EXCERPT FROM WR (AUTUMN 2012)

Jeff Phillips On the Case*

Normally this section of Workplace Review analyses a recent employment law decision and the consequences which may flow from it. There is a departure of that tradition. This article invites the employers in certain industries to stop complaining about penalty rates and embark upon applications before industrial tribunals in order to test and have such claims adjudicated.

There has been a preponderance of comment, particularly in light of the review of the Fair Work Act 2009 (Cth) regarding penalties rates, notably in The Australian. The renowned industrial relations commentator, Professor Judith Sloan, has spoken authoritatively about the difficulties businesses face concerning such rates, especially in the food, hospitality and retail industries.

The Fair Work Act trumpets the operation of modern awards, but in some areas do these modern awards reflect modern Australia? The authorities that establish penalty rates for weekend work hark back to a bygone era. The language and the concerns found in those cases reflect the adage, “the past is a foreign country”.

In 1919, Higgins J in the Gas Employees Case (1919) 13 CAR 437 at 469 said this of Sunday work:

The true position seems to be that extra rate for all Sunday work is given on quite different grounds for an extra rate for work on the seventh day. The former is given because of the grievance of losing Sunday itself – the day for family and social and religious reunions, the day on which one’s friends are free, the day that is most valuable for rest and amenity under our social habits; whereas the latter rate is given because seven days per week for work are too many. This involves that even if time and a half be paid for Sunday work; there should be extra pay also for the seventh day of work. But the extra pay should be time and a half, not double rates. The norm of work being six week days and Sundays free, the payment for departure from the norm should be two time and a half rates, which is equivalent to one double rate.

Conciliation Commissioner Blackburn in the Tramway & Gas Employees Case (1948-1949) 62 CAR 558 at 564 said as follows:

It is undeniable that, in our civilisation, Sunday, above all other days, is the recognised and accepted day of rest from labour. From the earliest Christian teaching to refrain from all unnecessary work and labour on Sunday, that day has been treated as a day apart and of different import from Saturday. The Unions, therefore, urge that the rate of pay for work which the community demands shall be done on a Sunday should be appreciably greater than the rate for work done on Saturday – a more convenient day of community recreation and pleasure.

However, the Industrial Commission of New South Wales in Re Engine Drivers General (State) Interim Award [1950] AR (NSW) 260 at 267 left open opportunities to review such penalty rates for weekend work should circumstances within the community change. The Commission said as follows:

From the foregoing review of decisions it would be seen that at the present time this Commission accepts that time and a quarter rate is a proper standard but it does not follow that this standard is immutable; like all such general findings, it must be subject to review from time to time with alterations of social, industrial and other relevant conditions.

In our opinion, additional rates for week-end work are given to compensate the employee having to work on days which are not regularly working days for all employees in the 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.

Drake-Brockman J, in the South Australian Railways Case (1935) 35 CAR 370 at 372 identified that the reason why industrial tribunals impose penalty rates is to discourage that sort of work. Discussing the need to impose penalty rates he said as follows:

They are not imposed for the purpose of increasing the rates of pay. They are imposed for the purpose of discouraging employers from employing men under conditions likely to impair their health, or for the purpose of discouraging certain kinds of work, or working under particular conditions. A good illustration of that, perhaps, is the penal rate ordinarily imposed for overtime. The court does not give extra pay for overtime work because it wants to increase the amount of pay to the man, but for the purpose of discouraging employers from working overtime where it possibly can be eliminated.

Having looked at the social context in which successful arguments were run to impose penalty rates, or more particularly what Drake-Brockman J described as “penal rates” on employers for certain sort of work, one has to recognise that 21st century Australia has radically changed from the era when such penal rates were imposed. The idea that Sunday in Australia is set aside for religious observance of a Christian kind does not recognise the fact that Australia is a secular society, post-Christian and a society where there are many other beliefs which do not necessarily hold Sunday sacred as the day of worship. Further, the idea of the family sitting around the dining room table for a Sunday roast leg of lamb is a snapshot of a long-lost Australia. The way in which people wish to perform work has changed. There are many people who would like to have the opportunity to work on the weekends, such as students in full-time education, or workers engaged in other industries during the week, or people who would prefer to vary their working days as a matter of choice. Employers, particularly in the restaurant industry, say they cannot employ extra staff on Saturdays and Sundays because of the proscriptive award rates of pay under the so-called modern award. It also fails to recognise that Australian employers, particularly in the retail industry, are competing against other global retailers by way of the internet and because of the comparatively cheap airline flights that make shopping overseas very price attractive.

In The Australian of 12 January 2012, the following rates of pay were stated of a Level 1 retail employee aged 21. Such an employee has a weekly rate of $647.10 per week, which translates as an ordinary hour rate of $17.03. However, it becomes on Saturday an hourly rate of $21.29 and on Sunday an hourly rate of $34.07 and a public holiday rate with a minimum of three hours of $42.59. Other employers have stated they cannot employ staff on Sundays, but if they could have employees choose their span of hours which may include Saturday or Sunday work at ordinary time, they could employ many more. This debate has concerned complaints by employees in the print media.

The time has come when employers should put up or shut up and make a case before Fair Work Australia for a change to penalty rates in the interest of themselves, their employees and the wider community.

Jeffrey Phillips SC, Barrister, Denman Chambers, Sydney.

* The full citation is (2012) 3 WR 26.