Penalty rates should not be so high
As Easter weekend hits, the accommodation industry is jumping up and down to have some action on penalty rates – something that with the current political situation at state and federal levels is far from likely.
The Accommodation Association of Australia said unless changes are made to the existing regime, visitors and staff will continue to lose out. “Accommodation businesses – particularly those in regional and rural parts of Australia – are being hamstrung by the direct cost to operators of penalty rates,” said the association’s chief executive officer, Richard Munro.
“While cafes, restaurants and retail businesses can choose to close this Easter weekend, accommodation businesses cannot, as they have to remain open 24 hours a day, seven days a week. Instead, many bars and restaurants within accommodation businesses will be shut because it is unprofitable for them to open.
“This makes for a less-than-desirable reception for international visitors, while staff miss out on shifts.”
In some states and territories, the situation is worse than others. “In NSW and Victoria, for example, all four days over Easter are classified as public holidays,” Mr Munro said. “This means that casual staff who work on the four days across Easter will be paid the equivalent of 11 normal working days.
“This is a clear demonstration that current penalty rates are too high.
“The accommodation industry is not advocating for penalty rates to be abolished, rather for penalty rates to be set at a reasonable level to – among other things – attempt to ensure that Australia can compete with other low-cost international destinations which are on our doorstep.
“The tourism industry is Australia’s largest services export with excellent prospects for growth, however shutting down on public holidays due to penalty rates detracts from our product and jeopardises potential expansion. “This will continue to be the case unless penalty rates are overhauled.”
Tourism Accommodation Australia also calls for more sensible debate on penalty rates and public holidays.
The prospect of penalty rates of up to 275 per cent is forcing Australia’s accommodation providers to curtail services over the Easter long weekend holiday period, with restaurants and bars the most affected.
A survey conducted by TAA last year showed that 67 per cent of accommodation providers said they would be closing outlets or reducing services because of crippling penalty rates.
The survey of TAA’s 1000 strong membership revealed that while 85 per cent of respondents acknowledged that reductions in services could negatively impact guest perceptions, the alternative for accommodation providers planning to keep open outlets was to lose money over the period.
The survey revealed that for accommodation providers electing to operate outlets on Good Friday and Easter Monday (when penalty rates increase to as much as 275 per cent) only 13 per cent of operators expected to make a profit, 54 per cent to make a loss and 23 per cent to break even. 10 per cent indicated they wouldn’t operate outlets at all on those two days.
Commenting on the survey results, acting CEO, TAA Carol Giuseppi, said it was disappointing that at a time when travellers were expecting the highest level of service, the costs associated with penalty rates made it impossible for hotels to deliver the service levels they would like to.
“We are not arguing against penalty rates, but rather their excessive levels,” said Ms Giuseppi.
“The recent decision in South Australia to reduce penalty rates on weekends for retail workers acknowledged that working conditions have changed since penalty rates were introduced over 50 years ago.
“Penalty rates of 275 per cent actually discriminate against workers as much as they do employers, because if a hotel closes a restaurant or cuts back on room service, the worker – for whom working on weekends or public holidays often suits their circumstances most of all – doesn’t get the opportunity to work. They get no money and travellers get reduced services.”
“Politicians might like to duck this issue but industries that actually employ people can’t. We need a sensible and rational debate on the issue if the concerns of both workers and employers are to be addressed.”
AHA CEO, Stephen Ferguson, said that governments also needed to address the issue of the number of public holidays being gazetted across the country.
He said that the AHA supports the concept that increased rates of pay are warranted for those working on public holidays. Especially long-established public holidays like Good Friday and Easter Sunday. However, the AHA is concerned that there is no consistency of the number of public holidays, and that business bears the cost when excessive numbers of dates are sanctioned.
“The National Employment standards set out eight days on which all Australians must have a public holiday. The states are then able to add any number of additional public holidays to the eight provided by the commonwealth,” he said. “The number of public holidays is the sole domain of the federal and state governments. However, the rates of pay on public holidays are the sole domain of the FWC. The AHA is asking the commission to cap the number of days on which penalty rates must be paid to eleven days per annum.”
Mr Ferguson said that when the Newman Queensland government mandated a public holiday in Brisbane last year for the G20, they then complained when businesses failed to open their doors for the international visitors, when it was the penalty rates associated with public holidays that forced businesses to close their doors. He said the same was likely to happen as a result of the Victorian Labor Party promising AFL Grand Final Eve as a public holiday as part of their election commitments last year.
Restaurant & Catering Australia stresses that while public holidays are set out in the National Employment Standards of the Fair Work Act 2009, state governments also set additional public holidays in state legislation under our federation constitution. It is intended that people have these distinct days away from work, however in circumstances where an employer does engage an employee on a public holiday, they are penalised for doing so.
The vast majority of employees do in fact take the day off work, yet in some industries this is not a practical possibility. Service stations, supermarkets, hospitals and other businesses of necessity must remain open, and as such must employ people to fulfil duties on public holidays. The hospitality industry is similar. Hotels and accommodation providers cannot be reasonably expected to evict guests for the purposes of observing a public holiday, whilst cafes and restaurants need to remain open to offer their services to the mass of populace that are not at work.
For some therefore, accepting a penalty (through the form of an increased labour cost) is not a choice, it is simply a reality of operation. Naturally, one must then question what is reasonable in applying this penalty. The hospitality industry has the highest percentage of casual employees of any industry sector, with 64.6 per cent of employees having no paid leave entitlements, according to the Australian Bureau of Statistics. The penalty for employing a casual on a public holiday is 275 per cent under the Hospitality Industry (General) Award. To put this in perspective, a trade qualified chef, working on a public holiday under that award is entitled to $54.01 per hour – as a minimum. A general waiter is banking $49.56 an hour.
