager of Halikos Hospitality Pty Ltd,which owns H Hotel,Frontier Hotel and H 105 Mitchell Hotel and Apartments in Darwin,Northern Territory. 642

[767] The Hospitality Employers’witnesses gave evidence in respect of a diverse range of enterprises covered by the Hospitality Award. Evidence was given about enterprises in most States and Territories,as well as from a range of rural,regional and capital city locations (as shown in Chart 29 below).

Chart 29

Hospitality Employers’evidence –size of enterprises by location


[768] There was also considerable diversity in respect of the size of the enterprises (in terms of numbers of employees) which were the subject of the Hospitality Employers lay evidence. Chart 30 shows the number of employees per establishment for each of these witnesses. The evidence related to 80 establishments employing 3161 employees in total,ranging from 5 to 120 employees with an average of approximately 40 employees per establishment (39.5125). 643

Chart 30  644

[769] The vast majority of the Hospitality Employers lay witnesses had considerable experience in the hospitality sector. Chart 31 sets out the years of experience in the hospitality industry of each of the Australian Hotels Association witnesses. Of the 41 witnesses,only 5 did not give evidence about their experience.

[770] The level of experience of the remaining 36 witnesses ranged from 3 years to 49 years,with an average of just over 21 years’experience in the hospitality industry. 645

Chart 31  646

[771] Under cross-examination most of the lay witnesses called by the Hospitality Employers conceded that they had not undertaken specific calculations as to the precise monetary value of the proposed reduction in penalty rates. It was generally conceded that they had not undertaken any sort of cost-benefit analysis associated with increasing the level and range of their services and employing additional staff (or offering existing staff more hours),in the event the Sunday penalty rate was reduced. It was also generally conceded that the level of penalty rates is only one factor among a range of factors which affect the ability of their business to employ additional labour or offer more services to their customers. In light of the concessions made,we accept that much of the evidence of the lay witnesses may be regarded as speculative in nature. But this is necessarily the case. Evidence about intentions in light of proposed changes is necessarily hypothetical and speculative. Hospitality is a dynamic sector,subject to constant change,in response to changes in consumer preferences. It would be difficult to predict,with certainty,what precise actions would be taken in response to a particular change.

[772] However it is important to acknowledge that the evidence was given by experienced operators in the Hospitality sector about their intentions in the event that the Sunday penalty was reduced from 175 per cent to 150 per cent. It is also apparent that the witnesses make decisions about whether or not to open and how many staff to engage on a particular day,on a day-to-day basis.

[773] We also note that a number of the lay witnesses called by the Hospitality Employers were cross-examined in relation to the impact of Schedule B of the Hospitality Award,which provided transitional provisions in respect of loadings and penalty rates for casual employees in South Australia.

[774] The effect of the South Australian transitional arrangement was that employers with a casual workforce,which works across seven days of the week,may have a reduced labour cost as of 1 January 2015. During the transitional period between 1 July 2010 and 31 December 2014 the employer was required to pay their casual employees 150 per cent for each day of the week. However,during that period,the casual employees were not entitled to additional payments including with respect to weekend and public holiday work. After 1 January 2015,the employer was required to pay casual employees who worked Monday to Friday 125 per cent,casual employees who worked on a Saturday 150 per cent and casual employees who worked on a Sunday 175 per cent. If,as a result of that change,an employer’s total labour cost had reduced,it may provide some information about the potential employment effects of such a reduction in labour cost.

[775] Three of the lay witnesses were cross-examined as to the effect of the transitional arrangements:Mr Bullock; 647 Mr McCallum,648 and Mr Lovell649. The evidence from these witnesses suggests that despite the fall in the casual loading on Monday to Friday (from 150 per cent to 125 per cent) no additional employees had been employed to work on weekdays. This evidence may cast some doubt on the proposition that a reduction in weekend penalty rates would have a positive impact on employment. But it also needs to be put into context –it only reflects the experience of 3 hospitality employers in South Australia over a limited period since the end of the transitional period. Further,there may have been a range of other factors which contributed to the static employment levels in these businesses,including weaker demand (perhaps as a result of increased competition or changes in consumer preferences);increases in other business expenses (such as rent or utilities) or higher labour costs due to the increase in the public holiday penalty rate and casuals Sunday rate.

[776] The diversity of the enterprises referred to in the Hospitality Employers lay evidence and the considerable experience of the lay witnesses are relevant to the weight to be attributed to this evidence. While the Hospitality Employers lay evidence cannot be said to be statistically representative of the employers covered by the Hospitality Award,the evidence is cogent,relevant and persuasive.

[777] It follows that we reject the United Voice submission that:

    ‘None of that evidence [i.e. the Hospitality Employers lay evidence] supports the contention that cuts to penalty rates will have any impact on employment…

    The AHA did not present any credible evidence that employers are making decisions to restrict trade or services on Sundays because of penalty rates.’ 650

[778] The incidence of owner operators performing work on Sundays (instead of employing other labour) was particularly common in small and medium sized businesses. For example the owners of small and medium sized businesses gave the following evidence:

  • Ms Ferguson,Owner/Manager of the Railway Hotel,Parkes,NSW (13 employees) said that the hotel does not roster ‘many casual employees to work on a Sunday’ 651 and the owners worked on weekends.652 Ms Ferguson and a supervising manager work on Sundays,assisted by one casual employee whereas on Saturdays 6 casual employees are rostered.

  • Ms McDonald,Accounts Manager of the Timber Creek Hotel,Northern Territory (14 employees) said that on Sundays in the wet season ‘the owner of the Hotel will work in the kitchen which reduced the need for a cook position’. 653

  • Ms Mitchell,Owner of the Victoria Tavern,Rockhampton,Queensland (18 employees) said that as a result of penalty rates fewer award staff are hired on Sundays and public holidays ‘even though the Hotel receives business that would justify the contrary’ 654 and that ‘in lieu of rostering more staff’she will ‘typically work on Sundays and public holidays to ensure adequate staff numbers’.655

  • Mr Trengove,Owner andManager of the Mulga Hill Tavern,Broken Hill,NSW (33 employees) said that the hotel is run with ‘skeleton staff on Sundays and public holidays’ 656 and he will personally ‘cover certain shifts on those days as a measure to cut costs’.657

  • Mr Waller,Owner and Licensee of The Heads Hotel,Shoalhaven Heads,NSW  658(28 employees) said that he works weekends ‘to save costs’659 and ‘would prefer to allocate that work to 2 casual staff members in his place’.660

  • Ms Sergi,Owner of the Steam Packet Hotel,Nelligan,NSW (11 employees) and her husband work on Sundays and public holidays to reduce the cost of labour on those days. 661

  • Mr McCallum,Owner of the Lonsdale Hotel,South Australia (42 employees),works public holidays alongside his wife,son and daughter,so that not as many staff members are required. 662

  • Mr Dowd,Owner of the Lightning Ridge Outback Resort &Caravan Park,NSW (12 employees) works 12 to 14 hours per day as a cost saving measure in lieu of rostering staff and also rosters family members to work with him on public holidays. 663

  • Mr Annovazzi,Owner of the Capertee Hotel,Capertee,NSW (6 employees) does not roster any staff on public holidays and instead works on those days with his wife. 664

  • Mr Green,Owner of the Courthouse Hotel,Mudgee,NSW (7 employees) works on public holidays with the co-owner of the Hotel in the bar and the kitchen. 665

  • Mr Cordwell,Owner of the Ascot Hotel,Rockhampton,Queensland (5 employees) is usually the only person who works at the Hotel on Sundays and public holidays and operates the kitchen and bar. 666

  • Mr Sullivan,Owner of the Queensland Hotel,Goondiwindi,Queensland (24 employees) reduces staffing levels on Sundays and on public holidays Mr Sullivan and his wife also work. 667

  • Mr Gibson,Owner of the Westcourt Tavern Westcourt,Queensland (25 employees) works on public holidays and rosters only salaried employees in an effort to save costs. 668

  • Mr Burke,Owner of the Malvern Hotel,Malvern ,Victoria and Belgian Beer Café,Southbank,Victoria (54 employees) works on Sundays and public holidays with other owners and family. 669

  • Mr Ryan,Owner of the Gippsland Hotel,Sale,Victoria (23 employees) works on public holidays with his wife and managers and does not roster any casual staff. 670

  • Mr Williams,Owner of the San Remo Hotel,Victoria (24 employees) works on public holidays and rosters managerial staff to work instead of casual employees. 671

[779] The evidence also discloses that a range of operational limitations are imposed on Sundays,in order to reduce labour costs. These limitations broadly fall into three categories and are evident across small,medium and large sized businesses:

    (i) Restricting trading hours
  • Mr Bullock,Chief Executive Officer of 1834 Hotels in Adelaide,South Australia (which manages over 16 individually owned hotels employing 500 employees) said that because of penalty rates there are reduced trading hours on Sundays. 672

  • Mr Dowd,Owner of Lightning Ridge Outback Resort Caravan Park in Lightning Ridge,NSW) (12 employees) said that trading hours are reduced and live music is no longer offered on Sundays. 673

  • Ms Mitchell,Owner of the Victoria Tavern in Rockhampton,Queensland (18 employees) said that trading hours are reduced on Sundays so that the hotel does not operate at night. 674

  • Ms Cameron,Owner of the Lord Roberts Hotel,Sydney,NSW (19 employees) has reduced trading hours on Sundays so that the Hotel opens at 12.00 midday instead of 10.00 am and closes at 10.00 pm rather than midnight. 675

  • (ii) Lower staffing levels

  • Mr Bilston,General Manager of the Amora Hotel Riverwalk in Melbourne,Victoria (89 employees) said that ‘skeleton staff are utilised in the restaurant on Sundays to reduce the cost of wages due to penalty rates’. 676

  • Ms Cameron,Owner of the Lord Roberts Hotel in Sydney,NSW (19 employees) said that the penalty rate on Sunday ‘is too great’and so the hotel reduced operating hours on Sunday. 677

  • Mr Cronin,part Owner and Manager of The Western Hotel in Ballarat,Victoria (27 employees) said that although 70 per cent of the Hotel’s revenue is related to weekend trade ‘due to the penalty rates that are incurred’the hotel operates ‘at lower staffing levels’on these days and rosters management and salaried staff to work on Sundays. 678

  • Mr Winn,Hotel Manager of Halikos Hospitality Pty Ltd,Darwin,Northern Territory (133 employees) said that the Company’s 3 hotels in Darwin operate on a skeleton staff on Sundays and public holidays.679 Generally staff levels on those days are 60 per cent of levels on other days. 680

  • Mr Bullock,Chief Executive Officer of 1834 Hotels,South Australia and Northern Territory (which manages over 16 individually owned hotels employing 500 employees)has reduced staff numbers on weekends and public holidays by reducing trading hours and limiting menus in order to reduce costs. 681 Casual staff are also replaced with salaried staff on those days whenever possible.682

  • Mr Ovenden,Group Operations Manager of The Glen Hotel,Eight Mile Plains,Queensland 683 (120 employees) said that the hotel does not operate with a receptionist on Sunday and this is the only day of the week ‘we have no one on the phones because of the costs associated with that’.684

  • Mr Hakfoort Chief Executive Officer of the Hakfoort Group,Queensland (231 employees) has reduced the numbers of casual staff rostered on Sundays and public holidays and instead rosters salaried employees to work on those days and uses casual employees to fill gaps. 685

  • Mr Tony Cakmar General Manager of Clarion Suites Gateway,Melbourne,Victoria (70 employees) said that the Hotel operates on a skeleton staff on Sundays and public holidays and where possible casual employees are not rostered on those days. 686

  • (iii) Restrictions on the type and range of services provided

  • Mr Annovazzi (Owner of the Capertee Royal Hotel in Capertee,NSW–6 employees) said that as a result of current penalty rates,rooms are not made up on Sundays or public holidays and there is no entertainment on Sundays and higher prices due to a 10% surcharge. 687

  • Mr Bilston (General Manager of the Amora Hotel Riverwalk in Melbourne,Victoria –89 employees) said that on Sundays the Lobby bar is closed 688,the restaurant operates with a skeleton staff689,room cleaning is delayed690 and there is no turndown service.691

  • Mr Bullock (Chief Executive Officer of the 1834 Hotels in Adelaide,South Australia–managers of over 16 individually owned hotels employing 500 employees) said that because of penalty rates lower-priced carvery meals are no longer offered at a number of hotels on Sundays. 692

  • Mr Cakmar (General Manager of the Clarion Suites Gateway in Melbourne,Victoria–70 employees) said that the hotel restaurant is closed for Sunday dinner due to penalty rates. 693

  • Mr Dowd (Owner of the Lightning Ridge Outback Resort &Caravan Park in Lightning Ridge,NSW- 12 employees) said that due to penalty rates,trading hours are reduced and live music is no longer offered on Sundays. 694

  • Mr Gallagher (Owner of the Gallagher Group of Hotels in Sydney,NSW-182 employees) said that the upstairs area of Jacksons is closed on Sundays in an attempt to reduce wage costs. 695

  • Mr Hakfoort (Chief Executive Officer of the Hakfoort Group in Queensland–231 employees) said that the following restrictions are placed on services at establishments within the Group to reduce the cost of penalty rates on Sundays and public holidays:

  • The restaurant area of the Burke &Wills Hotel is closed on Sundays and public holidays;

  • The hours for breakfast service have been reduced at the Conservatory Restaurant at the Burke &Wills Hotel;

  • The dinner service at Albert’s Restaurant at the Burke &Wills Hotel has been reduced;

  • Rooms in accommodation Hotels in the group are not cleaned on Sundays or public holidays unless necessary and only refreshment of rooms and the delivery of breakfast is provided. 696

  • Ms Mitchell (Owner of the Victoria Tavern in Rockhampton,Queensland Queensland –18 employees) said that due to penalty rates a breakfast service is not viable on Sundays and public holidays. 697

  • Ms Morrow (Human Resources Manager of the Hunter Management Services,Victoria–owner of four hotels and employer of 329 persons) said that sections of the hotels are closed on some public holidays including TAB and bistro,and the making up rooms is delayed on Sundays if possible. 698

  • Mr Trengove (Owner of the Mulga Hill Tavern in Broken Hill,NSW –33 employees) said that ‘as a result of having to pay the current penalty rates’the dining service is closed for lunch on Sunday 699 and promotions,live entertainment are not offered on Sundays.700.

  • Ms Sergi (Owner of the Steam Packet Hotel,Nelligan,NSW–11 employees) closes the Hotel Bistro on Sunday evenings during winter (other than in school holiday periods). The Hotel stays open because of customer expectations,based on the Hotel being the only one in Nelligan. 701

  • Mr Burke (Part Owner of the Malvern Hotel Malvern Victoria and Belgian Beer Café Southbank Melbourne Victoria–29 employees) closes the Hotel restaurant on Sundays and reduces the number of staff and therefore service provided on public holidays where the restaurant is open (3 of 11 public holidays per year). The Belgian Beer Café is busy on Sundays but the upstairs restaurant is not opened because of the cost of penalty rates. 702

  • Mr Tudor (Owner of the Hotel Canobolas in Orange,NSW–55 employees) said that the hotel does not provide live music or provide a cheaper food promotion such as Sunday roast ‘due to the amount we spend on wages.’ 703

  • Ms Walder (Director of Human Resources of the InterContinental Sydney Double Bay in Sydney,NSW–105 employees) also said that the rooftop area of the hotel is closed on public holidays when there is not strong occupancy and where possible the servicing of accommodation rooms was ‘rolled over’from Sunday to Monday ‘to avoid paying housekeeping staff on Sunday’. 704

  • Mr Williams (Owner of the San Remo Hotel in San Remo,Victoria–24 employees) said that accommodation rooms were not serviced on Sunday unless booked. 705

  • Ms Anderson (Human Resources Manager Pacific Hotel,Cairns,Queensland –105 employees) said that as a result of penalty rates the Hotel’s restaurant is closed on Sundays for four months of the year between March and June. The restaurant is also closed and no room service is offered on nine out of 11 public holidays during the year. 706

  • Mr Lovell (Owner of the Marryatville Hotel Kensington South Australia –28 employees) has ceased offering bistro meals on public holidays and altered the terms of the Hotel’s licence to remove the obligation to provide full meal service on public holidays. 707

  • Mr Kearney (Owner of Bar Petite Newcastle,NSW –7 employees) reduces staff on Sundays and has cut lunch service to three days a week,closing the bar between 12.00 midday to 3.00 pm,Monday to Thursday. 708

  • Mr Gallagher (Owner of the Gallagher Group of Hotels,Sydney,NSW –182 employees) reduces services across weekends and public holidays in all Hotels in the Group including closing particular areas,splitting the gaming room,restricting entertainment by not providing live music,and reducing staff numbers on public holidays. 709

  • Mr Cronin (Owner of the Western Hotel Ballarat Victoria –27 employees) offers reduced services on Sundays and public holidays or closes,does not make rooms up on those days. 710

  • Mr Burke (Owner of the Malvern Hotel,Malvern,Victoria and Belgian Beer Café Southbank,Melbourne,Victoria –54 employees) closes the Hotel restaurant on Sundays and does not open the upstairs section of the Belgian Beer Café on Sundays despite it being busy. 711

  • Ms Mitchell (Owner of the Victoria Tavern Rockhampton Queensland –18 employees) does not serve breakfast on Sundays or public holidays as penalty rates mean it is not economically viable. 712

  • Mr Sullivan (Owner of the Queensland Hotel Goondiwindi,Queensland –24 employees) closes the bar on Sunday if there are less than six patrons and does not open the dining room for Sunday lunch. A trial of offering a lunch time Sunday roast to minimise the requirement on the kitchen to prepare full meals,was abandoned because the cost of penalty rates for one extra staff member to work was not worth the amount of money the Hotel made. 713 Mr Sullivan also gave an example of a Sunday night when the kitchen was open with three staff working and the Hotel suffered a loss of $100 as the labour costs associated with penalty rates were so high.714

  • Mr Brown (Manager of the Shoreline Hotel,Howrah,Tasmania –56 employees) offers services on Sundays and public holidays for reduced hours including not cleaning accommodation rooms on those days and is considering further reducing the Hotel’s services by closing the bistro (the largest loss making area) in order to concentrate on gaming,the bottle shop and reduced bar services. 715

  • Mr Williams (Owner San Remo Hotel,Victoria –24 employees). Rooms are not made up on Sundays unless they are booked the next day which means patrons who arrive without a booking cannot be accommodated. 716

  • Ms Usher (Owner Fitzroy Beer Garden Fitzroy Victoria –12 employees) opens on Sundays but closes on Mondays and Tuesdays to save costs. Only one bar is open on Sundays and public holidays. 717

[780] The Hospitality Employers lay witnesses also gave evidence about the likely impact of a reduction in the Sunday penalty rate (from 175 per cent to 150 per cent) on employment levels and service.

[781] In terms of the likely employment effect,a number of owner operators of small to medium hospitality enterprises expressed a willingness to provide more hours of work to Hospitality Award covered employees on Sundays,rather than doing the work themselves. For example:

  • Ms Ferguson (Owner and Manager of the Railway Hotel in Parkes,NSW–13 employees) said that there would be the potential to engage an additional casual so that she would not to have to work Sundays and public holidays. 718

  • Ms Sergi (Owner of the Steam Packet Hotel in Nelligen,NSW–11 employees) said that she could provide existing casual staff with between 3–8 hours’work on public holidays 719 and this would allow her and her husband to have time off.720

  • Ms Usher (Owner and Manager of the Fitzroy Beer Garden in Fitzroy,Victoria–12 employees) said that she expects that the 6 hour shifts currently worked by either herself or her husband would be taken by one of the existing casuals. 721

  • Mr Waller (Owner of the Heads Hotel in Shoalhaven Heads,NSW- 28 employees) said that he estimates work for two additional casuals at 3 to 4 hours each,possibly up to 5 hours 722 and he would rather engage casuals to work weekends so that he does not have to.723

  • Mr Williams (Owner and Manager of the San Remo Hotel in San Remo,Victoria–24 employees) said that by reducing the number of hours that he works,there would be more hours available for staff. 724

[782] There was also evidence that there would be additional hours of work offered to either existing or new employees in small to medium sized enterprises. For example:

  • Mr Burke (Owner of the Malvern Hotel,Malvern,Victoria and Belgian Beer Café Southbank,Melbourne,Victoria –54 employees) said that the Hotel would offer an additional 16 Sunday hours for casual employees and would engage apprentices to work at the Malvern Hotel and the Belgian Beer Café and a trainee would also be engaged for the Café. This works out at around 120 additional hours for casual employees as well as the hours worked by apprentices and the trainee. 725

  • Mr Cordwell (Owner of the Ascot Hotel Rockhampton Queensland –5 employees) would keep the Hotel open later on Sundays and public holidays if the AHA proposal to reduce penalty rates was granted and would roster staff to work an extra 2 shifts of 5 hours. If employees worked on Sundays then more people could be employed to work during the week. 726

  • Mr Williams (Owner of the San Remo Hotel,Victoria –24 employees) would roster more casual employees for,collectively,an additional 23 hours on public holidays to offer usual services including regular operating hours and housekeeping services. 727

  • Mr Ovenden (Glen Hotel in Eight Mile Plains,Queensland –120 employees) said that there would be opportunity to offer additional hours to casual employees on Sundays and to engage a receptionist on Sundays. 728

  • Ms Tait (Murrumba Downs Tavern Queensland –32 employees) would have longer shifts for existing permanent employees and employ more permanent and casual employees. 729

[783] The evidence of the Hospitality Employers lay witnesses supports the proposition that a lower Sunday penalty rate would increase the level and range of services offered,with a consequent increase in employment (in terms of hours worked by existing employees or the engagement of new employees). The types of suggested changes to the level and range of services are summarised below.

