Fair Work Act 2009
s.156 - 4 yearly review of modern awards

4 yearly review of modern awards – penalty rates – hospitality and retail sectors

CONTENTS

ABBREVIATIONS

1. Introduction

4 yearly review

[1] Section 156 of the Fair Work Act 2009 (the FW Act) provides that the Fair Work Commission (the Commission) must conduct a review of all modern awards every four years (the Review).

[2] As detailed in a statement issued on 6 February 2014, 2 the Review consists of an Initial stage (dealing with jurisdictional issues), a Common issues stage and an Award stage (which would review all modern awards in four groups).3

[3] As part of the Review, various employer bodies have made application to vary penalty rate provisions in a number of modern awards. These applications have been heard together.

[4] In an Issues Paper dated 24 February 2014, the Commission indicated its preliminary view that proposals to vary penalty rates would not be dealt with as a common issue, but would be dealt with in the Award stage of the Review. 4 This preliminary view was confirmed in a Statement and Directions issued on 17 March 2014 and it was noted that the penalty rates matter would be dealt with by a separately constituted Full Bench. 5

[5] The modern awards subject to claims are:

[6] This decision deals with those claims.

[7] Table 1 below sets out claims employer parties have made to reduce weekend penalty rates in respect of each award that is the subject of this decision. Table 1 sets out the current penalty rates for work performed on a Saturday and Sunday in each award, and the proposed change for each award is highlighted in red text.

Table 1

Weekend Penalty Rates

¹ Level 1–2 employees receive a penalty rate of 150% on Sundays, Level 3–6 casual employee receive 175%.

² ABI have made a claim in relation to the Restaurant Award to reduce the public holiday rate only.

³ The Retail employers are also seeking to reduce the penalty rate for shiftworkers on Sunday from 200% to 150%.

⁴ There are currently up to four penalty rates, based on the time of working

[8] The principal parties to the proceedings are identified in Chapter 5.1.

[9] In a statement on 8 September 2016 directions were issued in which we sought to clarify the status of the various claims before us in the penalty rates proceedings. A draft summary of the claims was issued along with the statement, requesting parties’ comments.

[10] Australian Business Industrial and the New South Wales Business Chamber (ABI) confirmed that the variations to the Hair and Beauty Industry Award 2010 which had been proposed by ABI and the Hair and Beauty Australia Industry Association, were no longer pressed. Correspondence was also received from Restaurant & Catering Industrial (RCI) confirming that its claim in respect of clauses 34.4(c) and 34.4(d) of the Restaurant Industry Award 2010 was no longer pressed.

[11] No correspondence was received from other parties in relation to the draft summary.

[12] A finalised version of the summary was republished as a statement on 12 October 2016. 6

[13] In addition to the claims set out in Table 1 above, a number of other claims have been made. These claims generally relate to the public holidays clause, for example the Hospitality Employers (the Australian Hotels Association and the Accommodation Association of Australia) seek to introduce a two-tiered regime into the Hospitality Award in respect of public holiday penalty rates under which higher penalty rates are prescribed for work performed on the public holidays specified under s.115(1) of the FW Act. Other claims seek to reduce the existing penalties paid for work on public holidays. We set out all these claims in more detail in Chapter 9. Claims have also been made seeking changes to the early/late night work penalties in a number of the awards.

[14] We deal with each claim in detail later in this decision.

[15] As noted in the Statement issued 17 December 2014, further proposals to alter penalty rates in other modern awards will be dealt with on an award-by-award basis in the award stage of the Review. 7

1.1. The Process

[16] After a consultation process, a consensus emerged among interested parties that the modern awards and issues in relation to penalty rates would be dealt with jointly but sequenced into three ‘groups’, as follows:

(i) Common evidence—evidence relevant to the consideration of claims in all awards and industry sectors.

