Restaurant owners happy to pay less on Sundays

For workers in the hospitality industry, rising early for a Sunday morning shift after Saturday night’s revelry is worth it - if only for Sunday penalty rates. 

This has been the case since 1 January 2010, when the relevant modern award, the Restaurant Industry Award introduced the penalty rate regime (see clause 34.1 ).

From 1 July 2014, however, Sunday penalty rates for many hospitality workers will reduce by 25%, following a Full Bench decision of the Fair Work Commission in Restaurant and Catering Association of Victoria - Re Restaurant Industry Award 2010 [2014] FWCFB handed down on 14 May 2014.

The decision will affect employees in the restaurant industry, which includes most hospitality workers, but not those in fast food outlets or restaurants in hotels or clubs.

The decision was a result of the modern award implementation process, which requires the Commission to review awards as soon as practicable after the second anniversary of their commencement, to check if it is achieving its objective of providing a “fair and relevant minimum safety net” of employment terms and conditions (section 134 of the Fair Work Act 2009). 

In deciding whether the award is “fair and relevant”, the Commission must consider numerous factors, including the need to provide additional remuneration for employees working on weekends.

The Applicants in the matter, the Restaurantand Catering Association of Victoria, Australian BusinessIndustrial and 16 private restaurant businesses, filed an application to the Commission seeking a number of changes to the award, including cdecreased weekend and public holiday penalty rates.

The application was first heard at the Commission by Deputy President Gooley, who after four days of evidence from employers, economic experts and academics, rejected (among other requests), the proposal to reduce Sunday penalty rates. 

Deputy President Gooley’s decision was based largely on there being “insufficient or no evidence that the proposed changes would improve productivity or encourage collective bargaining” [at 30].

The Applicants appealed Deputy President Gooley’s decision to the Full Bench, which on 14 May 2014, granted permission to appeal, finding that there was a sufficient public interest to be determined in the outcome. 

The Full Bench then quashed the Deputy President’s decision regarding Sunday penalty rates on the basis that the Deputy President had determined the matter “by reference to the test of whether there had been a significant change in circumstances since the making of the Restaurant Award and, as a result, did not consider the matter in accordance with the relevant requirements of the Transitional Act” [at 154].

Finding that 6 of the 9 elements of the Award’s objective were “detrimentally affected” by Sunday penalty rates, which were failing to achieve the “fair and relevant” objective of the award, the Full Bench then decreased Sunday penalty rates from 50% to 25% [at 303].

Unsurprisingly, United Voice, representing the industry’s employees, is upset, and considering an appeal, and Restaurant and Catering Australia is ecstatic, immediately issuing a press release praising the outcome of its “historic” fight.

The effect of the decision will be felt by the industry’s workers - a force already “low-paid compared to other industries”, with a “lower skills base” and made up primarily of students and women with children.

Emma Pollett-Sutton
Lawyer

Anyone seeking advice about workplace laws should contact Nevett Ford Melbourne Lawyers on 03 9614 7111.