    (i) Extend operating hours

  • Ms Cameron (Lord Roberts Hotel in Sydney,NSW) said that there would be the potential to open the hotel on Sunday mornings with consequential increase in availability of casual hours. 730

  • Mr Hakfoort (Hakfoort Group;Queensland) said that trading hours could be extended. 731

  • Ms Blair (Milestone Hotels Dubbo,Leichhardt and Kingswood New South Wales) said that the Sydney Hotels would trade for longer on Sundays if penalty rates were reduced. 732

  • Mr Gallagher (Gallagher Group of Hotels) said that if the AHA proposal was granted he would open hotels for longer hours and consider offering more work to staff on public holidays and Sundays. 733

  • Ms Usher (Fitzroy Beer Garden Fitzroy Victoria) would offer usual services on Sundays and public holidays and would open the business on Tuesdays when it is currently closed and would split the Sunday and Tuesday shifts between salaried and casual staff creating more work for casual staff. 734

  • (ii) Provide additional meal services

  • Ms Anderson (Pacific Hotel in Cairns,Queensland) said that there would be the possibility to open the restaurant on every Sunday. 735

  • Ms Blair (The Milestone Hotels in Dubbo,Leichhardt and Kingswood,NSW) said that bistro opening hours would be extended at the Sydney hotels. 736

  • Mr Cakmar (Clarion Suites Gateway in Melbourne,Victoria) said that the hotel may be able to open the restaurant for lunch on Sundays 737 and that the restaurant would open all Sundays,as opposed to the current arrangement where the restaurant is open on some Sundays.738

  • Mr Hakfoort (Hakfoort Group;Queensland) said that he would extend the food service periods. 739

  • Mr Sullivan (Queensland Hotel Goondiwindi in Goondiwindi,Queensland) said that he would improve customer service by providing Sunday lunch. 740

  • Mr Bullock (1834 Hotels South Australia and Northern Territory) said that it may be possible to offer customers a full service at all times including opening all departments of the Hotels in the Group during normal trading hours and offering full menus. 741

  • Ms Cameron (Lord Roberts Hotel in Sydney,NSW) 742 said that she would consider offering Sunday brunch at her hotel on the basis that her loss would be reduced to a more acceptable level and with the intention of making a profit by increasing volume.743

  • Mr Kearney (Bar Petite Newcastle,NSW) would reinstate the lunch service he has cut on Monday to Thursday. 744

  • (iii) Provide live entertainment

  • Mr Trengove (Mulga Hill Tavern in Broken Hill,NSW) said that it might be possible to provide a full dining service on Sundays and to provide live entertainment. 745

  • Ms Blair (The Milestone Hotels in Dubbo,Leichhardt and Kingswood,NSW) said that live music would be possible on Sundays with the engagement of a solo guitarist. 746

  • Mr Ovenden (Glen Hotel in Eight Mile Plains,Queensland) said that there would be opportunity for engagement of a receptionist and live music on Sunday. 747

  • Mr Trengove (Mulga Hill Tavern in Broken Hill,NSW) said that it might be possible to provide a full dining service on Sundays and to provide live entertainment. 748

  • Ms Cameron (Lord Roberts Hotel,Sydney New South Wales) would have a DJ playing at the Hotel on a regular basis and would also offer trivia nights. 749

  • Mr Darren Gun (Crescent Head Tavern New South Wales) would consider providing live entertainment on Sundays and public holidays. 750

  • Ms Tait (Murrumba Downs Hotel Queensland) would have live entertainment on public holidays or events such as an Easter egg hunt for families. 751

  • (iv) Invest in infrastructure to provide an improved level of service to customers

  • Mr Gunn (Crescent Head Tavern in Crescent Head,NSW) said that there would be opportunity for investment in child friendly areas. 752

  • Ms McDonald (Timber Creek Hotel in Timber Creek,Northern Territory) spoke of the opportunity to improve the quality of services through improved toilet and shower facilities in the caravan park. 753

  • Mr McInnes (Hurley Hotel Group –Pretoria and Hackney Hotels in South Australia) would consider undertaking renovations at the Hackney Hotel by providing a larger combined bar area with an open roof. 754

  • Ms Mitchell (Victoria Tavern Rockhampton Queensland) would like to make the Hotel more family friendly by investing in a playground facility 755

  • Mr Johnston (Ulster Hotel Ipswich Queensland) said that an extra day of trading could provide sufficient funds to renovate the Hotel kitchen and improve the variety of meals served to patrons. 756

  • (v) Provide cleaning services for accommodation facilities

  • Mr Cronin (The Western Hotel in Ballarat,Victoria) said that accommodation rooms would be serviced on Sundays. 757

  • Mr Hakfoort (Hakfoort Group;Queensland) said that cleaning services could be provided for all accommodation facilities on Sundays and public holidays. 758 Mr Hakfoort would also like to offer in-house laundry services for accommodation guests but has contracted this out due to the cost of penalty rates. If the AHA proposal was granted Mr Hakfoort would consider employing staff directly to offer this service.759

        (ii) United Voice

[784] In opposing the variation of the Hospitality Award,United Voice relied on the evidence of 7 lay witnesses:

  • Sean Davis,casual Duty Manager at the Grange Hotel; 760

  • Steven Petrov,gaming supervisor at a hotel with gaming facilities at Zagames Ballarat Hotel; 761

  • Andrew Sanders,casual Food and Beverage Attendant at Peter Rowland Catering; 762

  • Jan Syrek,security officer at Crown Perth; 763

  • Carol Gordon,casual receptionist at a hospitality establishment at Elphin Villas; 764

  • Amit Gounder,housekeeping employee at Sheraton on the Park Hotel;and  765

  • Rachel-Lee Zwarts,apprentice chef at the Torrens Arms Hotel. 766

[785] Only Andrew Sanders and Sean Davis were required for cross-examination.

Sean Davis

[786] Mr Davis has worked in the hospitality industry for 30 years in a range of roles and since April 2015 has been employed as a casual duty manager at an Adelaide hotel. At the time he made his witness statement Mr Davis worked an average of 35 hours per week and usually works Wednesday to Saturdays from 5.00 pm to close (usually around 1.30 am–2.00 am). As to Sunday work,at that time,Mr Davis’evidence was:

    ‘I am not on the roster regularly on a Sunday,however I am often called in when other staff are sick. I estimate I work two or three Sundays out of every month.’ 767

[787] By the time Mr Davis came to give oral evidence in the proceedings,his roster had changed such that he is rostered on Wednesday,Thursday and Sunday. 768

[788] As to the impact of working on weekends Mr Davis says:

    ‘I have always worked weekends and public holidays. I try to get these shifts because of the penalty rates I am paid on these days. These are also the busiest days at the hotels.

    The penalty rates mean I earn more money each week. If penalty rates were changed I,of course,would earn less. I am only just getting by on my current wage.

    Although I receive penalty rates for working weekends and public holidays,working these shifts comes at a huge cost to me and my family. As I work in hospitality I cannot really refuse to work on the weekends or public holidays as these are the busiest periods for the industry. If the rates were changed I would be working the same hours for less money. This might cause me to seriously consider training for a different industry with the view to changing my career.

    The cost to my family of working weekends and evenings is that I am rarely am (sic) able to spend quality time with them. I am usually working when the children are home from school in the afternoons and evenings. On my days off earlier in the week I am often very fatigued and tired and try and catch up on sleep. It is not unusual that I work till well after midnight,get home even later,and then get up by 7.30am to help get the children to school.

    I am often unable to take the children to their sporting activities on the weekend such as soccer or netball as I am working. The responsibility of running around four children to different sports then falls solely upon my wife.

    I rarely am able to attend any family gatherings or functions,including my own children’s birthday parties as these are usually held on weekends or evenings when I am working.

    As a result of working Weekends I have absolutely no social life and find it very difficult to maintain my friendships as I am unable to catch up with them on weekends because I am working.

    Working weekend and evenings over a significant period of time can become very mentally debilitating and physically taxing on my body. On occasions I have felt depressed as a result of being isolated from my family and friends and have sometimes found it difficult to cope with the day to day pressures of life.’ 769

[789] At paragraphs 34–41 of his statement Mr Davis sets out the impact upon him of a reduction in penalty rates as sought by the Hospitality Employers,in particular:

    ‘I already have to make hard choices about my spending. My family currently cannot afford to indulge in luxuries. If my penalty rates are reduced this will mean that my spending choices become harder.’ 770

[790] The Hospitality Employers contend that insofar as Mr Davis’evidence is relied upon to illustrate the effect on earnings of the variation to the Sunday penalty rate,that evidence will not provide any meaningful assistance because there is no recurring pattern to Mr Davis’Sunday work and therefore a reliable comparative evaluation cannot be made about the effect upon his weekly earnings of a change in the Sunday rate. We disagree. As Mr Davis said in cross-examination,he is currently rostered on Sundays.

[791] The Hospitality Employers also contend that Mr Davis is available and willing to work on Sundays. Mr Davis’willingness and availability for weekend work is said to emerge from the following passage in his cross-examination:

    ‘Yes. And in the course of that interview I take it you were asked about your availability for work during the week?---Yes.
    And did you indicate you were available –were there any days that you were not available?---Tuesdays.
    That was the only day you were unavailable?---Yes. And you don’t work Tuesdays do you?---Not so far,no.
    So you were available to work any day other than Tuesday,including the weekends?---If I want a job then,yes.
    Yes. And you’ve always worked the weekends according to your statement?---Generally,yes. Mostly,yes.’ 771

[792] Further,Mr Davis agreed that he has been available to work weekends and that he has not declined work on either a Saturday or a Sunday:

    ‘You’ve been available to work the weekends?---Well,you have to. You haven’t got a choice.
    You’ve been available to work those weekends?---Well,yes,absolutely. Yes. So in your current position at the Grange,have there been occasions where you have declined to work,say,a Saturday?---No,absolutely not. It pays better.
    And have there been occasions where you have declined to work a
    Sunday?---No.’ 772

[793] The passages from Mr Davis’evidence which are relied on by the Hospitality Employers need to be seen in context. It is clear from his evidence as a whole that it is not Mr Davis’preference to work on weekends,rather it is an economic necessity. The following passages from his cross-examination support this conclusion:

    ‘It’s also the case you’ve tried to get those weekend shifts at other establishments in the past?---Well,it’s not so much as trying to get the shifts. It’s you make yourself available for them so that you get the job. Because they need people to work weekends because no one wants to work weekends or nights.
    So you tell the managers that you’re available to work those times?---Well,if I want the job I have to. I have no choice.’ 773

    Steven Petrov

[794] Mr Petrov has worked in the hospitality sector since 1998 and is currently a gaming supervisor at a hospitality establishment in Victoria. He is employed under the Hospitality Award and paid an annual salary (a loading of about 25 per cent on the award minimum rate) instead of weekend,shift or public holiday penalty rates. Mr Petrov’s current working arrangements are detailed at paragraph 15 and 16 of his statement:

    ‘I work Monday,Friday,Saturday and Sunday,from 6pm until close. Close time can vary but on average,if it all goes well,on Monday,Friday and Saturday the venue closes at 3.00am and we work until about 4.30am. On Sunday the venue closes at 3.00am but we normally finish at 5.00am because we have to balance the financial week. We physically have to weigh the coin hoppers so the financial records for the week can be balanced. Once my meal breaks are removed,I work approximately 40 hours per week,but I am usually at work for about 11 hours each shift.

    One consequence of my roster is that I work nearly every public holiday because I always work Monday,Friday,Saturday and Sunday.’ 774

[795] As to the impact of weekend and public holiday work Mr Petrov says:

    ‘Because I work on Monday,Friday,Saturday and Sunday I cannot attend any family events because they are held on weekends and I am excluded from them because of the hours I am rostered to work.

    A good example is the birthday parties of my grandchildren. They are held on the weekend so that most people can attend. I can’t participate in any of these events because I have to work.

    Lots of other people enjoy the weekend because they are out partying and enjoying themselves but I can’t participate in that stuff. Even things that people take for granted like going to the footy - I can’t do that because of the hours I have to work in the hospitality industry.

    I used to be involved in a lot of things - karate,gym work with training partners,squash - but that all had to go very early in my career because I couldn’t commit to things on the weekend which is the most convenient time for everyone else,because the work always has to come first.

    I have worked nearly every Christmas Day in the last 15 years. I do a rushed mini version of Christmas at home and then take off. This makes me feel like I’m missing out. I also carry the burden of letting people down. The best word for it is ‘guilt’. It makes me feel guilty that I have to rush Christmas.

    The good thing about working on the weekend is the weekend penalty rate. Basically I work weekends in order to obtain a higher rate of pay. My annual salary is based on the Award and the penalty rates in it. Other than that,there is nothing good about working weekends.’ 775

[796] At paragraphs 31–38 of his statement,Mr Petrov sets out the impact upon him of a reduction in penalty rates as sought by the Hospitality Employers,in particular:

    ‘Under the Award,my annual salary cannot be less than what I would earn if I was paid the minimum hourly rates in the Award. If the proposed cut to the Sunday penalty rate is made by the Commission the base that my annual salary is calculated from will be reduced by 52 weeks multiplied by $58.74 which equals a total yearly reduction of $3,054.48.

    If this happens,then the loss of Income will mean that everything becomes more difficult. When I took out a mortgage,I didn’t do so on the basis that penalty rates would be reduced. I would need to cut back across the board. This would also affect Betty because we are both in the same industry and our household will cop it doubly if penalty rates are cut.’ 776

Andrew Sanders

[797] Mr Sanders is a student and works for a catering business on a casual basis mainly as a waiter and a bartender. He is employed under the Hospitality Award and classified as a Level 2 Food and Beverage Attendant,grade 2.

[798] At the time he made his statement Mr Sanders worked an average of 18 hours per week,but his hours were highly variable. 777

[799] Mr Sanders does not work every Sunday but expects he will have to work regular Sundays in the future. 778

[800] As to the impact of weekend work Mr Sanders says:

    ‘I find that people don’t understand what it is like to work on the weekends. My friends will ask me why I can’t take time off,or why I cannot work another night. I miss out on so many of the things my friends do. The nights I work are the nights people do things like go out to dinner,see movies,and have parties. When they go out,I am working. I do not get to go to birthdays. When I started it was worse,because I was invited to more events,but now people have stopped asking me to things.

    Because I work late at night,I have to sleep late the next day to get enough sleep. If I have worked Friday or Saturday night then I lose half the next day because I am asleep. I then get up and go to work again. I regularly miss out on the things people do on the weekend. If I do not sleep in,I am too tired to really enjoy what I am doing.

    My grandmother died recently,and it has been hard on my family. She held us together and we have to work on seeing each other. Every so often we will hold a family get together on a weekend,and I will usually have to forego this for work. I do not get to see my family otherwise. I would like to be able to see them more.’ 779

[801] Mr Sanders estimates that if the Sunday and public holiday penalty rates in the Hospitality Award were reduced as proposed by the Hospitality Employers then he would lose about $40 on a 9 hour Sunday shift:

    ‘I have calculated to earn back that $40,I would have to work an extra 1.5 hours on Saturday or an extra two hours on Thursday or Friday.

    While I would be able to work those additional hours,it would cause problems with my study and my social life. I would miss out on more social and family events,and my grades would suffer. I know this because in the second semester of 2014 I was doing three subjects while working the same number of hours. I am expected to commit 27 hours each week to my course,including class time,class preparation,and homework. I feel that my grades suffered because I don’t have enough time. I am reducing my course-load to two subjects in the second semester of 2015;I hope that this will balance better with my work.

    Even if I am available to work additional hours,I do not know if I will be offered additional hours by my employer. The National Gallery of Victoria can only host so many events,and that decides how many shifts I work. I have asked for work at other venues that have contracts with my employer,but they say that they prefer to keep the same people working at the same places.’ 780

[802] We note that Sunday work is not a regular feature of Mr Sanders’work and,that when he is rostered on a Sunday,no typical pattern emerges from the number of hours he works. 781

Jan Syrek

[803] Mr Syrek is a full-time security officer at a casino in Perth and is employed under an enterprise agreement,the Hospitality Sector WA United Voice –Crown Enterprise Agreement 2013 (the Crown Agreement) 782 and,consequently,the Hospitality Award currently has no direct application to him.

[804] Mr Syrek gives evidence about the impact of work on weekends and public holidays, 783 particularly on his capacity to engage in social activities with his family:

    ‘The biggest impact of working weekends has been on [his fiancé] because she usually works Monday to Friday,so we often do not see each other all week. We have not made many friends together as a couple,so she usually just spends time with her mum or brother when I am working on a weekend.’ 784

[805] At paragraphs 42–48 of his statement Mr Syrek sets out the impact upon him of a reduction in penalty rates as sought by the Hospitality Employers. We note that the base hourly rate of $24.99 used by Mr Syrek in the illustrative calculations 785 derives from the Crown Agreement. At that time the applicable award rate was $19.10 per hour. We attach little weight to this aspect of Mr Syrek’s evidence. While the Crown Agreement remains in operation any variation to the Hospitality Award as a result of these proceedings would have no impact upon him.

Carol Gordon

[806] Ms Gordon has worked in the hospitality sector since March 2014 as a casual receptionist (classified as a Level 2,Front Office Grade 1 under the Hospitality Award).

[807] Ms Gordon’s evidence as to the adverse impact of weekend and public holiday work is set out at paragraphs 22–26 of her statement. Working at these times impacts on Ms Gordon’s care for her foster child,who has serious medical issues,and on her social life:

    ‘Working on weekends has had a negative impact on my social life. For example,I have a group of friends who meet up for a meal every month or so,generally lunch on Saturday or Sunday or dinner on Saturday. Everyone else works Monday to Friday. Our meals are now fitted around my roster. I can only go out with my friends on a free weekend,because Riley wants me to spend my free night with him on weekends I am rostered to work.’ 786

[808] At paragraphs 35–40 of her statement,Ms Gordon sets out the impact upon her of a reduction in penalty rates as sought by the Hospitality Employers. We return to this aspect of Ms Gordon’s evidence shortly.

Amit Gounder

[809] Ms Gounder commenced employment in the housekeeping department at the ‘Sheraton on the Park’hotel in Sydney in 2001. Upon returning for parental leave in 2010 Ms Gounder has been a part-time employee working 24 hours per week,from 7.00 am to 3.00 pm on Saturday,Sunday and Monday each week (including public holidays). 787 At the time she made her statement Ms Gounder was classified as a Guest Services Employee Grade 2 and paid $18.47 per hour.

[810] As to the impact of weekend and public holiday work Ms Gounder says:

    ‘I work on weekends because my husband’s work means he is only available to take care of our seven year old son on weekends. The penalty rates I am paid on weekends help to balance the loss of family time. I would prefer to be able to spend the weekends with my family but the costs of before and after school care for my son on weekdays would mean that a large chunk of my wages would go straight to child care expenses. I’d also have to work more days to earn the same amount if I didn’t get weekend rates.

    I sometimes miss out on family events including weddings and birthday parties because I have to work on weekends. The only way I can attend these weekend events is if I take annual leave. My employer is co-operative in letting me have short periods of annual leave but that still means I have less annual leave to take as a block if we go away for holidays.’ 788

[811] It appears from Ms Gounder’s evidence that while weekend and public holiday work adversely impacts on the time spent with family,working at such times suits her personal circumstances as that is the time when her husband is available to care for their son.

[812] Ms Gounder earns $1,137.01 per fortnight,and if Sunday penalty rates in the Hospitality Award were reduced in the manner sought by Hospitality Employers she would lose $73.88 per fortnight:

    ‘the loss of income will mean we have less choice about our spending. It will be harder to pay off our mortgage and maintain the standard of living we are used to. We might have to cut out the karate sessions my sons participates in,and paying my daughter’s university fees.’ 789

Rachel-Lee Louise Zwarts

[813] Ms Zwarts has worked in the hospitality industry since about 2010,and has been an apprentice chef since September 2013. 790 In May 2015 she started as a full-time apprentice chef at the Torrens Arms Hotel. Ms Zwarts works split shifts on various days and regularly works on weekends and public holidays:

    ‘I usually work the public holidays and I like to get the extra money that comes from penalty rates on Sundays and public holidays. The extra money makes up for the difficulty of working those days.

    Weekends and public holidays are the times I get paid the most so I try to work these days.’ 791

[814] As to the impact of working on Sundays Ms Zwarts’evidence is as follows:

    ‘I am religious and working Sundays makes it really difficult to get to Church.