(ii) Hospitality group—includes the following awards:

Amusement, Events and Recreation Award 2010
Hospitality Industry (General) Award 2010
Registered and Licensed Clubs Award 2010
Restaurant Industry Award 2010

(iii) Retail group—includes the following awards:

Dry Cleaning and Laundry Industry Award 2010
Fast Food Industry Award 2010
General Retail Industry Award 2010
Hair and Beauty Industry Award 2010
Pharmacy Industry Award 2010

[17] Applications to vary the Amusement, Events and Recreation Award 2010, Dry Cleaning and Laundry Industry Award 2010 and Hair and Beauty Industry Award 2010 were withdrawn by the parties at various points in the proceedings. 8

[18] A number of conferences were held and various procedural Statements issued by the Commission dealing with a range of programming and scheduling matters. There was general agreement that ‘common evidence’ would be heard first and separate to the particular evidence relating to the Hospitality group and the Retail group, followed by a submission process.

[19] Common evidence is evidence that is relevant to the consideration of claims in all of the relevant awards and industry sectors, and would generally be provided by an expert. Such evidence could include government reports and statistical or social commentary material. Award or industry-specific evidence would be presented during the Hospitality and Retail group stages.

[20] Final directions and a hearing timetable were issued in a Statement on 3 March 2015. 9 The directions set out the process for the filing of evidence (including witness statements from expert witnesses and lay witnesses across the three streams), objections to any evidence, submissions, proposed findings and survey material.

[21] The directions and timetable were revised on 7 August 2015, 10 after a number of parties sought variations to the 3 March 2015 directions.

[22] Parties were advised that issues in relation to the penalty rate payable on a public holiday in the awards referred to in paragraph [5] of this decision were to be dealt with during these proceedings, and not as part of the common issue public holiday proceedings. 11

[23] The Commission heard evidence on 8–25 September, 1 October, 12–28 October, 4– 6 November, 15–16 and 21 December 2015. Evidence was given by 143 lay and expert witnesses of whom 128 were required for cross-examination. Witnesses included employers and employees from the relevant industry sectors, appearing either in person or from around Australia (including regional locations) via videolink. The expert evidence included academics with expertise in economics and workplace relations. A complete list of witnesses is attached to this decision at Attachment A.

[24] A number of Mentions have been held concurrently while evidence is being heard, dealing with scheduling of witnesses, objections to evidence (both expert and lay), legal professional privilege claims and applications for confidentiality orders. As part of these proceedings, the Commission has issued 38 Orders for the production of documents, and eight confidentiality orders.

[25] In total there have been 39 days of hearings and an additional 15 mentions and conferences.

[26] The dates for filing final submissions were revised following requests from the parties, and final hearings in the matter were held from 11–15 April 2016 and 28 September 2016. The final written submission was received on 4 February 2017.

[27] In addition to material received from parties, the Commission has published its own research material. Three reports have been prepared and published by the Workplace and Economic Research Section of the Commission to assist parties with their submissions in the matter:

(i) Industry profile – Accommodation and food services
(ii) Industry profile – Retail trade
(iii) Changing work patterns

[28] These reports have been updated and republished a number of times to take into account new data. The most recent update to all three reports was on Friday 20 January 2017 to take into account the following:

• Australian Bureau of Statistics (ABS) Employee Earnings and Hours, May 2016; and


• Household, Income and Labour Dynamics in Australia (HILDA) survey, 2015.

[29] A Research Reference List was published on the Commission’s website on 15 January 2016 containing references that had been cited in the substantive evidence of expert witnesses and the submissions of the parties. Additional publications identified by staff of the Commission that may be of relevance were also included in the list. Interested persons were given an opportunity to comment on the list 12. The Research Reference List is contained in Attachment B.

[30] The conduct of the Review has been open and transparent, in accordance with s.577 of the FW Act. The Commission’s website has been used extensively to provide information to any interested person in order to facilitate broad participation in the Review. Interested persons were encouraged to subscribe to the dedicated penalty rates subscription notification service to keep them informed about the penalty rates matter.

[31] On 15 January 2016 13, revised directions were issued directing that:

‘Any interested person who is not a party to the proceedings may put forward a position (and file material in support of their position) in relation to varying the penalty rate provisions in the above awards by no later than 4.00pm Wednesday 17 February 2016.’

