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Sunday penalties and restaurants – not exactly a brave new world

Yesterday, web pages were aflutter with comments by celebrity chef George Calombaris about the high cost of paying staff to work on weekends.

An article in The Power Index reported Calombaris complaining that he’s looking down the barrel of paying his restaurant staff ‘$40 an hour on Sundays … and it’s not like they’ve had to go to uni for 15 years’.

‘The problem is that wages on public holidays and weekends greatly exceed the opportunity for profit … it’s just not a good business practice to be paying penalty rates. It’s really difficult to stay open and we only do it because of tourism but the reality is it’s uneconomical,’ he said.
‘So our labour laws are something that need to be looked at and we keep talking about it.’

Here’s my problem. Labour laws are being looked at. Lots of people have been looking at them for a very long time. So when The Power Index reported that Calombaris had ‘launched a spray at the Gillard government’s Fair Work Act, claiming that public holiday and weekend penalty rates have the potential to force his new restaurant venture to the wall,’ I just couldn’t figure where Calombaris had gotten his information from.

Firstly, the minimum wage for full-time trade-qualified (four year apprenticeship) wait staff and chefs under the modern Restaurants award is $18.06 an hour. For working on a Sunday, anytime between 12 in the morning and 12 at night, the rate is $27.09. A casual with the same trade qualification would receive $31.61, a rate which includes their casual loading and removes any entitlement to any guarantee of hours, and any holiday or sick leave. So if George is paying $40 an hour, perhaps he has recognised that in order to attract quality staff, an employer must offer a rate of pay more generous than his or her competitors. That’s called the market.

Of course, I’m pleased that Calombaris is complying with minimum award conditions. An audit of the Hospitality sector conducted by the Office of Fair Work Ombudsman in 2009 found that 33% of audited businesses were found to have breached award conditions. And this was after the FWO had information to 27 stakeholders, worked in conjunction with the Australian Hotels Association, and sent over 7880 educative letters to employers in the hospitality sector. Disappointing to say the least. It’s one thing to have an opinion on workplace law and to argue your case to change it. It’s another to simply ignore it and hope it will go away while you run your business on your own terms.

But this is nitpicking really. A dollar here, a dollar there. Calombaris’s point was really that the laws need to be looked at.

What a relief to find out that Fair Work Australia, the tribunal that determined the modern awards, is obliged by law to review all modern awards this year. Submissions by any interested party who would like a say about how the awards are working and what they think should change are open until 8 March. I look forward to reading Calombaris’s submission.

Perhaps then we will understand why Calombaris thinks that these laws in particular, the ones to do with penalty rates for waiters in restaurants, need to be looked at? Clearly it’s because they’ve come out of the blue and have surprised Australian restaurateurs with their new fandangled approach to working during hours when the rest of us get to spend time watching the cricket or walking the dog.

Yes, the modern award is new. But it was created using existing award entitlements as their basis. Employers in New South Wales for instance have long been paying time and a half for Sundays. Tasmanian and Victorian restaurateurs would have been pretty pleased when the modern award became operational, as their Sunday penalty obligation used to be time and three quarters. South Australians, well – bosses there are no doubt keeping quiet on this debate. Their Sunday penalty has come down from double time.

Is Calombaris really saying that penalties will mean the end of restaurants? The Western Australian state award, in operation prior to the modern award, was established in 1979. How pleasing that the restaurant industry in WA has managed to survive both the recent global economic downturn, as well as the recession that followed on the heels of the creation of this state award. And what a relief to recall that when Australia’s first minimum wage was established in 1907, a wage that that was determined with regard to ‘the normal needs of the average employee, regarded as a human being living in a civilised community’, the sky failed to fall in then too.

Already, restaurant and IR folk alike are chatting about Calombaris’s comments. Indeed, economist and trade unionist Matt Cowgill writes far better than I on the subject. But to paraphrase Matt, perhaps before a high-profile restaurateur makes such public statements, he may be better served by doing a little more homework.

Comments

  1. work in hospitality and you get $40 an hour. work at a school as a tutor or as a disabilty support worker and you get $20. there’s something inherently wrong with this scale. goes to show how linked in wages are to consumerism.

    • I think that there is a link between consumerism and what the market will pay, but it needs to be remembered that the minimum award rate (so, in this example, $31.61 for a casual) is a result of industrial activity over the years by employees and unions, who have pushed for for better minimum conditions.

  2. Oh… but there is a fabulous way around this $40 per hour bizo… Put your staff on as permanent part time, negotiate a Fair Work hourly rate with them, and you could be paying as little as $19, $20 per hour for any day, any night, any time…

    • You use the word ‘negotiate’ here. If an employer wants to adjust hourly rates so as to balance out penalties (ie. increasing the hourly rate during the week from, say, $16 to $19 an hour and paying that flat rate of pay for all hours worked), two things need to happen:

      Firstly, the tribunal needs to be satisfied that this new rate makes the employee “better off overall”; that is, will this employee be getting a better deal at the end of each week on this higher flat hourly rate than they would be if they recieved their lower hourly rate during the week and a higher rate during times when penalties would normally be paid? If the answer is no, the agreement doesn’t pass the test.

      Secondly, and most importantly, the employees have to agree to it. It’s an agreement. If the employees don’t want a flat rate, then it’s up to them to say no. Yes, in some industries, it’s complicated: employees may not know what rights they have, employers may press their staff to agree, but again there are protections in place. I’m happy to agree that there needs to be more education in places so that workers in these kinds of work environments are equipped with the knowledge and skills needed to deal with such agreements, but at the end of the day, it is an agreement.

      • Hello Isy, you use the word ‘agreement’ here… Yes, I can say no to a negotiated flat rate if I live in a geographic area where there are many other employers offering employment, Yes. I can say no if I have enough social capital to believe my time and contributions are worth more than the $ amount being offered, Yes, I can say no if I don’t really need a job.

        I apologise for nitpicking (we do seem to be on the same side of the argument), however it seems to be a case of great theory that lacks in practice. I suppose it is good that the theory, at least, exists.

        • Not nitpicking at all Michelle – you’re right, we are on the same side, and yes, it is hard for people in all of the situations you’ve mentioned. Having a collective voice in these situations are all the more important in situations where individuals are under more pressure to agree to whatever offer is being put on the table.

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