Restaurants and cafes call for fair go on penalty rates

As a result of the Modern Award system introduced by the federal government in 2009, the costs of employing staff in the hospitality sector are spiralling upwards at a rate that makes opening on weekends simply unaffordable for many small businesses, says NSW Business Chamber.

The Chamber, in association with Restaurant & Catering Australia, is calling for a new approach to penalty rates in an application lodged with Fair Work Australia.

The application proposes that employees under the Restaurant Industry Award 2010 should be paid standard award wages for the first five shifts in any week and then attract penalty rates on the sixth and greater shifts over a seven-day period.

“Under this proposal, the sixth time someone gets out of bed and goes to work they will be paid a higher premium for their time regardless of the day. This removes the distortion for Saturdays and Sundays and better rewards the commitment of employees to a business.

“We all know of examples where our favourite cafes and restaurants are closed on Sundays. That’s because the owner simply can’t afford to pay staff penalty rates. Many actually lose money if they open for customers.

“A major cruise liner came into Sydney Harbour earlier this year. Passengers disembarked to have breakfast on a Sunday morning, and within half an hour most had returned to the ship because there were such limited options for dining in Sydney on a Sunday morning.

“It’s actually embarrassing that a global city like Sydney makes this impression on international tourists, let alone its own residents.

“The federal government’s inflexible approach to workplace regulation is slowly strangling the life out of small businesses; we have to change it before it does further damage to employment.

“The lure of penalty rates is meaningless for staff if a business can no longer afford to hire them.”

John Hart, CEO of Restaurant & Catering Australia, said that penalty rates are pricing restaurants out of the market and threatening the employment prospects of workers. “An award that adds 70% to a Saturday wage bill and 100% to an hourly rate on a Sunday is forcing many business owners to earn less than the minimum wage or simply close their doors,” Hart said.

“The restaurant industry’s core trading times predominately occur during weekends and weeknights. Accordingly, by imposing penalty rates on weekends and weeknights, the award is currently penalising restaurants for trading in their core working hours,” Cartwright said.

“The challenge for businesses in the hospitality sector is that the prohibitive costs of employing staff during these periods are growing exponentially as a result of the modern award process. It is simply becoming unaffordable to be expected to pay staff penalty rates on a Sunday, retain the same prices for goods and services and still make a profit.

“Cafe owners can’t simply double the prices they charge their customers in order to recoup their wages bill on a weekend.”

Cartwright said he had been bombarded with real-life examples of small businesses that were struggling to remain viable on weekends as a result of the prohibitive cost of employing staff.

Variation to penalty rates

The application seeks to vary penalty rates in respect of Saturday shifts, Sunday shifts and night shifts. Currently, penalty rates are imposed on the following basis:

Shift	Penalty
Saturday	25%
Sunday	50%
10.00 pm - 12.00 am (weeknights)	10%
12.00 am - 7.00 am (weeknights)	15%

The application seeks to replace the above penalty rates with a penalty rate that only operates if an employee is required to work on more than five consecutive days. The new provisions would apply as follows:

Shift	Penalty
First five days of work (regardless of the actual day work is performed)	N/A
6th consecutive day of work	25%
7th consecutive day of work (and subsequent consecutive days)	50%