    The main services are on Sunday morning. I usually work quite late in Saturday night and if I have to work on Sunday my shift starts at 10.00am so I can’t get to the Sunday morning service.

    I try to attend evening services when I can but it isn’t the same. There are less people and it is not as much of a community. My family is not there at the evening services.

    I don’t get to see much of my family because by the time I get up after working late the night before they have gone to work. When I get home it is pretty late,well after 10.30pm,and they are in bed.’ 792

[815] Ms Zwarts deals with the impact of a reduction in penalty rates as proposed by the Hospitality Employers at paragraphs 24–32 of her statement,in particular:

    ‘On a nine and a half hour shift work on Sunday I would lose $26.32 if the changes to the penalties were put in place. I am only paid a base rate of $11.07 per hour. This means I would be working effectively two hours for no pay.

    If the changes happen to the penalties it will really affect me because I don’t get paid very much at the moment because I am an apprentice. Any reduction in pay will make it even harder for me to pay my bills and try to save.

    I only have around $50.00 to spend after my bills now. With my expenses and the pay I receive I struggle to save at all even though I still live at home. Without the penalty rates I will have hardly anything to spend or save;it doesn’t seem fair because I work really hard.’ 793

7.2.5 Consideration

[816] We propose to deal with the s.134 considerations first.

[817] Section 134(1)(a) of the FW Act requires that we take into account ‘relative living standards and the needs of the low paid’. A threshold of two-thirds of median full-time wages provides a suitable benchmark for identifying who is ‘low paid’,within the meaning of s.134(1)(a). As shown in Chart 24 (see paragraph [735]) a substantial proportion of award-reliant employees covered by the Hospitality Award are ‘low paid’.

[818] As stated in the PC Final Report,a reduction in Sunday penalty rates will have an adverse impact on the earnings of those hospitality industry employees who usually work on a Sunday. It is likely to reduce the earnings of those employees,who are already low paid,and to have a negative effect on their relative living standards and on their capacity to meet their needs.

[819] The evidence of the United Voice lay witnesses puts a human face on the data and provides an individual perspective on the impact of the proposed changes. Many of these employees earn just enough to cover their weekly living expenses. Saving money is difficult. Unexpected expenses such as school trips,illness,or repairs,can produce considerable financial stress. As United Voice submits:

    ‘The prospect of reductions in income has already caused anxiety. Many workers are unable to work extra hours to make up for lost income without making significant changes to their lives,such as reducing or stopping study,or finding substitute childcare. There is genuine uncertainty about whether employers would actually be in a position to offer additional hours work to make up for the lost income.’ 794

[820] Ms Gordon’s evidence 795 is illustrative in this regard. In the weeks she worked on weekends she earned between $357.90 and $362.50. The proposed cuts to penalty rates,if made,would reduce her income by between $25 and $40 per week. She manages her spending carefully,and any reduction would mean she has ‘little margin for error in her spending’.796

[821] Ms Gordon’s evidence was that she is unlikely to be offered additional hours because the work is highly seasonal,and even if she was offered additional hours,her ability to accept those hours was limited by her responsibilities as primary caregiver for her nephew. 797

[822] The extent to which lower wages induce a greater demand for labour on Sundays (and hence more hours for low-paid employees) will somewhat ameliorate the reduction in income,albeit by working more hours. We note the Productivity Commission’s conclusion that,in general,most existing employees would probably face reduced earnings as it is improbable that,as a group,existing workers’hours on Sundays would rise sufficiently to offset the income effects of the penalty rate reduction.

[823] The ‘needs of the low paid’is a consideration which weighs against a reduction in Sunday penalty rates. But it needs to be borne in mind that the primary purpose of such penalty rates is to compensate employees for the disutility associated with working on Sundays rather than to address the needs of the low paid. The needs of the low paid are best addressed by the setting and adjustment of modern award minimum rates of pay (independent of penalty rates).

[824] We are conscious of the adverse impact of a reduction in Sunday penalty rates on the earnings of hospitality workers who work on Sundays and this will be particularly relevant to our consideration of the transitional arrangements associated with any such reduction.

[825] Section 134(1)(b) requires that we take into account ‘the need to encourage collective bargaining’. A reduction in penalty rates is likely to increase the incentive for employees to bargain,but may also create a disincentive for employers to bargain. It is also likely that employee and employer decision-making about whether or not to bargain is influenced by a complex mix of factors,not just the level of penalty rates in the relevant modern award.

[826] The Hospitality Employers submit that s.134(1)(b) is a ‘neutral’consideration as ‘The evidence does not establish that the current level of penalty rate encourages or discourages collective bargaining’. 798

[827] It is important to appreciate that s.134(1)(b) speaks of ‘the need to encourage collective bargaining’. As we are not persuaded that a reduction in penalty rates would ‘encourage collective bargaining’it follows that this consideration does not provide any support for a change to Sunday penalty rates.

[828] Section 134(1)(c) requires that we take into account ‘the need to promote social inclusion through increased workforce participation’. Obtaining employment is the focus of s.134(1)(c).

[829] On the basis of the common evidence we conclude that a reduction in the Sunday penalty rate in the Hospitality Award is likely to lead to some additional employment. We are fortified in that conclusion by the evidence of the lay witnesses called by the Hospitality Employers. As mentioned earlier,that evidence supports the following propositions:

  • some owner operators of small to medium hospitality enterprises will provide additional hours to Hospitality Award covered employees on Sundays,rather than doing the work themselves;and

  • a lower Sunday penalty rate would increase the level and range of services offered by some hospitality enterprises,with a consequent increase in employment (in terms of hours worked by existing employees or the engagement of new employees).

[830] We reject United Voice’s submission that the lay evidence led by the Hospitality Employers is simply conjecture and speculation,and that ‘None of that evidence supports the contention that cuts to penalty rates will have any impact on employment’. 799

[831] United Voice also submits 800 that it is significant that none of the employers have produced any ‘natural experiments’evidence to support their contention that cutting penalty rates will increase employment. Further,it submits that the ‘employment effect’is a critical part of the employer’s case and accordingly:

    ‘It is proper to expect that they would have sought to provide available empirical information to explain that effect. Given such evidence was available,and had been identified to the employers,it is reasonable to draw an inference that such evidence was not relied upon because it would not have assisted the employer parties.’ 801

[832] United Voice rely on Jones v Dunkel 802 in support of the proposition that we should draw the suggested inference from the absence of any ‘natural experiment’evidence.

[833] Some of the principles in relation to what is commonly termed ‘the rule in Jones v Dunkel’are as follows:

    1. The unexplained failure by a party to give evidence,to call witnesses,or to tender documents or some other evidence may in appropriate circumstances lead to an inference that the uncalled evidence would not have assisted the party’s case. The rule provides that an inference may be drawn in certain circumstances not that such an inference must be drawn. 803

    2. The rule permits an inference that the untendered evidence would not have helped the party who failed to tender it and entitles the Commission to more readily draw any inference fairly drawn from the other evidence. But the rule does not permit an inference that the untendered evidence would in fact have been damaging to the party not tendering it. The rule cannot be employed to fill gaps in evidence,or to convert conjecture and suspicion into inference. 804

    3. The rule only applies where a party is ‘required to explain or contradict’something and this depends on the issues thrown up by the evidence in a particular case. 805

[834] We accept that there have been a number of occasions in the past two decades where penalty rates or minimum wages have been reduced in the Accommodation and food services sector and that such occasions provide an opportunity for a ‘natural experiment’to discern the employment effects of such a change. As the Full Bench observed in the Restaurants 2014 Penalty Rates decision:

    ‘There are clear examples in the history of industrial regulation of the restaurant industry in which weekend penalty rates have been abolished or reduced,but no evidence was forthcoming to demonstrate that this had discernibly positive effects in terms of turnover and employment. The Deputy President,correctly in our view,pointed to the period 2006 to 2010 in Victoria when restaurant operators not bound by the then-applicable federal award were not required to pay any penalty rates at all as providing an opportunity to test empirically what the business and employment effects of a removal of penalty rates would be. However,no evidence was called at first instance from any restaurant operator in Victoria,and the evidence did not otherwise touch upon this period. There was another historical opportunity which we can identify. Prior to the Work Choices period commencing in 2006,restaurants in New South Wales were largely regulated by an award of the Industrial Relations Commission of New South Wales,the Restaurant &c.,Employees (State) Award. In 1996,the NSW Commission (Marks J) heard and determined various applications,including an application from the Restaurant and Catering Association of NSW and other employers,in respect of that award. The employers’application sought amongst other things a reduction in weekly penalty rates. In the Commission’s decision issued on 23 August 1996,it was determined that the Saturday penalty rate should be reduced from 50% to 25% and the Sunday penalty rate reduced from 75% to 50% (with casual employees receiving casual loadings in addition). On the employers’case presented before the Deputy President,that change should have increased turnover and employment in the NSW restaurant industry. But there was no evidence that was actually the case.’ 806

[835] Further,as pointed out by United Voice,the transitional arrangements in respect of penalty rates for casual employees in South Australia covered by the Hospitality Industry (General) Award 2010 provide a further opportunity for a ‘natural experiment’.

[836] We are not persuaded that the rule in Jones v Dunkel 807 is applicable in the context of these proceedings,for 3 reasons.

[837] First,as mentioned in Chapter 3 (at [110]),the Review is to be distinguished from inter parties proceedings of the type to which Jones v Dunkel 808 is apposite.

[838] Second,the application of the rule is dependent on the issues thrown up in the particular case. Contrary to United Voice’s contention,the Hospitality Employers and the RCI do not advance the bold proposition that cutting penalty rates will increase employment. The positions advanced are more nuanced. At paragraph [35] of their reply submission the Hospitality Employers made it clear that:

      ‘…the Associates do not advance the broad proposition that any reduction in any loading/penalty will necessarily have a consequential employment effect.’

[839] In its final written submission at paragraph [97],the RCI advances the following argument in relation to the consideration at s.134(1)(c) (which is directed to employment):

      ‘…Having regard to the evidence,it is apparent that the current level of penalty rates,particularly on Sundays,is having a detrimental effect on trading and employment opportunities.’

[840] Further,in its reply submission,at paragraph [25],the RCI states:

      ‘The point of RCI’s submissions has never been about advocating that certain positive outcomes will be achieved as a matter of fact but rather the importance of removing disincentives and barriers which exist.’

[841] Third,Jones v Dunkel 809 is directed at the unexplained failure by a party to call a witness or to tender documents. It seems to us that United Voice is seeking to extend the rule such that a party would be required to create evidence –in the form of a report documenting the effects of a ‘natural experiment’. No authority was advanced in support of such a proposition.

[842] If we are wrong about the application of the rule in Jones v Dunkel 810 in the present context we would exercise our discretion not to draw the inference sought. In doing so we have had regard to the issues raised above and to the inherent difficulty of undertaking research of this nature.

[843] In the context of labour market studies,Card (1992) 811 first used the natural experiment approach to assess changes in employment in California with a group of neighbouring locations that,although similar to California,made no adjustment to their minimum wage. Although this methodology has continued to influence research in this field,it is difficult to apply this technique to labour market research in Australia.

[844] Credible Australian research which quantitatively analyses the impact of changes in the national minimum wage and award rates of pay on employment and hours worked would be relevant to the conduct of annual wage reviews. 812 Accordingly,as part of its medium-term research program,the Commission commenced a competitive open tender process for this research in September 2014. The tender sought to elicit research which could quantify the impact of changes in national minimum wage and award rates of pay on employment and hours worked in Australia through methods other than Computable General Equilibrium modelling. As noted in the tender:

    ‘…[r]esearch that empirically estimates the employment effects of minimum wages adjustments in an Australian context has been limited. This is due to the specific nature of the research,which draws on an in-depth understanding of Australia’s industrial relations system and the limitations posed by data collected in Australia.’ 813

[845] To elicit as many quality tenders as possible,the Commission undertook a shortlisting process which included providing a nominal fee to successful shortlisted tenderers to further develop their proposals. The Commission also sought the services of expert academics to provide comments on de-identified tender proposals which were incorporated into the Commission’s tender evaluation process. Unfortunately,despite this process the Commission was unable to award a contract due to the lack of reliable data.

[846] Several reasons make natural experiments for changes in penalty rates more difficult to analyse than changes in minimum wages. In particular,there is no data source that regularly identifies workers receiving penalty rates,thus making it more difficult to identify an appropriate group of workers that form a comparator group (one that shares the same characteristics as people affected by the adjustment but do not benefit from the adjustment).

[847] In addition to this,longitudinal data that can identify the affected workers and track their labour market movements over time is required and this also does not currently exist in Australia. Again,data sources of this nature are strongly featured throughout the international evidence.

[848] Contrary to United Voice’s submission the consideration in s.134(1)(c) lends support to a reduction in Sunday penalty rates.

[849] It is convenient to deal with the considerations s.134(1)(d) and (f) together.

[850] Section 134(1)(d) requires that we take into account ‘the need to promote flexible modern work practices and the efficient and productive performance of work’.

[851] Section 134(1)(f) requires that we take into account ‘the likely impact of any exercise of modern award powers on business,including on productivity,employment costs and the regulatory burden’.

[852] It is self-evident that if the Sunday penalty rate was reduced then employment costs would reduce. It was not contended that a reduction in the Sunday penalty rate would impact on productivity or regulatory burden. This consideration supports a reduction in the Sunday penalty rate. As we have mentioned,s.134(1)(f) is not confined to a consideration of the impact of the exercise of modern award powers on ‘productivity,employment costs and the regulatory burden’. It is concerned with the impact of the exercise of those powers ‘on business’. In addition to the impact on employment costs it is also apparent that a reduction in the Sunday penalty rate would have other positive effects on business.

[853] The evidence of the lay witnesses called by the Hospitality Employers supports the proposition that the current level of Sunday penalty rates has led employers to reduce labour costs associated with Sunday trading by restricting the availability of services. The range of such operational limitations broadly fall into 3 categories:

  • restricting trading hours;

  • lower staffing levels;and

  • restrictions on the type and range of services provided.

[854] The evidence of the Hospitality Employers’lay witnesses also supports the proposition that a lower Sunday penalty rate would increase the level and range of services offered on a Sunday. The type of changes suggested in the lay witness evidence are:

  • extended operating hours;

  • providing additional meal services;

  • providing live entertainment;

  • investing in infrastructure to provide services;and

  • provide cleaning services for accommodation facilities.

[855] On this basis,it may be said that a reduction in penalty rates will promote flexible modern work practices. This consideration lends support to a reduction in Sunday penalty rates.

[856] Section 134(1)(da) requires that we take into account the ‘need to provide additional remuneration’for,relevantly,‘employees working on weekends’. As mentioned earlier,an assessment of ‘the need to provide additional remuneration’to employees working in the circumstances identified in paragraphs 134(1)(da)(i) to (iv) requires a consideration of a range of matters,including:

    (i) the impact of working at such times or on such days on the employees concerned (i.e. the extent of the disutility);

    (ii) the terms of the relevant modern award,in particular whether it already compensates employees for working at such times or on such days (e.g. through ‘loaded’minimum rates or the payment of an industry allowance which is intended to compensate employees for the requirement to work at such times or on such days);and

    (iii) the extent to which working at such times or on such days is a feature of the industry regulated by the particular modern award.

[857] It is convenient to deal with matters (ii) and (iii) first.

[858] As to matter (ii),the minimum wage rates in the Hospitality Award do not already compensate employees for working on weekends. We note that the Hospitality Award makes provision for annualised salary arrangements under which an employee is paid at least 25 per cent above their minimum weekly wage rate instead of,among other things,penalty rates for weekend work,provided such an agreement does not disadvantage the employee concerned (see clause 27.1 of the Hospitality Award). But such arrangements are not the focus of matter (ii).

[859] In relation to matter (iii),weekend work is a feature of the Hospitality sector. As mentioned earlier (see [715]),most enterprises in the Hospitality sector operate 7 days a week compared to 31.1 per cent of enterprises across all industries (80.5 per cent). Almost half of all enterprises only operate on weekdays. This feature of the Hospitality sector was confirmed by the lay witnesses called by the Hospitality Employers and United Voice.

[860] We now turn to matter (i),the extent of the disutility of,relevantly,Sunday work. In addition to the findings set out in Chapter 6,the lay witness evidence led by United Voice spoke to the adverse impact of weekend work on the ability of hospitality sector employees to engage in social and familial activities. While for some of those witnesses Sunday work had a particularly adverse impact,most simply referred to the impact of weekend work and did not distinguish between Saturday and Sunday work.

[861] We note that in the event Sunday penalty rates were reduced (but not removed entirely) employees working on Sundays would still receive ‘additional remuneration’.

[862] Section 134(1)(e) requires that we take into account ‘the principle of equal remuneration for work of equal or comparable value’. Any reduction in Sunday penalty rates would apply equally to men and women workers. For the reasons given earlier we regard s.134(1)(e) as neutral to our consideration of the claims before us.

[863] Section 134(1)(g) requires that we take into account ‘the need to ensure a simple,easy to understand,stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards’. We regard s.134(1)(g) as neutral to our consideration of the claims before us. No party contended to the contrary.

[864] Section 134(1)(h) requires that we take into account ‘the likely impact of any exercise of modern award powers on employment growth,inflation and the sustainability,performance and competitiveness of the national economy’.

[865] The Hospitality Employers note that the evidence presented has been addressed to the hospitality industry and that:‘It is not suggested that it would allow for an informed consideration of the economy wide effects of the current Award’. 814 We agree with the submission put. A detailed assessment of the impact of a reduction in Sunday penalty rates in the Hospitality Award on the national economy is not feasible on the basis of the limited material before us.

[866] The modern awards objective is to ‘ensure that modern awards,together with the NES,provide a fair and relevant minimum safety net of terms and conditions’,taking into account the particular considerations identified in paragraphs 134(1)(a) to (h). We have taken into account those considerations insofar as they are relevant to the matter before us.

[867] The central issue in these proceedings is whether the existing Sunday penalty rate provides a ‘fair and relevant minimum safety net’.

[868] The Hospitality Employers’principal contention is that the existing penalty rate acts as a deterrent to employment and as such the current penalty rates are neither fair nor relevant. In short,the existing Sunday penalty rate is not ‘proportional to the disability’. In this context the Hospitality Employers point to the fact that the existing Sunday loading (75 per cent) is three times the loading for Saturday work (25 per cent).

[869] As set out earlier,the Hospitality Employers propose that the Sunday penalty rate be reduced from 175 per cent to 150 per cent for all employees (inclusive of the 25 per cent loading for casual employees). No change is proposed to Saturday penalty rates.

[870] The change proposed by the Hospitality Employers is said to be fair and relevant for the contemporary hospitality industry,having regard to the following matters:

    (a) the availability of labour;
    (b) the willingness of employees to work and a preference for Sunday,especially from amongst casual employees;
    (c) consumer activity on weekends;
    (d) workforce composition;
    (e) hospitality industry business trading hours;and
    (f) the frequency of work on weekends and public holidays.

[871] In opposing the changes sought by the Hospitality Employers,United Voice contends that a reduction in penalty rates will not result in any measurable impact,other than the employer cash flow and profits. 815

[872] As to the proposition that (in essence) a reduction in penalty rates will only increase employer cashflow and profits,we note that this submission is put by United Voice in respect of each of the employer applications in which it has an interest (namely,the Hospitality Award,the Restaurant Award and the Fast Food Award). A similar submission is advanced by the SDA,in relation to the Pharmacy Award,it submits:

    ‘It can be anticipated that,in some material proportion,any reduction in labour costs will be absorbed as profit rather than applied to increasing the hours of work (whether by existing or new employees).’ 816

[873] It is convenient to deal with these submissions here,rather than simply repeat the point in the sections dealing with each of the modern awards.

[874] As observed in the PC Final Report,in examining this issue it is important to distinguish between short-run and long-run impacts:

    ‘Any changes in the cost of any inputs —up or down —must have at least short-term impacts on the profitability of the relevant businesses as they do not usually instantaneously alter their input mix,drop prices or adapt in other ways. So the imposition of higher penalty rates resulting from award modernisation in some industries and jurisdictions would have had short-term adverse effects on profitability,while the reduction of penalty rates,as recommended in this inquiry,would also provide short-term additional profits to businesses. The duration of these profitability effects will depend on the specific circumstances of the market…

    However,long run profitability is unlikely to be affected by penalty rate levels. Effects on profits are not enduring at the industry level because two processes tend to restore normal levels of profitability. Higher rates of return on capital attract entry in industries,such as those in the HERRC,that do not face substantial business entry and exit costs. (Exit and entry rates are high in most industries,and especially so in restaurants,catering,takeaways and cafes —figure 14.2 and table 14.2.) This spreads existing customers among a larger number of businesses,and tends to lower returns.

    Equally,in a workably competitive market (as is clearly the case in the HERRC industries),existing businesses facing competition tend to lower average prices or increase the quality of the product to consumers by opening longer,increasing staff-to-customer ratios,or employing better qualified staff. Their business strategy will depend on market conditions. But,whether it is through price or quality effects,increased profits are ultimately transferred to consumers. The converse process applies when a regulatory shock adversely affects profits,with the failure of some businesses and the adaptation by others (such as by opening for reduced hours on Sundays).’ 817

[875] The Productivity Commission goes on to observe that there is ‘little evidence to suggest that measures of profits have any particular trend reflecting penalty rates (table 14.3)’. Table 14.3 from the PC Final Report is reproduced below as Table 35.

