What Sunday Penalty Cuts Really Mean For Small Businesses

Categories Trends and News

Lowering Penalty Rates

The recent ruling by the Fair Work Commission to lower the Sunday penalty rates has brought celebration to small business owners throughout Australia.

This decision couldn’t come soon enough for companies in the service industries of hospitality, fast food, retail, and pharmacy who have been at the mercy of inflated Sunday wage rates for quite some time.

The Impact

With this issue being main stage in the media over the past while, both sides of this issue have been passionate about sharing the impact of what slashed penalty rates mean for those affected.

Retail and business groups who operate in the 24/7 economy and led the charge to lower these rates hoped that reduced Sunday penalty rates would allow businesses to stay open for longer hours on Sunday.

Against The Change

Opponents of the change, including unions and retail and hospitality workers, advocate that reduced Sunday rates would have negative repercussions for the country’s lowest paid workers who depend on these penalty rates to survive.

Now that the ruling has been passed, what do these penalty rate cuts really mean for small businesses in the future?

How Penalty Rates have Affected Small Businesses

Let’s look to the past first and see how small businesses have been impacted by these penalty rates.

In early 2015, a survey was conducted by the Chamber of Commerce and Industry Queensland to poll over 1,000 small businesses to assess the severity of the Fair Work laws, including the Sunday penalty rates on their business operations.

Results showed that 74% of those small businesses in the retail industry were adversely affected by the penalty rates and had to reduce both operating hours and staff hours as a result.

27% of the businesses within the hospitality, entertainment, and retail sectors did not open on Sundays and an astonishing 71% of these businesses blamed the steep Sunday penalty rate as the main reason for their decision.

The heavy financial burden placed on small businesses by these penalty rates can be further highlighted by the following survey responses.

A retail business in Toowoomba elaborates…

“Penalty Rates for Sundays are ridiculous and unsustainable. We have cut our opening hours on Sundays and may end up closing altogether on Sundays. Our staff want to work weekends as that’s the only time school and university students are available, but we simply cannot afford to pay double time on a Sunday. We are losing our business to large chains that pay less in wages for junior staff on weekends.”

Furthermore, a café and restaurant business in South Brisbane continues…

”We currently operate on absolutely skeleton staff on a Sunday which leads to customer complaints, but we cannot add any staff as we would lose money. The Saturday rate would allow us to staff to the correct levels.”

The Claims of Cutting Sunday Penalty Rates

Small businesses have been rallying for changes to these penalty rates for some time and argue that they are unable to open on Sundays because of the high cost of employee wages.

Some of the outcomes they hoped to experience once the lowered penalty rates were finalized were…

  • Be open on Sundays or increase Sunday operating hours
  • Hire more staff
  • Increased revenue due to longer opening hours and increased staff levels
  • Reduction in prices
  • Better customer experiences due to more staff and availability of hospitality businesses on Sundays

What’s Actually Happening Now

Once you get past the celebratory cheers and victory parties, how do these changes actually affect small businesses in their day-to-day operations?

Slow Phase In

Advocates for the penalty changes had hopes that these changes would be implemented and phased in over the next two years. Unfortunately, these changes will be spread out over four years and will not be completely phased in until 2020.

This has angered and disappointed some retailers who were hoping to have a break in penalty rates so they could focus on improving their customer service by hiring more staff to work the floor. It appears that this won’t be happening any time soon.

Delay in Job Creation

Because of the slow phase in, many hospitality and retail businesses believe that the slow transition to lowered penalty rates will only hinder and delay the creation of promised new jobs.

This will also have a detrimental effect on the growth on the industry as a whole.

Workers are Still Costly

Some independent business owners are still struggling with the Sunday wage rates despite the recent penalty cuts.

One small business owner in Brisbane who solely runs her retail shop herself has considered hiring an employee on the weekends to help her out but still finds it hard to justify the extra expense of having someone there on Sundays.

Holding Off on Penalty Cuts

Some business owners want to show their valued staff how much they appreciate them by holding off on the reduced penalty rates.

Ahmad Bayad, owner of the Coffs Harbour fast food outlet, believes that keeping his team motivated, especially casuals, is critical to the success of his business and so has decided to keep the penalty rates on hold.

He says “We want to reward staff who’ve been loyal to us and hopefully they’ll want to stay with us. When morale is good, customer service is good”.

Other businesses are also holding to the current rates in order to stand out from the crowd and to attract and retain exceptional staff.

Despite the proposed benefits of Sunday penalty cuts, it still may take some time to see positive changes within your small business.

References:
https://www.cciq.com.au/news/businesses-confirm-they-would-hire-if-penalty-rates-cut/

http://www.smh.com.au/business/workplace-relations/full-cuts-to-sunday-penalty-rates-delayed-until-2020-20170605-gwkojr.html

http://www.news.com.au/finance/work/at-work/what-penalty-rate-cuts-mean-for-you/news-story/c2a1c2b334f9a086d7fa4ce6554c998e

http://www.abc.net.au/news/2017-06-24/businesses-hold-off-passing-on-cuts-to-sunday-rates/8648870

http://www.theaustralian.com.au/national-affairs/industrial-relations/big-business-challenges-employers-to-use-penalty-cuts-to-create-jobs/news-story/dc561914e17387aff8a154aafcacf8bc

http://www.theaustralian.com.au/national-affairs/industrial-relations/weekend-penaltyrate-cuts-kick-in-but-workers-are-still-too-costly/news-story/921613b9fb2b8bd75c022913eb842d11

https://www.steadfast.com.au/well-covered/business-edge/2017/06/why-reducing-penalty-rates-is-good-for-business.aspx

https://www.steadfast.com.au/well-covered/business-edge/2017/06/the-argument-against-cutting-penalty-rates.aspx

http://www.abc.net.au/news/2017-02-23/the-cases-for-and-against-changes-to-penalty-rates/8295872

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