Most of you would have heard the announcement

Penalty Rates Cut Sunday and Public Holidays‘ for the Retail, Pharmacy, Hospitality and Fast Food industries.

The Fairwork Commission’s decision to cut penalty rates has brought controversy with a shake up to wages affecting business owners and employees working in these industries.

Why did the Fairwork Commission decide to cut penalty rates?

It is estimated that 2 in 3 small businesses fail within the first 5 years of business.  Working in the Bookkeeping industry, we work with many small businesses, some often struggling to survive.  Profit margins are tight. In the hospitality industry, wages expenses should be approximately 30% of sales.  Take employees base rate of pay, add penalty rates and 9.5% superannuation, this is near impossible to achieve.

Sundays and Public Holidays are a big part of our consumer behaviour and social lives.  We are an instant society expecting convenience when shopping and dining at the lowest price possible.

Whether you want a burger or coffee on Monday or Sunday from your local take-away, the price remains the same. Penalty rates paid to employees increase the cost of sales and pressures on small business owners.  Yes, in some cafés or restaurants you are charged a surcharge to dine on a Sunday or on Public Holidays.  With the cut to penalty rates, us as consumers will no longer be penalised for enjoying our dining experience.

At present, inflated labour costs see many businesses trade limited hours on Sunday and close Public Holidays reducing hours available for employees.  The Fairwork Commission believe reducing penalty rates for Sundays and Public Holidays will increase hours of operation and opportunities for employment stimulating our economy.

 What will be the impact for employees?

People working in the retail and hospitality industries often work Sunday’s and Public Holidays to pay bills, student loans and provide for their family.  Reducing penalty rates for employees could have a significant impact on their income and ability to meet financial commitments.

Since the announcement, many business owners have stated they will not cut employee wages in line with the new penalty rates.  Their business model understands that loyal staff are invaluable. Employers offering secure employment, rewarding conditions and higher remuneration benefit from greater productivity.  For employees working for business owners not implementing the changes will see no impact on their wages.

What are the changes and when will the changes commence?

The Fairwork Commission has indicated penalty rate changes will begin to take effect on 1st July 2017.   The table shows the changes in penalty rates.

Penalty Rate Cuts table of changes

At Account Aspects, we work with many small business owners and their employees affected by the penalty rate changes.  Payroll is an important service we offer as part of our Bookkeeping packages.  Discussing and implementing the penalty rate changes will help create a smooth transition.  Contact us to discuss our services today.