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Give restaurant and cafe owners a fair go on penalty rates

Give restaurant and cafe owners a fair go on penalty rates

Over the last 20 years or so, Australians have developed a true appreciation for the social ritual of the Sunday morning catch up with friends or family over breakfast or lunch at our local café or restaurant.

Yet, as the demand from customers for access to weekend dining steadily increases, it seems odd that more and more cafes and restaurants are closed on Sundays. Why is that?

The simple truth is that small business owners of cafes and restaurants are being hammered by an out of date workplace relations system that penalises them with huge employment costs for just trying to open during these peak demand periods.

The term “penalty rates” is appropriate given that they penalise everyone involved – the business owner can’t afford to open, the customer goes without service, the staff are not hired for the shift and the government is denied taxes from the extra day of trading – it is a lose/lose/lose/lose scenario.

The idea of penalty rates stems from a time in the past when weekends were considered sacrosanct, where most businesses were closed and where the main streets of suburbs and towns were empty and quiet as a result.

Community expectations have long since changed, and our suburban and regional shopping strips are now alive on weekends, but the employment laws have barely left the 19th century, and are driving us back to the olden days of closed weekends.

The Federal Government started the process of ‘modernising’ Australia’s industrial awards system back in 2009. Awards are the rules that govern how workplaces operate in hundreds of industries across the country, and particularly how much an employee gets paid on which days and during which times. There used to be thousands of such awards, but the Government decided to cut them down to just a few hundred. Sounds like a good idea. But the process of rationalising the number of awards has resulted in a “highest common denominator” approach where the most generous award provision have been adopted and then applied to all industries regardless of the vastly differing needs of those sectors. And it’s these new higher penalty rates that are killing Sunday trade. Just another example of how good ideas deliver unintended consequences when they are poorly executed.

Did you know that in January, a major cruise liner came into Sydney Harbour, unloaded its passengers to enjoy breakfast in the city, but within half an hour most had returned to the ship because there were such limited options for dining in Sydney on a Sunday morning!

Currently, a café or restaurant which opens on a Saturday has to pay 25% more in wages, and a shocking 50% more on a Sunday, regardless of whether the staff would actually prefer to work on weekends due to week day commitments like university. The owner is being slugged for providing the service that their customers demand. The current award system is simply unfair. It’s unfair for the business owner who has to close or operate at a loss for trying to meet their customers’ expectations, and it’s unfair on the staff that want to work but are being denied shifts due to exorbitant penalty rates.

That’s why the NSW Business Chamber, in partnership with Restaurant & Catering Australia, are asking Fair Work Australia for a new way of paying penalty rates.

Penalty rates are appropriate in certain circumstances, but we need a fairer approach to how they are applied. We are simply seeking to remove the penalty that is attached to trading on particular days of the week.

Under our proposal, employees will be paid penalty rates if they work more than five consecutive shifts. Basically, the sixth time someone gets out of bed and heads to work, they will be paid a 25% bonus, and then a 50% bonus for the seventh or more time that they work in any week. This is a common sense approach that will remove the financial burden that is preventing small businesses from opening on weekends and reward the loyal staff that work extra shifts to support their employer’s business.

If a business is closed, it doesn’t matter what the penalty rate is, no employee will be receiving it. It’s in everyone’s interest for a business to be open, providing services to its customers, creating jobs and contributing much needed tax dollars to the government’s coffers. But we need a new “modern” approach to penalty rates if this is the outcome that we want to achieve.

The so called “modern” award system is broken, and the time has well and truly come to fix it.

Stephen Cartwright
Chief Executive Officer
NSW Business Chamber


Posted: 1/05/2012 8:10:10 AM by Stephen Cartwright | with 5 comments
Dianne Palmer
I too offer my support of such a well thought out and balanced position.
18/09/2012 11:33:02 AM

Please, this makes too much sense. As a non-business person I totally agree with this idea, it's fair on everyone and ensure business staffind needs are matched with staff preferences and appropriate staff skills. I would tweak the days/rates a little though to be a little more fair to staff.
5/06/2012 12:10:06 PM

Kathy Balodis
I own a restaurant/cafe in Port Macquarie, open every day except Christmas Day. The reason I survive wages on the weekend is the use of salary staff as well as the volume of business due to everyone else closing. Whilst that sounds appealing the fact is you cannot provide the right customer service you should be. The proposal you have suggested is excellent. The current Fair Work philosophy is the concept we live in a non global world Monday-Friday. The world has changed, Asutralians want to shop, dine, go to attractions and work on any given day of the week. The philosophy of Fair Work needs to understand this shift in society and reflect society needs/wants in their conditions. The proposal is excellent.
2/05/2012 1:53:46 PM

Bettina Esposito
In August this year (2012) I am celebrating 2 years of running a cafe on the Central Coast, NSW. I work 6 days per week/ 12 hours a day and work both saturday and sunday ( I am also a mum to 2 school aged children). The cafe struggle to pay my staff the normal rate of pay, let alone the penalty rates. On public holidays I cannot afford to open the cafe. I did open on a recent public holiday, but only because family members came in and worked for free (free lunch). The overheads like rent, electricity, food cost, 10% GST on most sales and the staff penalty rates simply will see many of us small business owners having to resort to closing. We can't exactly charge our customers extra. I completly support 100% the move for change
2/05/2012 1:52:35 PM

Michael Coffey
I have a very successfull family cafe in Tamworth which employ's a total of 19 staff, I used to trade 7 days a week with only Christmas Day & Good Friday off.
Each shift requires 2 Chef's, 1 Kitchenhand, 3 Waitstaff, 2 Barista's and myself as a floor supervisor, a total of 9 staff.
The last pay period included a Saturday, Sunday & Public Holiday, because I pay the correct wages and don't rip my staff off - unlike some of my competitors. For that week I lost $250 because of penality rates. I will not be opening on Sundays or Public Holidays again
Also employing non professional staff ie Uni students etc means you need to employ twice as many staff to get the same job done.
Our waitstaff need to be treated and trained as professionals for us to attract and retain good staff.
A formal apprenticeship for them would be a start!!
2/05/2012 1:00:28 PM

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