Table 35

Profits and losses in selected industries
2006-07 to 2013-14a

 

 

    2006–07

    2007–08

    2008–09

    2009–10

    2010–11

    2011–12

    2012–13

    2013–14

 

    Index of profit margin (2006-07=100)

 

Index

Index

Index

Index

Index

Index

Index

Index

Total retail trade

100.0

91.4

93.7

98.3

98.8

95.1

94.3

97.6

Accommodation

100.0

80.5

126.3

102.3

72.3

111.8

105.0

91.7

Food and beverage services

100.0

64.7

98.7

125.2

98.6

102.8

103.5

102.8

Total arts and recreation services

100.0

104.5

106.9

117.1

102.5

100.3

99.8

98.4

All industries

100.0

93.9

85.7

95.6

103.5

100.6

87.6

90.1

 

        Share of enterprises making a loss

 

%

%

%

%

%

%

%

%

Total retail trade

20.7

26.2

24.9

28.4

30.9

27.6

26.2

24.3

Accommodation

26.4

26.0

25.3

23.8

..

19.4

19.4

19.6

Food and beverage services

22.5

33.2

34.8

30.7

..

23.4

22.9

25.6

Total arts and recreation services

29.9

27.6

28.2

30.6

34.6

19.3

20.2

24.7

All industries

23.5

23.7

24.8

25.4

25.4

21.4

20.8

20.0

a Profit margins (operating profits as a share of revenue) vary from industry to industry because they have varying levels of capital. For example,an industry may have a high profit margin because it is a capital intensive industry,though its return on capital may be equivalent to another business with a lower profit margin. Accordingly,normalising the initial profit margin to 100 provides a better way of comparing the measures over time.

Source:ABS (various issues),Australian Industry,Cat. no. 8155.0.

 
 

[876] Given the matters referred to in the PC Final Report,we reject the United Voice and SDA contention that a reduction in penalty rates will only increase employer cashflow and profit. While such changes will have a short term impact on the cashflow and profitability of the relevant businesses,long run profitability is unlikely to be affected by a reduction in penalty rates.

[877] Returning to the submissions advanced by the Hospitality Employers we note at the outset that they are not proposing that the Sunday penalty rate be reduced to the Saturday penalty rate. The Hospitality Employers also accept that there is disability associated with Sunday work and that there is a need to compensate for that disability. As stated in their written submissions:

    ‘…the Associations accept that there is disability associated with working on Sundays. The Associations accept the need for additional remuneration on Sundays in order to compensate employees for the disability and to attract labour to work on that day. In accepting the existence of disability and a need to compensate,the Associations also say that the Award should meet that need in a way that is fair and balanced. Importantly,the Award should not penalise the hospitality employer or deter employment.’ 818

[878] It is implicit in the claim advanced that the Hospitality Employers accept the proposition that the disutility associated with Sunday work is higher than the disutility associated with Saturday work. If this was not the case then they would have proposed that the penalty rates for Sunday and Saturday work be the same.

[879] We note that the Hospitality Employers also submit that the Sunday penalty rate should be set having regard to the need to attract labour. We do not accept that submission. Modern awards provide a minimum safety net of terms and conditions. A modern award penalty rate must be ‘fair and relevant’and set having regard to the applicable provisions in the FW Act. Considerations associated with the need to attract labour are best addressed through collective bargaining or the payment of overaward wages.

[880] We note that the PC Final Report recommended that for full-time and part-time employees the Sunday penalty rates be set at the higher rate of 125 per cent and the existing Saturday penalty rate.

[881] In the Hospitality Award the existing Saturday penalty rate for full-time and part-time employees is 125 per cent. Hence,if adopted the Productivity Commission recommendation would result in the reduction of the Sunday penalty rate for full-time and part-time employees from 175 per cent to 125 per cent.

[882] As mentioned earlier,in the Review the Commission is not constrained by the terms of a particular application,it may vary a modern award in whatever terms it considers appropriate,subject to procedural fairness considerations. Accordingly,if we were satisfied of the merit of doing so,it would be open to us to adopt the recommendation in the PC Final Report (and reduce the Saturday penalty rate to 125 per cent) or indeed to go further and reduce the Sunday penalty rate. But as we are not satisfied of the merit of doing so,we have decided not to adopt that course.

[883] As set out in Chapter 6,there is a disutility associated with weekend work,above that applicable to work performed from Monday to Friday. Further,generally speaking,for many workers Sunday work has a higher level of disutility than Saturday work,though the extent of that disutility is much less than in times past.

[884] We are satisfied that the existing Saturday penalty rates in the Hospitality Award achieve the modern awards objective –they provide a fair and relevant minimum safety net.

7.2.6 Conclusion

[885] For the reasons given we have concluded that the existing Sunday penalty rate is neither fair nor relevant. As mentioned earlier,fairness in this context is to be assessed from the perspective of the employees and employers covered by the modern award in question. The word ‘relevant’,in the context of s.134(1),is intended to convey that a modern award should be suited to contemporary circumstances.

[886] Based on the evidence before us and taking into account the particular considerations identified in paragraphs 134(1)(a) to (h),insofar as they are relevant,we have decided to reduce the Sunday penalty rate for full-time and part-time employees,from 175 per cent to 150 per cent.

[887] We now turn to the application of weekend penalty rates in the Hospitality Award to casual employees. The Hospitality Award provides that casual employees are paid a casual loading of 25 per cent.

[888] Casuals are currently paid 150 per cent of the applicable minimum hourly rate for Saturday work,that is,the 125 per cent Saturday penalty rate plus the 25 per cent casual loading. Yet,curiously,the Sunday rate for casuals is 175 per cent (inclusive of the 25 per cent casual loading),which is the same as the Sunday rate for full-time and part-time employees.

[889] As we have mentioned,the PC Final Report makes reference to the interaction of penalty rates and casual loadings and concludes that:

‘For neutrality of treatment,the casual loading should be added to the penalty rate of a permanent employee when calculating the premium rate of pay over the basic wage rate for weekend work.’ 819

[890] There is considerable force in the Productivity Commission’s conclusion.

[891] Casual loadings and weekend penalty rates are separate and distinct forms of compensation for different disabilities. Penalty rates compensate for the disability (or disutility) associated with the time at which work is performed.

[892] The Hospitality Employers acknowledge the distinct purpose of penalty rates,when they submit:

    ‘…penalty rates can be distinguished from other terms and conditions such as minimum wages by virtue of penalty rates being compensation for the disability associated with the time at which work is performed. Penalty rates do not compensate for the nature of the work or the skills and attributes required to perform it –those being the purpose of minimum wages.’ 820

[893] The different treatment for casuals who work on Sundays (as opposed to Saturdays) may be traced back to a decision by Commissioner Gay,on 6 May 1993,to vary the Hotels,Restaurants and Hospitality Industry Award 1992 (a precursor award to the Hospitality Award). 821 Prior to that decision weekend penalty rates for casual employees were 75 per cent of the ordinary rate for work on Saturdays (175 per cent) and 100 per cent on Sundays (200 per cent) . The Commissioner fixed a Saturday penalty rate of 25 per cent on Saturdays and a Sunday penalty rate of 75 per cent for all employees (i.e. full-time,part-time and casuals). The effect was that the Saturday rate for casuals was reduced from 175 per cent to 150 per cent and the Sunday rate for casuals from 200 per cent to 175 per cent,inclusive of casual loading. The Commissioner’s reasons for adopting that course are not immediately apparent from his decision. We note that the Commissioner expressed the view that the Sunday penalty rate should be less than the overtime rate but appreciably more than the Saturday penalty rate.

[894] The Commissioner’s decision also predates the Casual Loading Test Case Decision,in December 2000. 822 In that matter the Full Bench increased the casual loading in the Metal Industries Award 1998,to 25 per cent,and said:

    ‘…we are satisfied that paid leave;long service leave;and a component covering differential entitlement to notice of termination of employment and employment by the hour effects,should constitute the main components to be assessed in determining casual loading…’ 823

[895] The distinct purpose of the casual loading is made clear from clause 13.1 of the Hospitality Award:

    ‘The casual loading is paid as compensation for annual leave,personal/carer’s leave,notice of termination,redundancy benefits and other entitlements of full-time or part-time employment’

[896] Importantly,the casual loading is not intended to compensate employees for the disutility of working on Sundays.

[897] In our view,the casual loading should be added to the Sunday penalty rate when calculating the Sunday rate for casual employees. We propose to adopt the Productivity Commission’s ‘default’method. Accordingly,the Sunday rate for casual employees in the Hospitality Award will be 25 + 150 = 175 per cent.

[898] We note that this is the rate currently prescribed in clause 32.1 for casuals and hence we do not propose to change that rate. The Sunday rate for full-time and part-time employees will be reduced to 150 per cent.

[899] We deal with the transitional arrangements associated with the reduction in the Hospitality Award Sunday penalty rate (for full-time and part-time employees) in Chapter 13 of our decision.

[900] For the reasons given earlier,we are satisfied that the existing Saturday penalty rates in the Hospitality Award provide a fair and relevant minimum safety net and accordingly,they achieve the modern awards objective. Accordingly,we do not propose to vary the existing Saturday penalty rates.

[901] Finally,we turn to the proposal by the Hospitality Employers to remove the reference to ‘penalty’and ‘penalty rates’in clause 32 of the Hospitality Award and to insert references to ‘additional remuneration’. We note that a similar variation is proposed by the Pharmacy Guild of Australia in respect of the Pharmacy Industry Award 2010.

[902] No particular submission was advanced in support of the proposal to change the terminology in the Hospitality Award,by either the Hospitality Employers or any other party and it is opposed by United Voice. 824

[903] We assume that the change proposed is sought on the basis that s.134(1)(da)(iii) of the FW Act speaks of ‘the need to provide additional remuneration for …employees working on weekends’. The change proposed would also be consistent with the contemporary purpose of ‘penalty rates’. As mentioned in Chapter 3,deterrence is no longer a relevant consideration in setting weekend penalty rates. The purpose of such rates is not to penalise employers for rostering employees to work at such times,it is to compensate employees for the disutility of working on weekends. These considerations favour the change in terminology proposed by the Hospitality Employers.

[904] However,as United Voice submits,such a change may create uncertainty and confusion amongst the employers and employees to whom the Hospitality Award applies. The expression ‘penalty rates’is commonly understood and is used in the FW Act. Indeed s.139(1),which deals with what type of terms may be included in a modern award,refers to:‘penalty rates for …employees working on weekends’.

[905] Further,the change in terminology proposed is only advanced in respect of 2 modern awards. The introduction of different expressions (which have the same meaning) in different modern awards is apt to confuse. Such an outcome would not be consistent with ‘the need to ensure a simple,easy to understand …modern award system’(s.134(1)(g)). If changes of the type proposed were to be made then,prima facie,they should be made in all modern awards which currently provide for ‘penalty rates’.

[906] The submissions in respect of this issue were very limited. We propose to provide a further opportunity for interested parties to express a view about the proposed change in terminology. We deal with the process for doing so in Chapter 12:Next Steps.

    7.3 Registered and Licensed Clubs Award 2010

      7.3.1 The Claims

[907] CAI seeks to vary clause 29 –Penalty Rates of the Registered and Licensed Clubs Award 2010 (the Clubs Award) by reducing the penalty rates for Saturday work,from 150 per cent to 125 per cent,and for Sunday work,from 175 per cent to 150 per cent. The changes sought are set out below,in a marked up version of clause 29.1:

    29.1 An employee other than a maintenance and horticultural employee performing work on the following days will be paid the following percentage of the minimum wage rate in clause 17—Minimum wages for the relevant classification:

     

    Monday to Friday

    Saturday

    Sunday

    Public holiday

     

    %

    %

    %

    %

    Full-time and part-time

    100

    150 125

    175 150

    250 200

    Casual (inclusive of the 25% casual loading)

    125

    150

    175 150

    250 200

[908] If granted,CAI’s proposed variation to clause 29.1 would:

  • reduce the penalty rates paid to full-time and part-time employees for work performed on a Saturday from 150 per cent of their minimum rate of pay to 125 per cent;

  • reduce the penalty rates paid to all employees for work performed on a Sunday from 175 per cent of their minimum rate of pay to 150 per cent;

[909] CAI also seek reductions in the public holiday penalty rate. We deal later with that aspect of CAI’s claim.

      7.3.2 Background to the Clubs Award

[910] In the award modernisation process,the Award Modernisation Full Bench initially drafted and published a single exposure draft for the hospitality industry. At that stage the Full Bench said:

    ‘We have decided to defer consideration of award coverage for the licensed and registered club sector. It may be that the sector could be included in the proposed hospitality industry modern award,with or without some special conditions and/or appropriate transitional provisions. The different types of clubs within the sector,and the different activities undertaken by them,raise issued of potential overlap with events staged by clubs and grounds management and maintenance. This matter requires further consideration in Stage 3.’ 825

[911] The Full Bench confirmed its commitment to this approach later in 2008:

    ‘In our statement of 12 September 2008,which accompanied the exposure drafts,we expressed a provisional view that the nature of work in the hospitality industry and the terms and conditions of employment in federal awards and NAPSAs were such that a single modern award could be made in respect of the hospitality industry,although consideration of the clubs and off-shore resorts sectors were deferred until Stage 3.’ 826

[912] The issue of a separate clubs award was considered during the Stage 3 award modernisation proceedings. At that time CAI submitted that ‘a national Club Industry Award should be made,that is separate and distinct from any other rationalised hospitality industry award that may be made as part of this process’. 827 CAI contended that the clubs industry ‘is a separate and distinct industry from most other industries in the hospitality sector’,based on the following:

  • Clubs are not-for-profit organisations;

  • Clubs are community based and community run organisations;

  • Clubs are established on the basis of interest mutuality;

  • Clubs are subject to separate and distinct regulations and regulatory framework;

  • They are required to adopt a set of rules (a constitution) subject to the provisions of the applicable regulatory framework;

  • They are subject to control by members and only members and bona-fide visitors can avail themselves of the facilities;

  • They do not pay a dividend to their members so any excess funds are channeled back into the community;

  • Each club is committed to maximizing local support and offering affordable social opportunities in a fun,safe and friendly environment in order to raise funds in furtherance of their community objectives;

  • Employees of Clubs provide a service to their members which goes beyond the service provided in a commercial establishment;

  • In many Regional Areas employees of Community Clubs are multi-skilled in that they perform work across a range of functions such as Clerical,greenkeeping and counter service;

  • Clubs offer a variety of sports,activities and entertainment for its patrons and members that are not normally offered at other hospitality venues.

[913] The Full Bench dealt with this issue during the Stage 3 proceedings as follows:

    ‘The question of award coverage for licensed and registered clubs first arose in the priority stage of award modernisation. We deferred a final conclusion,noting that it might be possible to include the sector in the Hospitality Modern Award and the potential overlap in relation to events staged by clubs and grounds management and maintenance.

    There is general support amongst employer and employee associations in the industry for a separate licensed and registered clubs modern award. While it might be possible to include clubs within the Hospitality Modern Award,with some sector specific arrangements,we have decided to make a separate clubs award. We publish a draft Registered and Licensed Clubs Award 2010. The LHMU and CAI provided a draft award,in a largely agreed form,and we have used this as the basis of the exposure draft.’ 828

[914] The Clubs Award was published in final form on 4 September 2009. 829

      7.3.3 The Clubs Industry

[915] The ABS data of direct relevance to the Clubs industry is quite limited.

[916] As mentioned earlier,data is collected by the ABS on industry employment using the ANZSIC. Clubs constitute a class within the Accommodation and food services division.

[917] A paper 830 by Commission staff provides a framework for ‘mapping’modern award coverage to the ANZSIC. Using this framework the Clubs Award is ‘mapped’to the Clubs (Hospitality) industry class,which is at the ANZSIC 4 digit level.

[918] The Census is the only data source that contains all of the employment characteristics in Table 36 for Clubs (Hospitality). The most recent Census data is from August 2011.

[919] The August 2011 Census data shows that there were around 43 000 employees in Clubs (Hospitality). Table 36 compares certain characteristics of employees in the Clubs (Hospitality),with employees in ‘all industries’.

Table 36  831

Labour force characteristics of the Clubs (Hospitality) industry class,ABS Census 9 August 2011

 

Clubs (Hospitality)

All industries

 

(No.)

(%)

(No.)

(%)

Gender

    

Male

19 577

45.2

4 207 586

50.8

Female

23 718

54.8

4 082 662

49.2

Total

43 295

100.0

8 290 248

100

Full-time/part-time status

    

Full-time

18 811

45.8

5 279 853

67.8

Part-time

22 264

54.2

2 507 786

32.2

Total

41 075

100.0

7 787 639

100

Highest year of school completed

   

Year 12 or equivalent

22 731

53.5

5 098 228

62.6

Year 11 or equivalent

4509

10.6

885 404

10.9

Year 10 or equivalent

11 863

27.9

1 687 055

20.7

Year 9 or equivalent

2332

5.5

317 447

3.9

Year 8 or below

963

2.3

141 973

1.7

Did not go to school

59

0.1

20 158

0.2

Total

42 457

100.0

8 150 265

100

Student status

    

Full-time student

6170

14.4

612 990

7.5

Part-time student

2502

5.9

506 120

6.2

Not attending

34 095

79.7

7 084 360

86.4

Total

42 767

100.0

8 203 470

100

Age (5 year groups)

    

15–19 years

4363

10.1

547 666

6.6

20–24 years

7817

18.1

927 865

11.2

25–29 years

4556

10.5

1 020 678

12.3

30–34 years

3749

8.7

933 827

11.3

35–39 years

3771

8.7

934 448

11.3

40–44 years

3800

8.8

938 386

11.3

45–49 years

4050

9.4

911 739

11

50–54 years

4025

9.3

848 223

10.2

55–59 years

3425

7.9

652 190

7.9

60–64 years

2496

5.8

404 470

4.9

65 years and over

1243

2.9

170 718

2.1

Total

43 295

100

8 290 210

100

Average age

37.5

 

38.8

 

Hours worked

    

1–15 hours

7693

18.7

875 554

11.2

16–24 hours

6553

16.0

792 539

10.2

25–34 hours

8018

19.5

839 694

10.8

35–39 hours

7485

18.2

1 676 920

21.5

40 hours

4902

11.9

1 555 620

20

41–48 hours

3296

8.0

895 619

11.5

49 hours and over

3128

7.6

1 151 693

14.8

Total

41 075

100

7 787 639

100

Note:Part-time work in the Census is defined as employed persons who worked less than 35 hours in all jobs during the week prior to Census night. This group includes both part-time and casual workers. Information on employment type is collected for persons aged 15 years and over.

Totals may not sum to the same amount due to non-response. For full-time/part-time status and hours worked,data on employees that were currently away from work (that reported working zero hours),were not presented.

[920] The profile of Clubs (Hospitality) employees differs from the profile of employees in ‘All industries’in three important respects:

    (i) about 54 per cent of Club employees work part-time (i.e. less than 35 hours per week 832),compared with only 32.2 per cent of all employees;

    (ii) over one-third (34.7 per cent) of Club employees work 1–24 hours per week,compared to just over one-fifth (21.4 per cent) of all employees;and

    (iii) Club employees are likely to be younger than employees in other industries,28.2 per cent of Club employees are aged 15–24 years,compared with 17.8 per cent for all industries.

      7.3.4 The Evidence

      (i) Clubs Australia

[921] CAI called 5 witnesses in support of its application to vary the Clubs Award:

  • Richard Tait:Executive Director for CAI and Executive Manager of Workplace Relations for The Registered Clubs Association of NSW (ClubsNSW); 833

  • John Dellar:Manager of Club Hawthorn Incorporated,a club in Hawthorn,Victoria; 834

  • Gwyn Rees:Deputy Chief Executive of Clubs Australian Capital Territory; 835

  • Jeffrey Cox:Operations Manager of Coffs Ex Services Club,an Ex Services and Sports Club that owns two other community clubs in Urunga and Woolgoolga;and  836

  • Anthony Casu:General Manager of Narooma Sporting &Services Club Ltd. 837

[922] United Voice objected to substantial parts of Mr Tait’s original witness statement. That objection was largely resolved by agreement,between United Voice and CAI and as a consequence the most relevant aspects of Mr Tait’s evidence –insofar as it concerns weekend penalty rates –is set out at Annexure B to Exhibit CAI1. 838 Annexure B to Mr Tait’s statement is a report by KPMG ‘National Club Census 2011’,dated 2012 (the KPMG Clubs Report). KPMG was engaged to examine the economic and social contribution of licensed clubs in Australia. Mr Tait described the KPMG Clubs Report as ‘a lobbying document in relation to showing the social contribution clubs have to their community and…for the government to understand that contribution’.839 The KPMG Clubs Report provides an analysis of the gross (as distinct from net) benefits of clubs to the Australian economy,as noted at paragraphs 67–68 of the report:

    ‘It is important to note that the analysis undertaken as part of this project focuses on the gross benefits of clubs to the Australian economy,as opposed to the net benefits. A gross analysis differs from a net analysis in the following two ways:

      •Firstly,it has been widely acknowledged that problem gambling creates a social cost,or dis-benefit,driven by addictive behaviour and its subsequent social costs. A net analysis of the benefits of clubs would measure the benefits of the clubs as the sum of the direct and indirect economic benefits net of any dis-benefits,including those driven by problem gambling.