[32] This direction was publicly advertised in major newspapers nationally on 20 January 2016. 14 Some 5845 public contributions from individual employees and employers were received and published on the Commission’s website15 and 55 additional confidential contributions were forwarded to the Full Bench and provided to the principal parties, but not published.

[33] Throughout the process and in addition to the 5845 public contributions, 36 submissions have been received from organisations who are not principal parties to the proceedings. These organisations included Members of Parliament and State governments, unions, student organisations, community groups, small businesses, churches and industry groups. Of these submissions 14 supported a reduction to the current penalty rates regime and 22 did not support any change to the current system. These submissions are addressed in Chapter 5.3.

2. The Decision: An Overview

2.1 The Legislative context and proposed changes in penalty rates

[34] Section 156 of the FW Act provides that the Commission must conduct a 4 yearly review of modern awards (the Review). Subsection 156(2) deals with what must be done in the Review and provides that the Commission must review all modern awards and may, among other things, make determinations varying modern awards.

[35] This decision deals with the review of the weekend and public holiday penalty rates and some related matters, in a number of Hospitality and Retail awards.

[36] The Commission’s task in the Review is to decide whether a particular modern award achieves the modern awards objective. If it does not then it is to be varied such that it only includes terms that are ‘necessary to achieve the modern awards objective’ (s.138).

[37] The modern awards objective in s.134(1) of the FW Act is central to the Review. The modern awards objective is to ‘ensure that modern awards, together with the National Employment Standards (NES) provide a fair and relevant minimum safety net of terms and conditions’, taking into account the particular considerations identified in sections 134(1)(a) to (h). Fairness in this context is to be assessed from the perspective of the employees and employers covered by the modern award in question. ‘Relevant’ is intended to convey that a modern award should be suited to contemporary circumstances. We deal with the relevant legislative provisions in more detail in Chapter 3.

[38] Historically, industrial tribunals have expressed the rationale for penalty rates in terms of both the need to compensate employees for working outside ‘normal hours’ (the compensatory element) and to deter employers from scheduling work outside ‘normal’ hours (the deterrence element). 16

[39] Having regard to more recent authority, the terms of the modern awards objective, and the scheme of the FW Act, we have concluded that deterrence is no longer a relevant consideration in the setting of weekend and public holiday penalty rates. We accept that the imposition of a penalty rate may have the effect of deterring employers from scheduling work at specified times or on certain days, but that is a consequence of the imposition of an additional payment for working at such times or on such days, it is not the objective of those additional payments. Compensating employees for the disutility associated with working on weekends and public holidays is a primary consideration in the setting of weekend and public holiday penalty rates.

[40] We note that the Productivity Commission has expressed a different view in respect of public holiday penalty rates:

‘… by definition, genuine public holidays are intended to serve a special community role and, as such, there are strong grounds to limit the expectation that they are for working. In that sense, the original concept of deterrence continues to have relevance’. 17

[41] We accept that public holidays, by their nature, are intended ‘to serve a special community role’ and that the expectation (and practice) is that the vast majority of employees do not work on public holidays. But these features do not support the adoption of deterrence as an objective in setting public holiday penalty rates. However, these features are relevant to determining the amount of compensation to be provided to employees who work on public holidays, given the additional disutility associated with working on a day when the vast majority of other employees are enjoying a day of leisure.

[42] A central contention advanced by the Shop, Distributive and Allied Employees Association (SDA) and United Voice in these proceedings is that before the Commission can vary a modern award in the Review, it must first be satisfied that since the making of the modern award there has been a material change in circumstances pertaining to the operation or effect of the award such that the modern award is no longer meeting the modern awards objective (the ‘material change in circumstances test’). If adopted the proposed test would require the proponent of a variation to establish that there has been a material change in circumstances since the modern award was made. The proposed ‘material change in circumstances’ test seeks to place a constraint on the discretion conferred by s.156 which is not warranted by the terms of this section or the relevant statutory context and purpose. There is no such express or implied requirement in s.156.

