14 Mar 2013

Federal Government flags change to Fair Work Act to protect penalty rates in law

By Saul Harben, Steve Bowler

In a move which is sure to create controversy among employers and business groups, Prime Minister Julia Gillard has announced that the Fair Work Act will be amended to include a new modern award objective which essentially enshrines an employee's right to be paid penalty rates into law.

Speaking at an ACTU work summit in Canberra, Ms Gillard indicated that a specific provision will be inserted into the Fair Work Act that guarantees that workers covered by a modern award will receive higher rates of pay for work performed outside of normal hours.

Outlining the changes, Ms Gillard stated: ''We will ensure that penalty rates, overtime, shift work loading and public holiday pay are definite, formal considerations for the Fair Work Commission when it sets award rates and conditions. We will make it clear in law that there needs to be additional remuneration for employees who work shift work, unsocial, irregular, unpredictable hours or on weekends and public holidays.''

The announcement has been welcomed by the ACTU and represents a victory for unions in their campaign for legislative protection of penalty rates. In contrast, the proposed change has already attracted criticism from business groups that locking penalty rates into law will further reduce flexibility for employers and have a significant impact on small businesses.

The decision by the Federal Government is likely to be seen as a rebuff to business, which has been lobbying for work performed at night or on weekends to be paid at the same rate as weekday work, particularly in the retail and hospitality sectors. This also comes in the wake of the recent rejection of Senator Nick Xenophon's proposed bill to exempt small businesses from paying penalty rates.

The announced change will mean that the Fair Work Commission will not be able to exclude penalty rates from a modern award when it determines award rates and conditions, regardless of the nature of the industry to be covered by the award, or the effect this will have on employers.

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