      •Secondly,gambling involves a transfer of wealth between two parties. In a state or territory economy,gambling revenue derived from interstate and international tourists represents a net gain to the local economy. However,gambling losses by local residents only represent a partial transfer between two sectors of the economy. On this basis,consumer expenditure on gambling would therefore be substituted elsewhere in the economy if clubs did not operate. The economic and social benefits driven by these changes in expenditure would potentially be different to those realised from expenditure at registered clubs. A complete net analysis would account for these expenditure substitutions and their potential economic and social benefits.’

[923] The KPMG Clubs Report relies on data obtained from individual clubs who responded to a survey during the course of 2011. A copy of the survey instrument is annexed to the KPMG Clubs Report. 840

[924] All 6,577 clubs who were licensed with the respective State and Territory licensing bodies as at May 2011 were invited to participate in the survey. Some 1,015 clubs completed the survey,a response rate of 15 per cent. To adjust for differences between the average size and type of clubs who responded to the survey (i.e. the sample of survey respondents) and the entire industry (i.e. population of licensed clubs in Australia),KPMG stratified both the sample and population data. The sampling error at a 95 per cent confidence interval was less than 10 per cent. 841

[925] While the material in the KPMG Clubs Report is somewhat dated (as it relies on survey data from May 2011) and is of limited direct relevance to the claims before us,it does provide a useful insight into some important characteristics of the Clubs industry.

KPMG Clubs Report –Gross Economic Benefits –Key Findings

[926] The key findings of the KPMG Clubs Report on this regard are as follows:

  • The licensed clubs industry is highly fragmented,comprising more than 6,500 individual venues spread across Australia.

  • Clubs across Australia make a significant contribution to the Australian economy. In 2011,licensed clubs generated an estimated combined revenue of approximately $9.6 billion across their operations.

  • The industry is also a large employer in both metropolitan and regional locations. In 2011,licensed clubs across Australia are estimated to have employed approximately 96,000 people across a variety of roles.

  • 54,000 employees are located in metropolitan locations while 39,000 are located in regional locations (excluding employees in ACT and NT).

  • Clubs also provide a significant amount of formal training to employees,spending more than $28 million in 2011.

  • Licensed clubs also invest heavily in capital assets. In 2011,licensed clubs across Australia invested an estimated $1.3 billion.

  • Licensed clubs also generate flow-on impacts to other industries through:

  • increased demand for goods and services that support the supply chains for clubs;

  • increased demand for consumer-orientated industries that cater to clubs;and

  • impacts on the cost of business inputs generated by changes in the price of some goods and services as a result of the operation of clubs.

  • It is estimated the total (direct and indirect) contribution of the licensed clubs across Australia to value added (i.e. the value of production less the value of intermediate goods used in production) was $7.2 billion in 2011.

  • It is estimated the total (direct and indirect) contribution of licensed clubs across Australia to employment was almost 75,000 full-time equivalent jobs in 2011.

KPMG Clubs Report –The Clubs

[927] In July 2011 there were about 6,577 licensed clubs in Australia. Some of these clubs were part of an amalgamated group,where a ‘parent’club controls the operations of its ‘subsidiary’clubs. There is a significant variety of licensed clubs in Australia –ranging from sporting to service clubs,to community and cultural/religious clubs. Sports/recreation clubs are the most common (1,604 registered in 2011) followed by bowling clubs (1,581 venues),golf clubs (1,118 venues) and RSL/services clubs (979 venues).

[928] Chart 32 summarises the types of clubs registered in Australia. 842

Chart 32

Types of clubs in Australia

[929] Licensed clubs operate throughout Australia. While a number of clubs operate in metropolitan areas,a significant number of smaller clubs operate in regional and rural locations. Chart 33 summarises the distribution of licensed clubs across Australia. 843

Chart 33

Spread of clubs across Australia

[930] Whilst clubs share a common not-for-profit,members’led business model they are highly varied in their purposes. Types of clubs include bowling clubs (which comprise over 1,500 venues),sporting and recreation clubs (over 1,600 venues),returned servicemen clubs (over 900 venues) and golf clubs (over 1,100 venues).

[931] In addition to types,there is also significant variability in terms of the size of clubs in Australia. The most common way of defining clubs according to their size is with reference to their total annual Electronic Gaming Machine (EGM) revenues.

[932] Of the 6,577 clubs registered in Australia in 2011,4,458 had no EGM revenues. These were followed by 496 clubs that generated annual EGM revenues of less than $200,000,733 clubs that generated EGM revenues of between $200,000 and $1 million,and 652 clubs that generated between $1 million and $5 million. At the top end of the market,there were 155 clubs that generated EGM revenues of between $5 million and $10 million,and 83 that were above this level.

[933] There is significant variability in the size of clubs’membership bases. Of the clubs surveyed for this report,the smallest club –an RSL club –reported having 2 members. The largest on the other hand –an amalgamated leagues club –reported having 110,134 members. The average number of members across all clubs in Australia is approximately 1,800.

[934] The overall industry is highly reliant on gaming machines for the majority of its income. 844

[935] The KPMG Clubs Report refers to a 2008 report by the NSW Independent Pricing and Regulatory Tribunal (IPART). 845 The IPART report is described as a detailed examination of the financial viability of the NSW registered clubs industry. The IPART Report:Key findings in respect of financial viability included:

  • Most clubs in NSW were heavily dependent on gaming machine revenue.

  • Individual clubs were prospering or declining for a variety of reasons,including:

    • −access to volunteer labour;

      −the skills and effectiveness of its Board and management teams;

      −competition within the local community both from other clubs and alternate forms of entertainment;and

      −demographic and social changes within their local communities.

[936] While IPART’s findings and recommendations related to NSW clubs only,the themes can be applied to licensed clubs nationally,given the similarity in operations and issues faced between clubs in all states and territories. 846

KPMG Clubs Report –The Employees

[937] The survey responses indicate that clubs in Australia employed approximately 96,000 people in 2011 847,in full-time,part-time,casual and trainee or apprentice capacities. About 80 per cent of employees are estimated to have been employed in clubs located in the eastern states of NSW,Queensland and Victoria.

[938] As shown in Table 37 below,employment in clubs is estimated to comprise of:

  • 27,000 full-time employees (28%);

  • 20,000 part-time employees (21%);

  • 47,000 casual employees (49%);and

  • 2,000 trainees and apprentices (2%).

Table 37

Distribution of employment type

 

Full-time

Part-time

Casual

Trainee and apprentice

Total

% of accommodation and food services

ACT

660

560

1,040

60

2,320

18

NSW

12,290

10,950

17,240

920

41,400

16

NT

260

170

570

20

1,020

14

QLD

5,530

3,750

11,110

520

20,910

13

SA

2,110

1,150

4,960

180

8,400

16

TAS

260

130

610

20

1,020

6

VIC

4,200

2,920

8,200

360

15,680

8

WA

1,470

720

3,310

120

5,620

8

Australia

26,780

20,350

47,040

2200

96,370

12

[939] The average number of employees per club is illustrated in Chart 34.

Chart 34

Average employees per club

[940] The survey responses suggest that clubs in the ACT and NSW tend to employ a greater number of people per club than all other jurisdictions. This higher employment is likely to be driven by the higher proportion of larger clubs in the ACT and NSW compared to the remainder of Australia.

[941] The age profiles of employees were as follows:

  • approximately 40% of club employees were aged between 25 years and 44 years;

  • about the next 30% of employees were aged 24 years and under;

  • the next 27% were aged between 45 years and 64 years;and

  • the final 3% were aged 65 years and over.

[942] The survey responses suggest that clubs in Australia consistently employed a greater proportion of females,with only 46% of the national workforce being male.

[943] Volunteers make an important contribution to the operation of clubs,as the KPMG Clubs Report notes:

    ‘Clubs are able to provide low cost facilities and fund local community activities because of large networks of volunteer labour. Using volunteer labour in the form of directors,and for trading,sporting and other purposes enables clubs to reduce labour costs and pass on savings to their members and the community. There was an average of 39 volunteers per club in 2011. Nationally,there were over 250,000 club volunteers,with approximately half of these volunteers being involved in the sporting function. Overall,metropolitan clubs had more volunteers than regional clubs.’ 848

[944] Licensed clubs are also highly effective in mustering volunteers in order to assist in both their operation and the provision of services to members and the community. The industry is managed by over 54,000 directors (or equivalents),who are mostly engaged on a voluntary and unpaid basis. The industry also uses more than 123,000 volunteers in the provision of sporting assistance (including junior sport coaching,refereeing and management). In total,over 250,000 volunteers are sourced and utilised by the industry.

[945] Clubs are able to provide low cost facilities and fund local community activities because of large networks of volunteer labour. Using volunteer labour enables clubs to reduce labour costs and pass on savings to their members and the community. Clubs use volunteers in many business areas including the management and organisation of club activities and operations,trading and sporting functions. Volunteers may also gain utility by participation in the community.

[946] The number of volunteers in each State and Territory is presented in Table 38.

Table 38  849

Volunteer type

 

Director

Trading

Sporting

Other

Total

Average per club

ACT

460

90

1,660

470

2,680

47

NSW

11,000

2,370

26,050

9,740

49,160

33

NT

540

320

1,230

420

2,510

39

QLD

11,770

7,810

27,310

9,050

55,940

40

SA

10,810

10,250

22,940

7,540

51,540

41

TAS

1,380

1,280

2,850

970

6,480

40

VIC

10,180

8,380

24,580

7,400

50,540

42

WA

8,240

8,060

17,320

5,670

39,290

41

Total

54,380

38,560

123,940

41,260

258,140

39

Average per club

8

6

19

6

39

 

Note:Totals may not add due to rounding.

[947] The majority of volunteers were directors or involved in sporting activities. Club Census 2011 responses suggest that approximately half of all volunteers were involved in sporting functions in 2011. SA had the largest number of volunteers,closely followed by Victoria and NSW. On average,ACT clubs have the most volunteers. Clubs in SA,Tasmania,Victoria,Queensland and WA also had higher averages than the national average of volunteers per club. NSW is the only State that has a lower average than the national average. 850

[948] Club volunteers contributed 5,877,500 volunteer hours in 2011. 851 KPMG estimated the value of volunteer labour to be $2,850 million,in 2011.852

[949] We now turn to the evidence of Mr Rees,Deputy Chief Executive of Clubs ACT. A substantial part of Mr Rees’witness statement 853 was redacted by consent,following an objection by United Voice. The remainder of Mr Rees’evidence,though brief,is consistent with the KPMG Clubs Report. In particular Mr Rees says:

    ‘Clubs ACT represents 51 of the 54 clubs trading in the ACT and 100% of all clubs holding a gaming machine licence.

    The clubs vary in size but in a similar fashion to other states are varied in their purposes,examples of which include ethnic,workers and religious types. Clubs also maintain and operate the vast majority of the ACT’s sport,recreational infrastructure including bowls,golf and football.’ 854

[950] Mr Rees was not required for cross-examination and we accept his evidence.

[951] As a consequence of the concessions made by CAI in respect of the admissibility of Mr Rees’evidence there is no evidence before us in respect of any individual club in the ACT. The absence of such evidence was drawn to the attention of CAI and it was invited to seek leave to adduce direct evidence from an ACT club if it wished to do so. 855 No such application was made.

[952] CAI called three witnesses who gave evidence in relation to the operation of particular clubs.

[953] Mr Jeffrey Cox gave evidence in relation to the Coffs Ex Services Club,which operates 3 clubs in the Coffs Habour area in NSW. The principal venue is the Coffs Ex Services and Sports Club and 2 smaller community clubs at Urunga and Woolgoolga.

[954] The Coffs Ex Services Club employs 163 employees of whom 54 are full-time,82 are part-time and 27 are casual employees. A significant part of the club’s business is ‘to provide lawn bowls,golf,squash and croquet facilities,multiple sub-clubs,free senior entertainment and promotions’. 856 Sunday trading hours are from 10.00 am to 10.00 pm. Mr Cox’s evidence is that the Club is unable to trade profitably on Sundays because:

  • Sunday is generally a ‘low income’day (average club revenue on a Sunday is $60,000,compared to $70,000 on Monday to Wednesday);and

  • it is a high wage expense day. 857

[955] As to the impact of a reduction in penalty rates,Mr Cox’s evidence was a follows:

    ‘If there was a reduction in the current penalty rates by 25% - 50% for weekends and public holidays,we would potentially extend our operating hours and then be able to offer more hours to our part-time and casual employees…

    Potentially a reduction in penalty rates would increase our trade revenue as we would be able to trade longer with longer opening hours. This would translate into the provision of greater services being made available to our members and guests and investment into community projects.’ 858 (emphasis added)

[956] We would observe that Mr Cox was somewhat equivocal about the employment and community benefits which may flow from a reduction in penalty rates.

[957] Further,shortly after Mr Cox swore his affidavit the Commission approved the Coffs Ex Services Memorial and Sporting Club Enterprise Agreement 2015 859 (the Coffs Club Agreement). Relevantly,the Coffs Clubs Agreement provides higher rates of pay than those provided in the Clubs Award and provides the same level of penalty rates as currently provided in the Clubs Award. One of the objectives of the agreement is to ‘Ensure the future financial sustainability of the Club’.860 The nominal expiry date of the agreement is 25 August 2018. Any variation to the Clubs Award a result of these proceedings will have no impact on the Coffs Ex Services Club while the Coffs Club Agreement remains in operation. However,any variation to the award will underpin any future agreement.

[958] Mr Anthony Casu gave evidence in relation to the Narooma Sporting and Services Club Limited (the Narooma Club),which operates 2 clubs,Club Narooma and Club Dalmeny,and employs about 60 employees under the Clubs Award,of whom 18 are full-time,23 part-time and 19 are casual employees.

[959] The Narooma Club’s best trading days are on Friday and Saturday (at about $25,000 per day),with Sundays being about 20 per cent lower (or about $20,000). The daily average revenue for Monday to Thursday is about $13,000. 861

[960] The Narooma Club conducts a cost-benefit analysis when considering operational changes to the staffing roster. As to the impact of a reduction in penalty rates (as sought by CAI),Mr Casu’s evidence was:

    ‘If there was a reduction in penalty rates,the club would not change current trading hours and it would be unlikely to increase the levels of revenue on those days,but the club would increase services during the trading hours. As increase in the provision of member services would mean we would increase our staff numbers or increase the hours available to existing staff. This increase would be seen as coming from casual–part-time staffing and could be as high as another 8 hours per day over the weekends supplying additional servicing to the members.’ 862

[961] Mr Casu was cross-examined about this aspect of his evidence. 863

[962] In short,Mr Casu’s evidence is that,if CAI’s proposed variation to penalty rates were adopted then the Narooma Club would increase the service it provides on weekends and as a consequence the hours worked by its current casual workforce could increase by as much as 8 hours per day on both Saturday and Sunday. In other words the employment impact of granting the claim could be as much as the equivalent of an additional 8 hour shift on Saturday and Sunday.

[963] Mr John Dellar gave evidence in relation to Club Hawthorn,a sporting club in Victoria. The club is centred around the sport of squash and,to a lesser degree snooker,and has a gaming room with 40 gaming machines.  864 The club employs 9 employees,of whom 2 are full-time and 7 are casual employees.865

[964] The club’s current trading hours are:Monday–Thursday 10.00 am to 11.00 pm,Friday and Saturday 10.00 am to 1.00 am and Sunday noon to 9.00 pm. In terms of daily revenue,Sunday is the least successful trading day generating about 60 per cent of the average revenue on Monday to Thursday. 866

[965] Mr Dellar indicated that if the penalty rate structure in the Clubs Award was varied as proposed by Clubs Australia then the Hawthorn Club would trade for an additional 4 hours on Sunday (that is it would open early,at 9.00 am or 10.00 am and,close later),resulting in additional hours for the existing staff who work on Sundays or engagement of an additional staff member to work on Sundays. 867

[966] Mr Dellar also observes that if penalty rates were reduced there would be an overall reduction in the club’s wages bill which would enable additional hours to be provided to existing employees during the week:

    ‘If the reduction in penalty rates occurred it would also be viable to employ additional staff on all days,not just weekends and public holidays. The flow on affect is that the reduction in total cost to the bottom line of the wages bill can be invested into more staff mid-week where currently cost is restraining the number of people actually required for good service.’ 868

[967] No specifics were given as to the number of additional hours that would be provided during the week and Mr Dellar conceded that he had not calculated what the reduction to the clubs wages bill would be if the penalty rate variations were made. 869

      (ii) United Voice

[968] In opposing the variation of the Clubs Award;United Voice relied on the evidence of 3 lay witnesses:

  • Mary Quirk:a full-time Bar Manager at Coledale RSL; 870

  • Wayne Jones:a permanent full-time employee engaged as Purchasing Officer and Head Cellar man at Bribie Island Bowls Club; 871 and

  • Damien Cooper:a casual Barman and Courtesy Bus Driver employed at Goodna Services Club in Goodna,Queensland. 872

Mary Quirk 873

[969] Ms Quirk is a full-time Bar Manager at the Coledale RSL who works Sunday to Wednesday,from 9.30 am to 7.30 pm. As Ms Quirk is regularly rostered on a Sunday she receives an additional week’s annual leave each year. 874

[970] Ms Quirk gives evidence about the impact of work on weekends and public holidays:

    ‘I am a Roman Catholic. I am not deeply devout but it is an important part of my life and I would attend church occasionally if I were able to do so on Sunday. I do attend mass occasionally on Saturday evening…Working Sundays has meant I have not been able to be a part of my church community as I would have liked. Sunday is the day of worship in my religion,so that is when my family and friends attend church…There are regular religious family events every year such as first communions,confirmations and christenings. I have missed out on a lot of these events and this makes me sad.’ 875

[971] During cross-examination Ms Quirk acknowledged that she could attend the 7.00 am service on Sunday mornings and still get to work by 9.30 am. 876

[972] At paragraphs 17–20 of her statement Ms Quirk sets out the impact upon her of the reduction in Sunday penalty rates sought by CAI and notes that she would ‘lose approximately $52 per week from my weekly take home pay’. 877

Wayne Jones 878

[973] Mr Jones has worked in the hospitality sector for about 30 years. Since 2005 he has been employed as the Purchasing Officer and Head Cellar man at the Bribie Island Bowls Club. He is a level 6 Manager under the Clubs Award and works Tuesday to Friday,from 7.00 am to 1.30 pm and on Saturday from 7.00 am to 3.00 pm. He does not usually work on Sundays or Mondays,unless a stocktake is done on those days. Stocktakes are done on the first day of each month.

[974] Mr Jones understood that there was an expectation that when you work in the hospitality industry you have to be prepared to work on weekends and public holidays:

    ‘When I started in the industry,it was made clear to me that unless I was willing to work on weekends and public holidays I would not be offered a position (including the Bribie Island Bowls Club). As a manager,I have set this expectation for my own staff.’ 879

[975] Mr Jones deals with the impact of weekend and public holiday work at paragraph 20–23 of his statement and says,in particular:

    ‘When my children were younger,and into their teenage years,I have missed out on weekend family,social and sporting events because I had to work. Working on weekends means that I simply do not get to participate in the normal family and social activities that occur during those times.’ 880

[976] At paragraphs 27–35 of his statement Mr Jones sets out the impact upon him of the penalty rate changes sought by CAI:

    If my Saturday penalty rates are reduced,then I will lose over $30 per week from my weekly take home pay. If this happens,then the loss of income will mean that I would find it even more difficult to cover my family’s living costs. I already have hard choices to make,which would only get harder. In these circumstances I may not have any money for emergency costs,such as unexpected car repairs. The only way I could then cover such expenses would be through a loan,which of course incurs interest and other charges. In order to make up the lost income,I have calculated that I would have to work an additional 2 to 3 hours per week. While I would be able to work those additional hours (should they be available),the impact of doing so would mean that I would spend even less time with my family. Even if I am available to work additional hours,I do not believe my employer would be in a position to offer additional hours. I work a 38 hour week,so if I work any additional hours with my employer I will be paid overtime. It is likely my employer would instead hire more casuals to cover the shortfall in staff.’ 881

Damien Cooper 882

[977] Mr Cooper is a casual Barman and Courtesy Bus Driver at the Goodna Services Club,in Goodna Queensland. He works an average of 40 hours per week (Fridays and Saturdays:5.00 pm to 2.30 am;Mondays and Thursdays:4.30 am to 10.30 pm;Sundays:noon to 9.30 pm),and on public holidays as required.