[43] We reject the proposition advanced by the Unions. The adoption of the proposed ‘material change in circumstances test’ would obfuscate the Commission’s primary task in the Review, determining whether the modern award achieves the modern awards objective. To adopt such a test would add words into s.156 in circumstances where it is not necessary to do so in order to achieve the legislative purpose. For completeness we record our agreement with the point advanced by the Australian Industry Group (Ai Group) in its submission in reply 18 that the variation of a modern award may be warranted if it was established that there was a ‘material change in circumstances’ since the modern award was made, but the establishment of such a change is not a condition precedent to the variation of a modern award in the Review.

[44] As mentioned, the modern awards objective is central to the Review. In determining whether an award achieves the modern awards objective the Commission must take into account a range of considerations, including those set out in s.134(1)(da). Relevantly, s.134(1)(da)(iii) requires that we take into account the ‘need to provide additional remuneration’ for ‘employees working on weekends or public holidays’.

[45] An assessment of ‘the need to provide additional remuneration’ to employees working in the circumstances identified requires a consideration of a range of matters, including:

(i) the impact of working at such times or on such days on the employees concerned (i.e. the extent of the disutility);

(ii) the terms of the relevant modern award, in particular whether it already compensates employees for working at such times or on such days (e.g. through ‘loaded’ minimum rates or the payment of an industry allowance which is intended to compensate employees for the requirement to work at such times or on such days); and

(iii) the extent to which working at such times or on such days is a feature of the industry regulated by the particular modern award.

[46] Assessing the extent of the disutility of working at such times or on such days (issue (i) above) includes an assessment of the impact of such work on employee health and work-life balance, taking into account the preferences of the employees for working at those times.

[47] Section 134(1)(da) speaks of the ‘need to provide additional remuneration’ for employees performing work in the circumstances mentioned. We note that the minority in the Restaurants 2014 Penalty Rates decision 19 made the following observation about s.134(1)(da): ‘…the objective requires additional remuneration for working on weekends’.20

[48] To the extent that the above passage suggests that s.134(1)(da) ‘requires additional remuneration for working on weekends’, we respectfully disagree. We acknowledge that the provision speaks of ‘the need for additional remuneration’ and that such language suggests that additional remuneration is required for employees working in the circumstances identified in paragraphs 134(1)(da)(i) to (iv). But the expression must be construed in context and the context tells against the proposition that s.134(1)(da) requires that each modern award must provide additional remuneration for working in the identified circumstances.

[49] The various employer parties have sought reductions in Sunday and public holiday penalty rates. These claims are summarised in Tables 1 and 74. There were also some claims to vary the penalty payments for early/late night work in some awards.

[50] Generally speaking, no changes are sought in relation to Saturday penalty rates. 21

[51] We have reviewed the Saturday penalty rates in 4 of the 6 modern awards before us and (subject to the observations at [65] and [66]) we are satisfied that the existing Saturday penalty rates achieve the modern awards objective – they provide a fair and relevant minimum safety net. The review of Saturday penalty rates in the Clubs and Pharmacy Awards is to be the subject of further proceedings (see [994]–[1009] and [1872]–[1892]).

[52] Variations to modern awards must be justified on their merits. The extent of the merit argument required will depend on the circumstances. Significant changes where merit is reasonably contestable should be supported by an analysis of the relevant legislative provisions and, where feasible, probative evidence.

[53] We have decided that the existing Sunday penalty rates in 4 of the modern awards before us (the Hospitality, Fast Food, Retail and Pharmacy Awards) do not achieve the modern awards objective, as they do not provide a fair and relevant minimum safety net.

[54] Except in the Fast Food Award (for the reasons set out at [1394]–[1397]), we do not propose to reduce the Sunday penalty rates to the same level as the Saturday penalty rates. As we mention shortly, for many workers Sunday work has a higher level of disutility than Saturday work, though the extent of the disutility is much less than in times past. In this regard we also note that it is implicit in the claims advanced by most of the employer interests that they accept the proposition that the disutility associated with Sunday work is higher than the disutility associated with Saturday work. If this was not the case then they would have proposed that the penalty rates for Sunday and Saturday work be the same, but they did not.

