Monday, December 21, 2015

Penalty Rates. Is it Time to Scrap Them?

Several times during the last 20 years, various Australian governments have discussed removing penalty rates for employees who work on weekends, public holidays and hours outside normal business hours.

Most of Australia's low-income employees work in the retail sector which pays absolute minima allowed by law. Others who typically get penalty rates are police officers, fire officers and medical staff, however, these latter occupations receive much higher base rates than retail sector workers.

It is arguable that some base salaries are determined with the assumption that they will earn penalty rates and, therefore they are set lower than perhaps would be the case.

This means that a trained nurse working regular 8 am to 4 pm shifts earns less than a cohort working regular shift work.

Having worked shift work and regular hours, I believe there is an argument for people to receive some shift penalties. If they were removed in nursing for example, many more nurses would want 8-4 jobs (of which there aren't that many).

There would be a disincentive for employees to work outside normal business hours and many would choose not to.

The definition of "normal business hours" once referred to Monday to Friday between 8 am and 5 pm. People were allowed two days off and Sunday was the day when true believers went to church.

Now, numbers going to church have diminished and Sunday is no longer considered a "holy day" in Australia. Normal working hours in many sectors, including retail now include Saturdays and Sundays.

This is the argument governments are using to try to rid us of penalty rates. The governments also say that lower salary costs would increase employment. Their argument has some validity.

When my wife, a senior midwife, works on a Sunday or public holiday, she receives a salary for the day that could only be called ridiculous, if not obscene. Her daily salary skyrockets - as does her tax.

While I believe employees need some benefit from working odd hours, I would opt for a flat rate payment rather than a percentage loading eg, in Australia 1.5 for the first three hours and twice hourly rate thereafter. Christmas Day I think is treble time.

Maybe an out-of-hours allowance of 15-20% of the normal daily salary would be an improvement. It could be a different percentage for different days/hrs if necessary.

Retail sector sales assistants receive on average just under $19 per hour in Australia.

What penalties are paid in your country, if any and are many shops open on Sunday? What do you think about getting rid of penalty rates?


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