[978] As to the impact of weekend and public holiday work Mr Cooper says that ‘I simply do not get to participate in normal social activities that occur during weekends…I miss out on a lot of activities that are meaningful to me’. Mr Cooper makes specific reference to missing football games he would have attended with his partner and catching up with his daughter,because of the hours he works. 883

      7.3.5 Consideration

[979] As mentioned earlier,CAI proposes a reduction in both the Sunday and Saturday penalty rates in the Clubs Award. No other employer body is proposing a reduction in Saturday penalty rates,in either this award or in any of the other modern awards before us.

[980] Two general points may be made in respect of the proposal by CAI and the submissions advanced in support of that proposal.

[981] The first is that there is an inherent contradiction in the position put by CAI. On the one hand,it is contended that there is no difference between Saturday and Sunday work,yet if adopted the variations proposed would result in different penalty rates for Saturday and Sunday (125 per cent and 150 per cent respectively).

[982] This issue was put to counsel for CAI during the course of closing submissions and he responded as follows:

    ‘…to align both Saturday and Sunday rates at 125 per cent in Clubs Australia’s view …would be too large a drop for Sunday rates in one hit,and it really is as logical as that …There is no necessary science in it and it is not –it certainly would recognise that there be a higher rate of pay for employees working on a Sunday…

    There is no evidence or there is little evidence to say that the persons who work on a Sunday should receive a greater reduction than 25 per cent from the current rate of pay…

    …there is no mathematical recognition within the Clubs Australia’s position that says that the Sunday rate should necessarily be an additional 25 per cent on top of the Sunday rate. It is simply because Clubs Australia does not wish to put to the Commission that there should be a reduction from 175 per cent to 125 per cent for Sunday’. 884

[983] The response given speaks of the type of approach taken in times past,namely to advance a position based on an assessment of what is industrially feasible instead of a detailed exposition of the merits of the particular proposal. This observation leads us to the second general point in respect of the position put by CAI.

[984] As mentioned earlier,proposed variations to modern awards must be justified on their merits. The extent of the merit argument required will depend on the circumstances. On any view of it the variations proposed by CAI constitute significant changes to the modern award. Such changes should be supported by an analysis of the relevant legislative provisions and,where feasible,probative evidence.

[985] The case put on behalf of CAI made only a cursory reference to the relevant s.134 considerations 885 and there was a paucity of evidence advanced in support of the proposed changes. The submissions put were general in nature and failed to adequately address the relevant statutory provisions.

[986] It will be recalled that CAI led evidence from only 3 witnesses in relation to the operation of particular clubs:Messrs Cox,Casu and Dellar.

[987] Mr Cox gave evidence in relation to the Coffs Ex Services Club,which employs 163 employees. CAI submits that Mr Cox’s evidence was that ‘A reduction in penalty rates on weekends and public holidays would potentially lead to an extension of the club’s operating hours with consequential additional hours being offered to part-time and casual employees’. 886

[988] However,Mr Cox was somewhat equivocal about the employment and community benefits which may flow from a reduction in penalty rates and there was no detail of,or substantive basis for,these potential outcomes provided.

[989] Mr Casu gave evidence in relation to the Narooma Club,which employs about 60 employees. In short,Mr Casu’s evidence was that if CAI’s proposed penalty rate reductions were implemented then the employment impact could be as much as the equivalent of an additional 8 hour shift on a Saturday and Sunday. In other words,a very modest employment impact.

[990] Mr Dellar gave evidence in relation to the Hawthorn Club,which employs 9 employees. Mr Dellar’s evidence was that if the penalty rate regime proposed by CAI was implemented then the Hawthorn Club would trade for an additional 4 hours on Sunday resulting in additional hours for existing staff who work on Sundays or the engagement of an additional staff member to work on Sundays. Mr Dellar also said that if penalty rates were reduced additional hours would be provided to existing employees during the week,but no specifics were given as to the number of additional hours and he conceded that he had not calculated what the reduction to the club’s wages would be if the penalty rate variations were made.

[991] As we have mentioned,the Clubs industry is highly fragmented,comprising of 6,500 individual venues across Australia. There is a significant variation in the type of clubs and the size of clubs. The KPMG Clubs Report noted that the types of clubs ranged from sporting to service clubs,to community and cultural/religious clubs. In relation to the clubs surveyed for that report,the smallest club reported having 2 members and the largest had 110,134 members.

[992] Given the limitations to Mr Cox’s evidence we are essentially left with evidence from 2 clubs (both ‘sporting’clubs),one in NSW and the other in Victoria,employing 60 and 9 employees respectively.

[993] While we do not suggest that it is necessary for the proponent of a significant variation to a modern award to provide evidence in respect of the impact of the proposed variation on each and every part of the industry covered by the relevant modern award,the evidentiary case put by CAI was patently inadequate.

      7.3.6 Conclusion

[994] On the material presently before us we are not satisfied that the variations proposed are necessary to ensure that the modern award sought to be varied achieves the modern awards objective. In short,CAI has not established a merit case sufficient to warrant the granting of the claim.

[995] If these were simply inter partes proceedings we would dismiss the CAI claim. But the claim has been made in the context of the Review and s.156 imposes an obligation on the Commission to review each modern award. There is also,at least on face value,a disconnect between the present provisions in the Clubs Award and those that will apply within the hospitality industry more broadly.

[996] We have given consideration to the next steps to be taken in respect of the review of weekend penalty rates in the Clubs Award. It seems to us that there are 2 options in respect of the future conduct of this aspect of these proceedings.

[997] Option 1:We could make determinations revoking the Clubs Award and varying the coverage of the Hospitality Award so that it covers the class of employers and employees presently covered by the Clubs Award. Any such determinations would have to comply with the statutory provisions relating to changing the coverage of modern awards and to the revocation of modern awards (ss.163 and 164 respectively). Such a course would obviously avoid the need to conduct any further Review proceedings in respect of the Clubs Award.

[998] Extending the coverage of the Hospitality Award and revoking the Clubs Award would also have the desirable outcome of rationalising the awards applying to the hospitality sector and providing greater consistency in the regulation of penalty rates in the sector. We would also observe that the ‘merger’of the Hospitality and Clubs Awards is consistent with the ‘need to ensure a simple,easy to understand…modern award system’,which is one of the considerations we are required to make into account in determining whether a modern award meets the modern awards objective’(s.134(1)(g) of the FW Act).

[999] Option 2:CAI and any other interested party could be provided with a further opportunity to advance a properly based merit case in support of any changes they propose in respect of weekend penalty rates.

[1000] It is our provisional view that option 1 has merit and warrants further consideration. As mentioned earlier,in the award modernisation process there was general support among employer and employee associations for a separate Clubs Award. The Award Modernisation Full Bench concluded that while it was possible to include clubs within the Hospitality Award,with some sector specific arrangements,it decided to make a separate clubs award –no doubt influenced by the consent position of the interested parties.

[1001] In the present proceedings,CAI sought to rely on Mr Tait’s evidence in order to distinguish the clubs industry from the rest of the hospitality sector:

    ‘Clubs,may be distinguished from other hospitality venues such as hotels,in that they are not-for-profit community based organisations whose central activity is to provide infrastructure and services for its members and the greater community. Clubs contribute to their local communities through employment and training,direct cash and in-kind social contributions,and through the formation of social capital by mobilising volunteers and providing a diverse and affordable range of services,facilities and goods.’ 887

[1002] We acknowledge that clubs have a number of characteristics which may be said to distinguish them from the types of enterprises covered by the Hospitality Award (such as hotels),namely:

  • clubs are not-for-profit community based organisations;and

  • clubs may be subject to a different regulatory environment in respect of their operations.

[1003] But while there are a number of differences between clubs and the enterprises presently covered by the Hospitality Award (such as hotels) we are not presently persuaded that those differences warrant a separate award. In particular,the fact that clubs are not-for-profit community based organisations does not mean that they warrant a separate award. A number of other modern awards cover both not-for-profit and for-profit enterprises,such as the Clerks –Private Sector Award 2010 and the Aged Care Award 2010.

[1004] We would also observe that there is a high degree of commonality in the work performed by the employees covered by the Clubs Award and the Hospitality Award,as evidenced by the similarities in the classification levels and rates of pay (see below).

Table 39

Comparison of the Clubs Award and the Hospitality Award’s Classifications

Provisions unique to Clubs shown in PURPLE

Provisions unique to Hospitality shown in GREEN

    17.2 Club employees

    

Level

    Classification

Minimum weekly wage

Minimum hourly wage

Level

Classification

Minimum weekly wage

Minimum hourly wage

  

$

$

  

$

$

Introductory

 

672.70

17.70

Introductory

 

672.70

17.70

Level 1

 

692.10

18.21

Level 1

 

692.10

18.21

 

    •Food and beverage attendant grade 1

   

    •Food and beverage attendant grade 1

  
 

    •Guest service grade 1

   

    •Guest service grade 1

  
 

    •Kitchen attendant grade 1

   

    •Kitchen attendant grade 1

  

Level 2

 

718.60

18.91

Level 2

 

718.60

18.91

 

    •Child care worker grade 1

      
 

    •Clerical grade 1

   

    •Clerical grade 1

  
 

    •Cook grade 1

   

    •Cook grade 1

  
 

    •Doorperson/
    Security officer grade 1

   

    •Doorperson/
    Security officer grade 1

  
 

    •Food and beverage attendant grade 2

   

    •Food and beverage attendant grade 2

  
 

    •Front office grade 1

   

    •Front office grade 1

  
 

    •Guest service grade 2

   

    •Guest service grade 2

  
 

    •Kitchen attendant grade 2

   

    •Kitchen attendant grade 2

  
 

    •Leisure attendant grade 1

   

    •Leisure attendant grade 1

  
 

    •Maintenance and horticultural employee level 1

   

    •Gardener grade 1

  
 

    •Storeperson grade 1

   

    •Storeperson grade 1

  

Level 3

 

743.30

19.56

Level 3

 

743.30

19.56

 

    •Clerical grade 2

   

    •Clerical grade 2

  
 

    •Cook grade 2

   

    •Cook grade 2

  
 

    •Food and beverage and gaming attendant grade 3

   

    •Food and beverage and gaming attendant grade 3

  
 

    •Forklift driver

   

    •Forklift driver

  
 

    •Front office grade 2

   

    •Front office grade 2

  
 

    •Guest service grade 3

   

    •Guest service grade 3

  
 

    •Handyperson

   

    •Handyperson

  
 

    •Kitchen attendant grade 3

   

    •Kitchen attendant grade 3

  
 

    •Leisure attendant grade 2

   

    •Leisure attendant grade 2

  
 

    •Maintenance and horticultural employee level 2

   

    • Gardener grade 2

  
 

    •Storeperson grade 2

   

    •Storeperson grade 2

  
 

    •Timekeeper/
    Security officer grade 2

   

    •Timekeeper/
    Security officer grade 2

  

Level 4

 

783.30

20.61

Level 4

 

783.30

20.61

 

    •Clerical grade 3

   

    •Clerical grade 3

  
 

    •Cook (tradesperson) grade 3

   

    •Cook (tradesperson) grade 3

  
 

    •Food and beverage attendant (tradesperson) grade 4

   

    •Food and beverage attendant (tradesperson) grade 4

  
 

    •Front office grade 3

   

    •Front office grade 3

  
 

    •Guest service grade 4

   

    •Guest service grade 4

  
 

    •Leisure attendant grade 3

   

    •Leisure attendant grade 3

  
 

    •Maintenance and horticultural level 3 (tradesperson)

   

    • Gardener grade 3 (tradesperson)

  
 

    •Storeperson grade 3

   

    •Storeperson grade 3

  

Level 5

 

832.30

21.90

Level 5

 

832.30

21.90

 

    •Child care worker grade 2

      
 

    •Clerical supervisor

   

    •Clerical supervisor

  
 

    •Cook (tradesperson) grade 4

   

    •Cook (tradesperson) grade 4

  
 

    •Food and beverage and gaming attendant grade 5

   

    • Food and beverage supervisor

  
 

    •Front office supervisor

   

    •Front office supervisor

  
 

    •Guest service supervisor

   

    •Guest service supervisor

  
 

    •Maintenance and horticultural level 4

   

    • Gardener grade 4 (tradesperson)

  

Level 6

 

854.60

22.49

Level 6

 

854.60

22.49

 

    •Cook (tradesperson) grade 5

   

    •Cook (tradesperson) grade 5

  
 

    •Club manager of a club with a gross annual revenue of less than $500,000

      
 

    •Child care worker grade 3

      

Note:The Clubs Award provides for an additional 7 classification levels (levels 7-13),which correspond to various levels of managerial responsibility.

    


[1005]
We accept that there are differences between the two awards,for example in relation to annualised salary arrangements,overtime on Saturdays and in both the classification definitions and the range of classifications covered. But it seems to us that such differences may be accommodated by either appropriate transitional arrangements or the inclusion of clubs-specific sector arrangement within the Hospitality Award.

[1006] Option 1 would have the advantage of providing greater consistency between penalty rates within the hospitality sector. The Productivity Commission report concluded that:

    ‘There are grounds for greater consistency (short of uniformity) between penalty rates across the HERRC industries.’ 888

[1007] In support of this conclusion the Productivity Commission noted that:

    ‘Notwithstanding award modernisation,there appears to be many inconsistencies in penalty rate settings. Wide disparities in rates persist in industries with similar structural characteristics and employee skill levels…

    Differences in rates create compliance costs and uncertainty for employers and employees.’ 889

[1008] In Chapter 7.2.6 we set out the changes we propose to make to Sunday penalty rates in the Hospitality Award. Table 40 below shows the differences between that weekend penalty rate regime and the current penalty rates in the Clubs Award.

Table 40

Penalty rate arrangements in Hospitality and Clubs Awards

 

Full-time or part-time employees

 

Casual employees

 

Percentage of base rate

 

Percentage of base rate

 

Sat

Sun

 

Sat

Sun

 

%

%

 

%

%

      

Clubs Award

150

175

 

150

175

      

Hospitality Award (proposed)

125

150

 

150

175

Note:As set out in Chapter 7.2.6 we propose to vary the Hospitality Award to reduce the Sunday penalty rate for full-time and part-time employees,from 175 per cent to 150 per cent.

[1009] We propose to provide an opportunity for interested parties to express a view as to the future conduct of this aspect of these proceedings. In particular,we will invite submissions on the two options set out above. We deal with the process for doing so in Chapter 12,Next Steps.

      7.4 Restaurant Industry Award 2010

      7.4.1 The Claims

[1010] Restaurant and Catering Industrial (RCI) and ABI made claims to reduce the penalty rates contained in clause 34 of the Restaurant Industry Award 2010 (the Restaurant Award).

[1011] RCI proposes to amend clause 34.1 of the Restaurant Award such that full-time and part-time employees be paid 125 per cent of the minimum rate for work performed on a Sunday,rather than the current rate of 150 per cent. It also proposes that casuals who are engaged at Levels 3–6 be paid 150 per cent for work performed on a Sunday rather than 175 per cent as contained in the current award. RCI also seeks the deletion of clause 34.1A—Special condition regarding existing employees.

[1012] RCI also proposes that the additional payment for ordinary hours of work from 10 pm to midnight currently provided for at clause 34.2(a)(i) be removed and that the additional payment in clause 34.2(a)(ii) (for ordinary hours of work between midnight and 7.00 am) be reduced from 15 per cent to 5 per cent with a change to the span of hours for which the payment is made (to between midnight and 5.00 am).

[1013] RCI and ABI also seek reductions in the public holiday penalty rate. We deal later with that aspect of the claims.

[1014] The changes sought by RCI are set out below,in a marked up version of clause 34:

    ‘34. Penalty rates

    34.1 Penalty rates for work on weekends and public holidays

    An employee working ordinary time hours on the following days will be paid the following percentage of the minimum wage in clause 20—Minimum wages for the relevant classification:

    Type of employment

    Monday to Friday

    Saturday

    Sunday

    Public holidays

     

    %

    %

    %

    %

    Full-time and part-time

    100

    125

    150 125

    250 150

    Casual Introductory Level,
    Level 1,Level 2
    (inclusive of 25% casual loading)

    125

    150

    150

    250 150

    Casual Level 3 to Level 6
    (inclusive of casual 25% loading)

    125

    150

    175

    250

    34.1A Special condition regarding existing employees

    No existing employee classified as Level 3 or above shall be moved down to pay grade Levels 1 or 2 or be discriminated against in the allocation of work as a result of the variation of clause 34.1 by the Full Bench of the Fair Work Commission in proceedings number C2013/6610.

    34.2 Additional payment for work done between the hours of 10.00 pm to 7.00 am on Monday to Friday

    (a) An employee,including a casual,who is required to work any of their ordinary hours between the hours of 10.00 pm and midnight Monday to Friday inclusive,or between midnight and 7.00 am Monday to Friday inclusive,must be paid an additional amount per hour calculated according to the following:

      (i) Between 10.00 pm and midnight

        For each hour or part of an hour worked during such times—10% of the standard hourly rate per hour extra.

      (ii) Between midnight and 7.00 am

        For each hour or part of an hour worked during such times—15% of the standard hourly rate per hour extra.

    (b) For the purposes of this clause midnight will include midnight Sunday.

    34.2 Additional payment for work done between the hours of midnight and 5.00 am Monday to Friday

    (a) An employee,including a casual,who is required to work any of their ordinary hours between the hours between midnight and 5.00 am Monday to Friday inclusive,must be paid an additional shift allowance of 5% per hour worked.

    (b) For the purposes of this clause midnight will include midnight Sunday.

[1015] If granted,RCI’s proposed variation to clauses 34.1 and 34.2 would:

  • reduce the penalty rates paid to full-time and part-time employees for work performed on a Sunday from 150 per cent of their minimum rate of pay to 125 per cent;

  • reduce the penalty rates paid to Casual Level 3 to Level 6 employees from 175 per cent to 150 per cent;

  • remove the special conditions applying to existing employees in clause 34.1A;

  • delete the existing entitlement to a 10 per cent loading within the span of hours between 10.00 pm and midnight;

  • adjust the span of hours in respect of which employees currently receive a 15 per cent loading (the loading would also reduce) from ‘between midnight and 7.00 am’to ‘the hours between midnight and 5.00 am’;and

  • reduce the existing loading for ordinary hours of work after midnight from 15 per cent to 5 per cent.

[1016] The RCI and ABI claims are opposed by United Voice.

      7.4.2 Background to the Restaurant Award

[1017] The background to the making of the Restaurant Award is extensively canvassed by the majority in the 2014 Restaurants Penalty Rates decision 890 and need not be repeated here. We address the 2014 decision later (at [1144][1153]).

      7.4.3 The Cafes and restaurants industry

[1018] The ABS data of direct relevance to the Cafes and restaurants industry class is quite limited.

[1019] A paper 891 by Commission staff provides a framework for ‘mapping’modern award coverage to the ANZSIC. Using this framework the Restaurant Award 2010 is ‘mapped’to the Cafes and restaurants industry class.

[1020] The Census is the only data source that contains all of the employment characteristics for Clubs (Hospitality). The most recent Census data is from August 2011.

[1021] The August 2011 Census data shows that there were around 144 000 employees in Cafes and restaurants. Table 41 compares certain characteristics of employees in the Cafes and restaurants industry class,with employees in ‘all industries’.

Table 41

Labour force characteristics of the Cafes and restaurants industry class,ABS Census 9 August 2011

 

Cafes and restaurants

All industries

 

(No.)

(%)

(No.)

(%)

Gender

    

Male

59 509

41.3

4 207 586

50.8

Female

84 466

58.7

4 082 662

49.2

Total

143 975

100.0

8 290 248

100.0

Full-time/part-time status

    

Full-time

48 301

35.5

5 279 853

67.8

Part-time

87 702

64.5

2 507 786

32.2

Total

136 003

100.0

7 787 639

100.0

Highest year of school completed

   

Year 12 or equivalent

91 446

64.8

5 098 228

62.6

Year 11 or equivalent

16 387

11.6

885 404

10.9

Year 10 or equivalent

23 162

16.4

1 687 055

20.7

Year 9 or equivalent

6209

4.4

317 447

3.9

Year 8 or below

3025

2.1

141 973

1.7

Did not go to school

938

0.7

20 158

0.2

Total

141 167

100.0

8 150 265

100.0

Student status

    

Full-time student

45 149

31.7

612 990

7.5

Part-time student

9394

6.6

506 120

6.2

Not attending

87 886

61.7

7 084 360

86.4

Total

142 429

100.0

8 203 470

100.0

Age (5 year groups)

    

15–19 years

34 237

23.8

547 666

6.6

20–24 years

35 227

24.5

927 865

11.2

25–29 years

22 259

15.5

1 020 678

12.3

30–34 years

13 976

9.7

933 827

11.3

35–39 years

9928

6.9

934 448

11.3

40–44 years

8336

5.8

938 386

11.3

45–49 years

7407

5.1

911 739

11.0

50–54 years

5880

4.1

848 223

10.2

55–59 years

3824

2.7

652 190

7.9

60–64 years

2114

1.5

404 470

4.9

65 years and over

786

0.5

170 718

2.1

Total

143 974

100.0

8 290 210

100.0

Average age

29.0

 

38.8

 

Hours worked

    

1–15 hours

43 323

31.9

875 554

11.2

16–24 hours

25 590

18.8

792 539

10.2

25–34 hours

18 787

13.8

839 694

10.8

35–39 hours

15 581

11.5

1 676 920

21.5

40 hours

11 782

8.7

1 555 620

20.0

41–48 hours

9222

6.8

895 619

11.5

49 hours and over

11 715

8.6

1 151 693

14.8

Total

136 000

100.0

7 787 639

100.0

Source:ABS,Census of Population and Housing,2011.

Note:Part-time work in the Census is defined as employed persons who worked less than 35 hours in all jobs during the week prior to Census night. This group includes both part-time and casual workers. Information on employment type is collected for persons aged 15 years and over.

Totals may not sum to the same amount due to non-response. For full-time/part-time status and hours worked,data on employees that were currently away from work (that reported working zero hours),were not presented.

[1022] The profile of Cafes and restaurants employees differs from the profile of employees in ‘All industries’in 4 important respects:

    (i) around two-thirds (64.5 per cent) of Cafes and restaurants employees work part-time (i.e. less than 35 hours per week 892),compared with only 32.2 per cent of all employees;

    (ii) almost one third (31.9 per cent) of Cafes and restaurants employees work 1–15 hours per week compared with only 11.2 per cent of all employees;

    (iii) almost half (48.3 per cent) of Cafes and restaurants employees are aged between 15 and 24 years compared with only 17.8 per cent of all employees;and

    (iv) almost 4 in 10 Cafes and restaurants employees are students (31.7 per cent are full-time students and 6.6 per cent study part-time) compared with 13.7 per cent of all employees.

[1023] The Lewis Report also included data on enterprises and employment in the Cafes and restaurant industry for 2014–15. Table 42 shows that:

  • there were over 15 000 enterprises,employing approximately 155 000 people;

  • casual employees accounted for around half of employees;

  • wages accounted for 27.9 per cent of total expenses,which is higher than for Accommodation and food services (26.9 per cent) and all industries (18.7 per cent); 893 and

  • the profit margin of 8.6 per cent was the same as Accommodation and food services and lower than the profit margin for all industries (10.9 per cent). 894

Table 42  895

Cafes and restaurant industry,2014–15

Enterprises

(No.)

15 251

Employment

(No.)

154 658

Working proprietors and partners of unincorporated businesses

(No.)

10 671

Employees

  

Salaried directors of incorporated businesses

(No.)

11 135

Other

  

Permanent full-time

(No.)

32 633

Permanent part-time

(No.)

26 910

Casuals

(No.)

73 308

Total

(No.)

132 851

Total

(No.)

143 987

   

Revenue

($m)

16 027.7

Expenses

  

Rent

($m)

1661.6

Utilities

($m)

326.3

Depreciation

($m)

450.7

Other

($m)

1898.6

Wages

($m)

4089.2

Purchases

($m)

6225.5

Total

($m)

14 649.8

Industry Value Added

($m)

5916.4

Profit

($m)

1377.9

Profit Margin

(%)

8.6

Wages (% of expenses)

(%)

27.9

Wages (% of value added)

(%)

69.1

7.4.4 The Evidence

(i) RCI

[1024] RCI called 5 lay witnesses in support of the application to vary the Restaurant Award. The names,addresses and workplaces of these witnesses are the subject of a confidentiality order. 896 We refer to these witnesses as RCI witness 1,RCI witness 2,etc.

[1025] RCI also called 3 witnesses who referred to survey data about the effect of penalty rates on the restaurant industry:

  • John Hart:the Chief Executive Officer of RCI; 897

  • James Parker:Managing Director of Jetty Research; 898 and

  • Carlita Warren:Policy and Public Affairs Director RCI. 899

[1026] It is convenient to deal first with RCI’s lay evidence.

[1027] As mentioned,RCI led evidence from 5 lay witnesses who operate businesses covered by the Restaurant Award.

[1028] RCI Witness 1 900 operates a restaurant and wine bar in Melbourne. At the time he made his supplementary statement the establishment employed 5 full-time and 14 casual employees. The 14 casual employees are classified as level 1 casuals under the Restaurant Award901 and the number of casuals was ‘basically constant’over the 2014 calendar year.902 The business trades Monday to Sunday,11.00 am to 11.00 pm.

[1029] In his witness statement RCI Witness 1 says:

    ‘10. The business on many occasions has run at a loss on Sundays because of penalty rates under the Restaurant Award

      11. If late night penalties were reduced under the Award we would consider extending our trading hours.

    12. We would consider employing more casual staff if penalty rates were reduced on Sundays and public holidays.’ 903

[1030] During the course of his cross-examination,RCI Witness 1 withdrew paragraph 11 of his statement:

    ‘Now,you say one of the things you describe as a possibility,is extending trading hours. I take it that- - -?---No,I didn’t want to extend trading hours,I just wanted to have more people to give better service.

    Okay,so the paragraph 11 in your statement,we should remove,should we?---Yes. Yes,I’m quite happy with that.’ 904

[1031] RCI Witness 1 also conceded that he had not calculated the extent of the reduction in wage costs if the RCI’s penalty rate proposal was implemented:‘No,I didn’t do it,but I could see the potential of if the penalty rates were reduced,I could extend the facilities to the public.’ 905 The witness also said that a reduction would mean that the business could be run more economically and that he would like to extend the business’s facilities.906

[1032] It was also clear from RCI Witness 1’s cross-examination (set out below) that he was unaware of the fact that the Restaurant Award had been varied in 2014 to reduce the Sunday penalty for level 1 and 2 casual employees from 175 per cent to 150 per cent:

    ‘And all of your casuals? Those 14 casuals that are on level 1,yes?---Yes.

    Are you aware that the penalty rates in that award were varied for casuals at the introductory level,level 1 and level 2,as of 1 July of 2014?---Yes.

    That went from 175 down to 150,is that right?---I don’t know what it is,I have a bookkeeper,but we were informed that the rates went up and that was - I left it to her.

    The rates went down,Mr XXX---They went down,did they? I just left it to her. To tell you the truth,I don’t even touch the wages.

    So it’s really difficult for you to make an assessment of the impact of penalty rates in that case?---Of course,up to a point. If there’s penalty rates and you’re struggling in the first place and it’s going to go up,or if it can come down you have a sort of a rule of thumb that you say,right,if it comes down,I can do something else. If it goes up,you just don’t do it.

    But I think your evidence is that that number of level 1 casuals stayed relatively - basically,I think you said - basically constant over 2014. That was despite the reduction from 175 to 150,is that right?---Hang on. What was - 175 to what?

    The casual loading went from - in respect of a Sunday - - -?---Sorry. Don’t - don’t draw me into - into costs,I’m sorry. I’m a rule of thumb person. I leave it to staff to do the other.

    Yes. To be fair to you,I just want to make it clear what I am talking about in respect of the change is that as of 1 July 2015 and as the result of the two-year review of the Restaurant Award,casual loading for casuals at introductory level,level 1 and level 2,inclusive of their casual loading,on a Sunday,went from 175 to 150. Are you aware of that?---No.’ 907

[1033] In the present proceedings RCI is not proposing any change to the Sunday penalty rate applicable to level 1 or level 2 casual employees.

[1034] We place very little weight on the witness’s statement that he ‘would consider employing more casual staff if penalty rates were reduced on Sundays’given that he was unaware of the fact that the Sunday penalty rate applicable to level 1 and 2 casual employees was reduced from 175 per cent to 150 per cent in 2014 and,if implemented,the RCI claim would not result in a change to Sunday penalty rates for level 1 and 2 casual employees (i.e. the level of casual employees employed by RCI Witness 1’s business). We also note that RCI Witness 1 said that despite the reduction in penalty rates in 2014,the number of casual employees in his establishment remained constant. 908

[1035] RCI Witness 2 909 is the owner of a licensed coffee shop/café in Queensland. At the time she made her supplementary statement,the business employed 16 casual employees,14 of whom are level 1 or 2 casuals under the Restaurant Award and the other 2 are employed in higher classifications.910 The business does not employ any full-time or part-time employees. The café is a 7-day-a-week operation,trading 7.30 am to 5.00 pm weekdays and 7.30 am to 5.00 pm on weekends.

[1036] In her witness statement RCI Witness 2 says:

    ‘The labour costs of running this cafe are high sometimes 45%- totally unsustainable. The cause -penalty rates over weekends and public holidays. In particular the public holiday penalty rates make trading totally unprofitable for us.

    Closing the business is not an option under the terms of our lease,negotiated prior to penalty rates being applied under the Restaurant Award. We are finding the current wage terms unsustainable for us.

    These high rates require that I restrict my staff numbers thus staff work really hard to cover the load and customer service can be compromised.’ 911

[1037] The statement that the business’lease was ‘negotiated prior to penalty rates being applied under the Restaurant Award’was the subject of cross-examination and the witness acknowledged that the Restaurant Award took effect on 1 January 2010 and she signed the lease almost 3 years later,on 4 December 2012. The witness also conceded that she ‘knew very well what the penalty rate regime was under the Restaurant Award’when she signed the lease. 912

[1038] RCI witness 2 was aware of the changes sought by RCI and conceded that she had not calculated the impact of the proposed reduction in penalty rates. 913 The witness also gave evidence about the impact of the reduction in penalty rates for level 1 and 2 casual employees that took effect on 1 July 2014:

    ‘Just some last questions in relation to those casual employees. If you just concentrate on the 14 of them that are level 1 and level 2,did their penalty rate for a Sunday change on 1 July of last year,2014?---Yes,it did.

    Is it your understanding that casual employees at level 1 and level 2 inclusive of their casual loading,their penalty rate on Sunday went from 175 to 150?---Yes,I am.

    But I think your evidence is despite that,your workforce was consistent over - the total numbers of casuals were broadly consistent for the calendar year of 2014. Is that right?---Yes,correct.’ 914

[1039] It is notable that RCI Witness 2 gave no evidence as to what the business’response would be to a reduction in penalty rates. It was not suggested that there would be any service improvements or additional staff employed as a consequence of any reduction in penalty rates. Further,the number of casuals employed in the Café did not change following the 1 July 2014 reduction in Sunday penalty rates.

[1040] RCI Witness 3 915 is the owner of a pizzeria in Canberra which employs 9 casual employees and trades Tuesday to Friday from noon to 2.00 pm and from 5.30 pm to midnight,and from 5.30 pm to midnight on a Saturday. It does not trade on Sundays.

[1041] In his witness statement RCI Witness 3 comments on the impact of late night and Sunday penalty rates. As to the late night penalties he says:

    ‘The late night penalty of 10% between 10PM and Midnight under the Restaurant Award is a commercial disincentive for the business to keep additional staff on as it curtails profits during these hours. If customer demand was present and the 10% late night penalty was abolished we would extend the hours employed by our staff on weeknights.’ 916 (emphasis added)

[1042] During the course of cross-examination the witness conceded that there was less customer demand after 10.00 pm on Monday to Thursday. 917

[1043] The proposition that the business would offer more hours to its staff if the late night penalty was abolished is subject to the qualification as to customer demand.

[1044] As to Sunday penalty rates RCI Witness 3 says:

    ‘We do not currently trade on Sundays,however,if the current penalty rate was reduced to the Saturday rate for all staff we would consider opening the business for Sunday trading’ 918

[1045] As mentioned earlier,the pizzeria employs 9 casuals,no full-time or part-time employees. Of those 9 employees,7 are level 1 casuals and the other 2 are level 2 casuals. 919 The number and level of employees has been ‘fairly consistent’over time,at least since 2014.

[1046] The witness was cross-examined on his statement that he would consider trading on Sundays if the Sunday penalty rate was reduced to the Saturday rate:

    ‘And you know,don’t you,Mr XXX,what the penalty rates are on Sundays under the Restaurants Award?---Yes.

    And you know that for level 1 and level 2 casuals they’re actually the same as they are on Saturday,that’s right,isn’t it?---Yes,I believe that is correct.

    So where you say at paragraph 12 of your statement that you don’t currently trade on Sundays but if the current penalty rate was reduced to Saturday rate for all staff you’d consider opening on Sundays,you could do that right now,couldn’t you?---I guess the sense of –to answer that question and the reason for my appearance is that the fact that –well actually let me backtrack –the rate for Sunday for level 1’s and 2 you’re saying is the same as Saturday?

    That’s right.---Because I don’t believe that’s correct.

    I asked you just a minute ago if you knew what the rates for Sundays were for casuals - - -?---Yes,that’s where I’d like to go back. I’d like to go back to that question. So I do believe that Saturday and Sunday rates differ during the day.

    If you’re wrong about that,does that mean that you would withdraw paragraph 12 of your statement?---Yes,that would be withdrawn,or more accurately it would be re-phrased more accurately.

    I think there’s a limit on re-phrasing,but I’ll let others deal with that.---Yes,well let’s leave it at –yes,if the Sunday rates are different to Saturday day rates then –which I wasn’t aware of,that paragraph 12 would be withdrawn.’ 920

[1047] As a consequence of the concessions made during cross-examination,we place no weight on that part of the witness’statement referring to the likelihood of trading on Sunday if the Sunday penalty rate was reduced.

[1048] RCI Witness 4 921 is the owner of a restaurant in NSW and has worked in the hospitality industry for 15 years. When it was initially opened the restaurant provided breakfast,lunch and dinner,7 days a week. At the time the witness made her statement the restaurant was open Wednesday to Sunday for lunch and dinner,with breakfast available on the weekends. The restaurant also caters for ‘high tea,functions and corporate events’. The restaurant employs 6 full-time employees (5 of whom are on annualised salaries) and 8 casual employees (6 are level 2 casuals and the other 2 are level 1 casuals). The number of staff employed had been ‘pretty consistent’over the 18 months prior to the witness giving evidence.922

[1049] At paragraph 6 of her statement,the witness says:

    ‘The company would be prepared to employ more casual staff on weekends and public holidays if penalty rates were significantly reduced’(emphasis added)

[1050] The witness was cross-examined as to what she meant by ‘if penalty rates were significantly reduced’:

    ‘So my question was then what is the significant reduction to the penalty rates on weekends that would enable you to make the changes that you say you want to make?---Ideally? Ideally,no penalty rates would be great.

    You know what amendments the Restaurant &Catering Association are seeking?---They’re seeking for a reduction. I think it’s to have it the same as Saturday rates.’ 923

[1051] The witness was familiar with the RCI claim and conceded that she had not calculated the ‘actual dollar figure’which would result from the reduction in penalty rates sought by RCI,as the business looks ‘at the percentage of the labour cost to what we are currently earning’. 924

[1052] The witness was aware of the fact that the Sunday penalty rate for level 1 and 2 casuals had been reduced to 150 per cent (inclusive of the 25 per cent casual loading) on 1 July 2014. 925 But despite the reduction in the Sunday penalty rate the number of casuals employed on a Sunday (and the hours they work) had not changed.926

[1053] As to the impact of the current early morning penalty the witness said,at paragraph 7 of her statement:

    ‘The company would reconsider opening for breakfast Monday to Friday again if the 15% penalty rate did not apply up to 7am’

[1054] This aspect of the witness’evidence was not challenged in cross-examination.

[1055] RCI Witness 5 927 operates a café in regional NSW. The café trades 7 days a week,from 7.00 am to 3.00 pm Monday to Friday and 8.00 am to 2.00 pm on weekends. The café employs 14 employees,5 full-time (2 of whom are on salary),1 part-time and 8 casual employees (all of whom are either level 1 or 2 casuals).928

[1056] The witness was aware of the reduction in Sunday penalty rates that took effect on 1 July 2014,but there has been no increase in overall staff numbers since that time. 929

[1057] At paragraphs 10,12 and 13 of his statement,the witness refers to the impact of penalty rates on the business:

    ‘Weekend penalty rates increase the ratio of wages to sales to approximately 60% for those days,if we employ adult employees,making it necessary to staff weekends with a high proportion of junior staff.

    We currently reduce trading hours on weekends because of the ratio of wages to sales,we are usually unable to open on public holidays because we are unable to operate profitably after paying penalty rates.

    The excessive wage rates and associated penalties can have a deleterious effect on customer service,because we are unable to appropriately staff the business during peak period.’ 930

[1058] The cross-examination of RCI Witness 5 cast some doubt on the accuracy of the 60 per cent figure referred to above, 931 but the essence of his evidence is that the current penalty rate regime restricts the business’s weekend trading hours and adversely affects customer service on weekends because a lower than optimal proportion of senior staff are rostered at that time in order to reduce labour costs.

[1059] We note that RCI Witness 5’s evidence does not particularise the impact of Sunday penalty rates (referring only to weekend penalty rates) and nor does the evidence canvass the likely impact of a reduction in the Sunday penalty rate on employment levels and service.

[1060] In summary,2 of RCI’s 5 lay witnesses were unaware of the fact that on 1 July 2014 the Restaurant Award was varied to reduce the Sunday penalty rate for level 1 and 2 casuals from 175 per cent to 150 per cent. Both of these witnesses were RCI members and we assume that RCI informed its members of the award variations.

[1061] Further,none of the RCI lay witnesses suggested that there had been any positive employment effect (either in overall numbers of employees or in hours worked) as a consequence of the previous reduction in the Sunday penalty rate.

[1062] There was some evidence as to the impact of existing weekend and public holiday penalties on operating hours and staffing composition (with a higher than optimal level of junior staff being rostered on weekends). But there was a paucity of evidence about the likely impact on employment levels and service of a reduction in the Sunday penalty rate as sought by RCI.

[1063] We now turn to RCI’s survey evidence. The evidence concerns three surveys:

  • a survey by Elections Australia Pty Ltd of RCI Members (the EA Survey);

  • a survey by Jetty Research (the Jetty Survey);and

  • a restaurant and catering benchmarking survey conducted by RCI in 2014 (the Benchmarking Survey).

The EA Survey

[1064] Attached to Mr Hart’s statement is a document from Elections Australia Pty Ltd setting out the results of a survey that the organisation conducted of RCI members in mid-2015 (the ‘EA Survey’). The survey asked three questions:

          1. To the closest whole number,what is the percentage of total labour costs to revenue (include all on costs such as payroll tax,workers compensation and superannuation)

      % _______

          2. A recent survey found that,on average,an additional 3 staff would be engaged if penalty rates on Sunday were lowered. In order to achieve this outcome what type of change would you require?
          (click on one option)

        ○a:Reduce Sunday rates to Saturday for all
        ○b:Reduce Sunday rates to Saturday for casuals
        ○c:Extend the 150% rate for casuals for Sunday to Grade 3 and above
        ○d:Other please specify below

      2d:Other

       

        3. What additional percentage daily turnover would result from such a change?

      % _______

[1065] The raw data from 335 survey respondents is provided in Attachment A to Mr Hart’s statement. No analysis of the data is provided.

[1066] In its written submissions RCI concedes that ‘the survey in the form in which it has been filed,provides no information about the approach and methodology relating to the survey’and,‘for this reason,RCI accepts that the probative value is reduced’. RCI goes on to submit:

    ‘However,it is helpful at a more general level in indicating the views of restaurant owners and managers,particularly to the extent that such views are consistent with the lay evidence and survey and expert evidence before the Full Bench.

    In particular,a focus of the survey was gauging the percentage of total labour costs to revenue. Based on the responses provided,the average percentage was calculated to be 41.4%. This is also consistent with the benchmarking survey conducted by Ms Warren of RCI which indicated labour costs to be 43.7%’ 932

[1067] RCI only expressly refer to the responses to survey question 1 (labour costs:revenue %). We note that the responses to this question vary substantially –from 20 to 95 per cent. There is also significant variation in the responses to questions 2 and 3. The responses to question 3 (what additional percentage daily turnover would result from the suggested change in penalty rates) range from 0 to 115 per cent. A suggested increase in turnover of 115 per cent frankly lacks credibility and finds no support in the expert evidence,the lay evidence or other survey evidence.

[1068] As acknowledged by RCI,the EA survey evidence provides no information about the approach and methodology adopted. We would add that the wording of survey questions 2 and 3 is problematic and there is little or no analysis of the data (in particular,there is no analysis or interpretation of the responses to questions 2 and 3). Further,and contrary to RCI’s submission,the evidence is not ‘helpful at a more general level’as the views presented in the data in response to questions 2 and 3 are not consistent with the lay evidence.

[1069] As we observe later,the assessment of survey evidence is not necessarily a binary task (i.e. you either accept or reject the evidence). The methodological problems associated with some survey evidence may mean that rather than dismissing the evidence the results are accepted as indicative or anecdotal,rather than definitive. But the EA survey evidence is so flawed that it is of no assistance.

The Jetty Survey

[1070] RCI commissioned Jetty Research to undertake a random national telephone survey of 1000 restaurant and café owners and managers. The survey respondents were randomly chosen from a list (supplied by RCI) of 18 268 restaurant and cafes and,while some were members of RCI,Jetty Research was not informed of which business were members. 933

[1071] The survey was conducted on weekdays between Wednesday 22 April 2015 and Monday 4 May 2015. Data from the ABS Counts of Australian Businesses survey for June 2014 showed that there were 26 728 restaurants and cafes employing staff. 934 The sample of 1000 respondents was achieved from 67 per cent of businesses contacted and eligible to participate.

[1072] Around 85 per cent of survey respondents opened on Sundays,increasing to 90 per cent that opened on Sundays and/or public holidays. 935

[1073] The survey found that the main reasons that businesses opened on Sundays and/or public holidays were:

  • to keep customers happy (31 per cent);

  • busy/busiest days (30 per cent);and

  • profitable day (23 per cent). 936

[1074] These businesses were also asked if opening on Sundays and/or public holidays make them more or less profitable overall. Around half (51 per cent) responded that it made them more profitable,while almost one quarter (24 per cent) responded that it made them less profitable. Larger businesses (more than 20 employees) were more likely to respond that it was more profitable than small businesses (fewer than 10 employees). 937

[1075] Businesses that opened on Sundays and/or public holidays were then asked what changes they would make to their business if penalty rates were reduced. They were provided with the following four options:

  • use the savings to improve your business (78 per cent);

  • use the savings to invest in training (68 per cent);

  • put on additional staff (52 per cent);and

  • open for longer hours (41 per cent). 938

[1076] For businesses that did not open on Sundays and/or public holidays,the main reason given by 70 per cent of respondents was ‘penalty rates/too expensive/can’t make a profit’ 939. Over half (54 per cent) of these businesses responded that they would be more likely to open on Sundays and public holidays if penalty rates were reduced.940

[1077] Combining the responses to both questions,Jetty Research concluded that 52 per cent of respondents would be likely to take on more staff and 42 per cent would likely open for longer hours. 941

[1078] Jetty Research used these data to suggest an aggregate estimate of the additional number of staff and opening hours,based on the questions asking for a “rough estimate”of the additional staff that these businesses would recruit for a typical Sunday/public holiday and additional hours they would be open. The survey found an average of an extra 3.15 staff per day would be employed,with a higher average for larger businesses and businesses not currently opening on those days. 942 The average number of extra opening hours was 5.07 per day,with little difference by business size. RCI extrapolated the Jetty Survey results to contend that reducing penalty rates could result in approximately ‘39,800 extra staff being employed nationally on any given Sunday or public holiday’.943

[1079] Mr Parker,the Managing Director of Jetty Research,gave some limited evidence about the data collection process. We note that Mr Parker is not a qualified practicing market researcher under the scheme established by the Australian Market and Social Research Society (AMSRS).944

[1080] Mr Parker was aware of the Australian standard for market,social and opinion research (AS ISO 20252),but his evidence was that it was not something he turned his mind to as part of the conduct of the survey945 and that the ISO standard was not applied to the Jetty Survey.946 Further,the database from which Mr Parker’s sample was selected,was provided to him by his client,the RCI. He was not responsible for the collection of that database and was unable to provide any reliable evidence as to its source.

[1081] Mr Parker’s statement attached the results of the Jetty Survey,including (at Appendix 1) the questionnaire used. As submitted by United Voice,the questionnaire has a number of significant deficiencies when considered in the light of the proposals being advanced by the RCI in this Review,including:

    (i) In relation to a number of the questions it was impossible to disaggregate the answer. For example when recipients were asked “Why do you choose to trade on Sundays and/or public holidays?”Mr Parker accepted that it was not possible to attribute the reason to one or other or both of those days.947 Likewise when recipients were asked “Do you believe that opening on Sundays and/or public holidays makes your business more or less profitable?”it was not possible to attribute the answer to one or other or both of those days.948

    (ii) Recipients were asked questions about “weekend penalty rates”without any distinguishing or clarification of those questions related to Saturday or Sunday penalty rates. Mr Parker accepted “The answer will not tell you anything as between Saturday and Sunday”.949

    (iii) Where questions sought to elicit answers about the effect of a reduction in penalty rates they did not identify the level of that reduction. 950

    (iv) A number of the questions prompted answers. For example,the question that sought to elicit what respondents might do in the event that “weekend penalty rates”were to reduce prompted only four options,those being:

      (a) “put on additional staff”;
      (b) “open for longer hours”;
      (c) “use the savings to improve your business”;
      (d) “use the savings to invest in training”.

[1082] We also note that a significant number of the relevant questions only had small to modest numbers of responses,further undermining their reliability.951

[1083] The Productivity Commission considered the reliability of the Jetty Survey given the survey design and achieved sample sizes. The Productivity Commission concluded that a ‘major deficiency’of the survey was that it asked for employers’views about the impact of a hypothetical reduction in penalty rates without specifying the actual magnitude (point (iii) in paragraph [1081] above),and as a result the responses ‘would reflect different judgments by respondents on the magnitude of the hypothetical change’,and would likely overstate any impacts. 952

[1084] Further,the Productivity Commission also noted businesses that opened on Sundays and/or public holidays were only provided with a set of responses to how they would respond to a reduction in penalty rates and could provide no additional responses,including no change (point (iv) in [1081]). The Productivity Commission concluded that this would also likely overstate any impacts.

The Benchmarking Survey

[1085] RCI also tendered and relied upon an RCI survey described as the “restaurant and catering Australia benchmarking survey”from 2014 (the 2014 benchmarking survey). The survey was attached to the statement of Ms Carlita Warren,the Policy and Public Affairs Director of RCI.

[1086] The survey was conducted electronically and forwarded to a list of 2,760 members and non-members’of RCI. Ms Warren was unable to say how many of the survey recipients were RCI members and how many were non-members.953 Ms Warren confirmed that the recipient list was ‘generated from the RCI’s data base that had previously received communications from the RCI’.954 Of the 2,760 recipients,340 responded to at least some part of the survey955 and of those only 121 completed all of the survey. 956

[1087] During the course of cross-examination,Ms Warren was directed to the criticisms of a previous ‘benchmarking survey’conducted by RCI,made by the majority of the Full Bench in the Transitional Review of the Restaurant Award. In that review the Full Bench (majority) stated at paragraph [113]:

    ‘for example,the RCI conducted a survey of its members in 2011 concerning a large range of issues of relevance to the industry. One question in the survey was “what has been the impact on weekend penalty rates being enforced through the restaurant industry?’”

[1088] The Full Bench said of that question:

    ‘that question is curiously phrased,in particular the impact of “enforced”is not entirely clear. The intermingling of weekend penalty rates and public holiday rates in the question also reduces the value of the survey response for our purposes.’

[1089] Ms Warren accepted that a similar question appeared in the 2014 benchmarking survey957 and acknowledged that the criticism made by the Transitional Review Full Bench (majority) had not been drawn to her attention. Ms Warren also acknowledged that the survey questions from 2011,2012 and 2013 are ‘pretty much the same’.958

[1090] As with the Jetty Survey questionnaire,the questions put as part of the Benchmarking Survey had a number of significant deficiencies,including:

    (i) Questions seeking reasons for not opening on Sundays/public holidays prompted respondents with answers.

    (ii) Answers were not able to be disaggregated to determine whether answers related to Sunday or a public holiday or both.

    (iii) Respondents were restricted in the number of answers for several questions,for example if they had more than one reason they were forced to choose one of the prompted responses.

    (iv) Questions that relevantly identified “reduced penalty rates on the weekend”making a “difference to running your business successfully”,did not in any way quantify the level of reduction that was being described.

[1091] As to the proper process for survey data collection,and the conduct of surveys more generally,United Voice relied upon the expert evidence of Ms Helen Bartley.959 Ms Bartley is a qualified practicing market researcher with the AMSRS and is also an accredited statistician with the Statistical Society of Australia.

[1092] Ms Bartley was asked to provide evidence about the necessary pre-requisites for the establishment and conducting of a survey from which reliable conclusions may be drawn. In respect of data collection Ms Bartley gave evidence that she would expect such data to be collected “in accordance with accepted market and social research industry standards,such as the ISO International Standard for Market,Social and Opinion Research (AS:ISO 20252) which is the international standard for access panels in market opinion and social research.’

[1093] Ms Bartley considered the following pre-requisites for the establishment and conduct of a survey from which reliable conclusions may be drawn:

  • A clear aim and objectives for the survey; 960

  • Clear definitions of concepts such as a well-defined target population,scope and timeframe; 961

  • A questionnaire that is relevant,contains meaningful and relevant questions that are unbiased and easy to answer,has response options that are mutually exclusive and follows a logical sequence; 962

  • An unbiased sample design and selection process that maximises the survey response where respondents are randomly selected from the target population and from a current and accurate sampling frame and a sufficiently large sample to draw results that are statistically accurate; 963 and

  • The consequences of any limitations with the survey to be considered. 964

[1094] United Voice relied on these points to respond to the Jetty Survey 965 and submitted that the survey did not meet these standards and therefore the results are not reliable.966 A similar submission was made in relation to the Benchmarking Survey.967

[1095] The Productivity Commission characterises the test of reliability proposed by Bartley as ‘overly stringent’and goes on to make the following observation:

    ‘Evidence is always imperfect,and few conclusions about anything in the social sciences could be reached if only those studies that met the full set of conditions set by Bartley were given any weight’. 968

[1096] The Productivity Commission explained that all of these business surveys would fail the “stringent”tests suggested by Bartley 969 and argued that only surveys from the ABS would be considered reliable if these tests were applied. Instead,the Productivity Commission contended that,while the results “should be treated as suggestive more than definitive”,they should not be disregarded as evidence is “always imperfect”.970 Further,the Productivity Commission stated that “few conclusions about anything in the social sciences could be reached if only those studies that met the full set of conditions set by Bartley were given any weight”.971

[1097] We agree with the above observation. The assessment of survey evidence is not a binary task –that is,such evidence is not simply accepted or rejected. Most survey evidence has methodological limitations –be it sample related the nature of the questions put or the response rate. The central issue is the extent to which the various limitations impact on the reliability of the results and the weight to be attributed to the survey data.

[1098] Given the limitations in the Jetty Survey and the Benchmarking survey,and consistent with the view expressed by the Productivity Commission,we propose to treat the data from these surveys as suggestive or anecdotal,rather than definitive. We expressly reject the proposition advanced by RCI that the results of the Jetty Survey can be extrapolated to all businesses covered by the Restaurant Award and that an estimate can be made of the aggregate employment effect of reducing penalty rates.

[1099] RCI also relies on the ‘Final Report of the Visitor Economy Taskforce:A Plan to Double Overnight Visitor Expenditure to NSW by 2020’ 972 (the Taskforce Report). The Taskforce Report expresses the view that:

    ‘The penalty rates currently imposed by the Fair Work Act 2009 curtail the financial viability of business operating in visitor economy sectors such as food,retail and accommodation. Many businesses are unable to stay open during peak periods (such as public holidays,evenings and weekends) due to the current penalty rates imposed under the Fair Work Act 2009,leaving demand unmet and benefit from visitor expenditure lost.

    Inadequate service levels,due to insufficient staffing at peak periods,result in a failure to retain customers,but may also drive away potential future customers through negative online reviews posted on the websites used so much by visitors to inform their dining,shopping and accommodation choices.

    Easing the impact of penalty rates under the Fair Work Act 2009 will give employers the flexibility to hire staff during high-demand periods and allow NSW to fully capture the revenue potential of discretionary visitor spend.’ 973

[1100] Recommendation 15 in the Taskforce Report is relevant for present purposes:

    ‘Call upon the Commonwealth Government to review the Fair Work Act 2009 to remove those provisions for penalty rates which significantly increase labour costs and deter businesses in the visitor economy from operating at times/days of the week when the tourism and hospitality sector faces peak demand (see also Food and Wine recommendations).’ 974

[1101] Eight actions are identified to implement the recommendations made. Relevantly,action 15A states:

    ‘Call upon the Commonwealth Government to review the Fair Work Act 2009,including to require an employee to work five days during the working week before being entitled to receive penalty rate wages for any subsequent shifts during the weekend.’ 975

[1102] We note that if adopted the proposed amendment to the FW Act ‘to require an employee to work five days during the working week before being entitled to receive penalty rate wages for any subsequent shift during the weekend’,would have the practical effect of eliminating weekend penalty rates in the retail and hospitality sectors. The Commonwealth has not acted on the recommendation.

[1103] It is also relevant to observe that no employer party in these proceedings has sought to vary any of the modern awards before us in a manner consistent with action 15A in the Taskforce Report.

[1104] Finally,we would also observe that the Taskforce Report is dated June 2012. In other words it predates the July 2014 reductions in Sunday penalty rates in the Restaurant Award.

      (ii) United Voice

[1105] United Voice relied on the evidence of 4 lay witnesses each of whom was employed under the Restaurant Award:

  • William King,Food and Beverage Attendant and Bar Manager Level 3 at Mestizo Cocina Peruvina Restaurant;976

  • Angus Lonergan,barista at The Place;977

  • Jennifer Miller,chef at Oscar’s on the Yarra;978and

  • Alexandra Kindness,kitchen hand at Demedios café.979

William King

[1106] Mr King has worked in the hospitality sector for over 20 years and since August 2014 he has been employed as a casual level 3 Food and Beverage Attendant and Bar Manager at Mestizo Cocina Peruvina Restaurant in South Australia.

[1107] Mr King works about 30 hours per week. He works shifts on Wednesdays,Thursdays and Fridays. On Saturdays he starts work at 2.00 pm and finishes around 10.00 pm,sometimes later. At the time he made his statement he did not work on Sundays,though he did when he was initially employed at the restaurant.

[1108] As to the impact of working on weekends and public holidays Mr King’s evidence is as follows:

    ‘As a result of regularly working Saturdays,some Sundays and public holidays I have missed many events with my family and close friends. These included attending engagement parties,birthday parties and celebrating my own birthday. These events are usually celebrated on the weekend. Occasionally,if I provide enough notice,I can get time off work to attend weddings.

    I recently spent some time coaching my step-daughters netball team on Saturday mornings. I would quite often work late on a Friday night,and when I couldn’t sleep in on Saturday morning because of netball I was unable to properly rest. I would still be tired when I went to work early in the afternoon. I found I could not commit for a second season because I was too exhausted from working in the evenings.

    I felt like I was missing out. My daughter is getting into her middle teenage years,and does not want to play netball anymore. I feel like I have missed part of her life. Even when I was able to coach her team,I would miss a lot of her life. After the game,I would not see her until Sunday afternoon. I would wake up around twelve,and that was when I could see her.’ 980

[1109] Mr King deals with the impact of a reduction in penalty rates as proposed by RCI at paragraphs 21–27 of his statement,in particular:

    ‘In the event that I am required to work Sundays and public holidays,if the penalty rates were reduce,I would be disadvantaged financially. I live week to week and have done for a long time. If I earned any less money,and I would need to work more. I do not think I would be offered more work at my current workplace,their staffing needs are pretty set. I do not believe I could find more work elsewhere. The key nights for hospitality are Fridays,Saturdays and Sundays,and there is a lot of competition for those shifts. 981

[1110] In his statement Mr King did not specifically refer to the impact of Sunday work on his social and family interactions. During his oral evidence he was questioned about whether there was a difference between Saturday and Sunday work in terms of the level of intrusion into his social life. The essence of his evidence in respect of this issue was:

  • It depends on when a particular social event is scheduled:‘If I’ve got friends that are having a nice casual barbecue and it happens to be on a Sunday afternoon then that’s going to intrude on my social life more than if it was a party on a Saturday night’. 982

  • As to the timing of particular social events,most birthday celebrations predominantly occurred on Friday or Saturday night. 983

  • In respect of family events and whether they occurred more commonly on a Saturday or Sunday:‘Maybe 50-50 or more leaning towards the Saturday’. 984

  • He drew no distinction between the level of intrusion associated with working on a Saturday or Sunday evening. 985

[1111] In response to a question about whether he had factored possible increases in working hours into the calculation of loss from reductions in penalty rates,Mr King said that there would be no more hours. There are currently two people rostered to work both days and nights on Saturdays and Sundays and that is all that is required to handle a 45 seat restaurant. In response to the proposition that he could look for additional work with another establishment,Mr King said:

  • I could find somewhere in hospitality that wanted you to work for them not including Friday,Saturday nights,then,yes,I could. However finding something like that in my experience,is,I’m going to say,very little to none.’ 986

Angus Lonergan

[1112] Mr Lonergan has worked in hospitality for about 10 years,most recently as a barista. He currently works as a casual employee for about 20 to 25 hours per week. He regularly works on the weekend and has worked on public holidays in the past.

[1113] Mr Lonergan gave evidence about the impact of working on weekends and public holidays and,in particular,the adverse impact on the time he is able to spend with his partner and friends:

    ‘I have trouble making time to see friends who work during the week,and it is very rare that I will see my friends as a group. I am often unable to attend birthday parties and other celebrations because I am working and they are held on the weekend. If they are during the day,I am normally working. If they are at night,I will probably have to leave early so that I am not tired for my shift the next day.’ 987

[1114] As to Mr Lonergan’s evidence that he was ‘often unable to attend birthday parties’,during the course of his oral evidence he said that these events were often on Friday or Saturday evening. 988 In the course of cross-examination Mr Lonergan was asked whether there was any difference between Saturday and Sunday work in terms of the level of intrusion into his social life. He replied:‘not particularly,no’.989

[1115] Mr Lonergan deals with the impact of reduction in penalty rates as proposed by RCI,at paragraphs 43 to 46 of his statement,in particular:

    ‘I have calculated that if penalty rates are reduced in this way,then I will lose approximately $153.00 to $122.00 when I work a 7 hour public holiday shift.

    While I would be able to work additional hours,the impact of doing so would mean that I would have less time to search for full-time work. 990

Jennifer Miller

[1116] Ms Miller has worked in the hospitality industry ‘on and off’for about 30 years and since December 2014 as a casual Commis Chef at ‘Oscars on the Yarra’in regional Victoria (a level 4 Cook Grade 3). Her hours fluctuate on a weekly basis,from 2 to 47 hours per week,spread across all of the days of the week. The majority of her shifts are between Thursday and Sunday and she works on public holidays,from time to time. A lot of Ms Miller’s shifts are “split”or double shifts whereby she works a breakfast or lunch shift and then comes back to work a dinner shift. 991

[1117] As to the impact of weekend and public holiday work Ms Miller’s evidence is as follows:

    ‘When I work mornings,I leave home before my son goes to work. When I work nights,he’s usually already asleep when I come home. When I work nights,I can’t phone friends up and talk to them because when I get home,they’re already asleep. On weekends and in the evenings,when my friends are all out socialising,I’m usually at work.

    If I want to see my grandchildren,I have to nip in and do it between shifts,which is difficult.

    The entire time I have worked in hospitality,I have had to miss family functions,including weddings and birthdays,because I have had to work. I still miss those events.

    I can’t think of any positive benefits for me from working the hours that I work,except for the penalty rates. A lot of the time when I’ve had to work public holidays and miss out on time with my family and extended families,I’ve been able to console myself by thinking that at least I’m getting paid penalty rates.

    Previously,I have worked Christmas Day,Christmas Eve and Boxing Day. The first time I worked Christmas Day,I had to explain it to my children who were upset. That was awful. When I worked on Christmas Day,I had to get my family to save me some of Christmas lunch,or they would have to wait until I finished worked. By the time I got home,everyone had opened their presents and I had missed out on the day. I always felt very sad working on those days.’ 992

[1118] During the course of her oral evidence Ms Miller acknowledged that working weekends ‘goes with the [restaurant] industry’ 993. Ms Miller was also asked whether there was any difference between Saturday and Sunday work in terms of the level of intrusion into her social life. She replied:

    ‘I feel Sunday is worse for me,because we have a lot of small children in our family and its usually Sundays that they have parties and picnics and things like that.’ 994

[1119] Ms Miller deals with the impact of a reduction in penalty rates as proposed by RCI at paragraphs 30–39 of her statement and estimates that she will lose about $65 when working a 15 hour split shift on Sundays and between $140.25 and $175.47 on a public holiday (depending on whether the RCI or ABI proposal is adopted). As to the impact of such a reduction in her earnings Ms Miller says

    ‘If penalty rates are cut as proposed by the RCI,then I would have to work more to earn the same amount of money,or find ways to reduce my household expenditure. My household expenses are already tight and there are some months when I don’t make enough to meet my monthly expenses and have to go without. Losing $260 a month would be very stressful. I don’t know what else I could give up.

    While I would be able to work some additional hours,the impact of doing so would mean that I would spend even less time with family,and have even less leisure time. Also,I do not know if I will be offered additional hours by my employer. If I am not,I would have to find a second job.

    Even if I could find a second job,it is extremely difficult to balance two jobs,because both employers might want me to be available all of the time,even if they weren’t rostering me on for that day. It would mean a lot of juggling,which would not be manageable.’ 995

[1120] Under cross-examination Ms Miller maintained that while it would be possible for her to get a second job on days she was not working for her current employer,the second employer would also require her to be flexible. In this regard,Ms Miller said:

    ‘That is very possible,however,they require you to be flexible and work most days. Be available seven days a week. And if I’m already working in a job that have permanent hours on Friday,Saturday and Sunday,that’s contradictory. I can’t sort of say:‘I can’t work for you this day because I’m working for this other person.”You have to be available all the time.’ 996

[1121] In response to the proposition that she could work in a second job on days when her