[55] The reductions in Sunday penalty rates we have determined are set out below:

[56] In relation to the Fast Food Industry Award 2010, for reasons associated with the preferences of the relevant employees and the limited impact of Sunday work upon those employees (see Chapter 7.5), we have decided to reduce the Sunday penalty rate, for level 1 employees from 150 per cent to 125 per cent (for full-time and part-time employees) and from 175 per cent to 150 per cent (for casual employees). We do not propose to change the Sunday penalty rate for Level 2 and 3 employees.

[57] The differential treatment of Level 1 versus Level 2 and 3 employees is on the basis that Level 2 and 3 employees experience a higher level of disutility associated with Sunday work than that experienced by level 1 employees. The evidence supports the retention of the current Sunday penalty rate for level 2 and 3 employees. In this context we note that level 2 and 3 employees are, generally speaking, regarded as ‘career’ employees with the major chains whereas casual and part-time crew members (level 1 employees) are usually regarded as ‘non-career’ employees.

[58] We also note that in addition to the changes to Sunday penalty rates we have decided to vary some of the penalty provisions in relation to early/late night work in the Restaurants and Fast Food Awards (see [1126]–[1137], [1154], [1324]–[1334] and [1391])

[59] As to the Pharmacy Industry Award 2010, at this stage, we are not persuaded to make the changes proposed to the loadings for work before 7.00 am and between 9.00 pm and midnight, on weekends and Monday to Friday. We deal with the next steps in the review of this award in Chapter 12.

[60] On the material presently before us we are not satisfied that the variations proposed to the Registered and Licensed Clubs Award 2010 and the Restaurant Industry Award 2010 are necessary to ensure that these awards achieve the modern awards objective. In short, the employer organisations concerned have not established a merit case sufficient to warrant the granting of their claims. We deal with the deficiencies in the cases put and the next steps in relation to the review of these 2 awards in Chapter 11 at [2044]–[2050].

[61] We have also decided to reduce the public holiday penalty rates in the Hospitality and Retail Awards (except for the Clubs Award, for the reasons set out at [1915]).

[62] We also conclude that the two-tiered approach to public holiday penalty rates advanced by the Hospitality Employers lacks merit. The distinction sought to be drawn between those public holidays expressly mentioned in s.115(1)(a) and the other days declared or prescribed by or under a law of a State or Territory as a public holiday (s.115(1)(b)), is illusory. In that regard we concur with the views expressed in the 1994 Public Holidays Test Case decisions and the Modern Awards Review 2012 – Public Holidays decision, that, in essence, the number and standardisation of public holidays across Australia is primarily an issue for the Commonwealth, State and Territory legislatures.

[63] The effect of our decision in respect of public holiday penalty rates is shown (in marked up format) in Table 2 below.

Table 2

Proposed public holiday penalty rates in the Hospitality and Retail awards

[64] The changes we propose to make to Sunday and public holiday penalty rates will result in greater consistency in penalty rate settings in the Hospitality and Retail Awards .

[65] In each of the Sunday and public holiday penalty rates we have fixed we have adopted what the Productivity Commission Inquiry Report: Workplace Relations Framework (PC Final Report) describes as the ‘default approach’ to setting the appropriate rate for casual employees (see [333]–[338]). Under this approach the rate of pay for casual employees is always 25 percentage points above the rate of pay for non-casual employees. Hence if the Sunday penalty rate for full-time and part-time employees is 150 per cent, the Sunday rate for casuals will be 150 + 25 = 175 per cent.

[66] We note that the approach we have adopted may have implications for the rate paid to casuals for Saturday work under the Retail Award. We refer to that issue at [1716]–[1720]. It may also result in a shift from casual to part-time employment in respect of those employed in the modern awards which we propose to vary.

[67] The decision to reduce Sunday and public holiday penalty rates in these awards is based on our conclusions with respect to the common evidence (see Chapter 6) and our assessment of the evidence in relation to each of these particular awards (see Chapters 7.2, 7.5, 8.2 and 8.3).

[68] In Chapter 6 we consider the ‘common evidence’ adduced in these proceedings and deal with the incidence and effects of weekend work and the employment effects of reducing penalty rates. The following propositions emerge from the common evidence before us:

1. There is a disutility associated with weekend work, above that applicable to work performed from Monday to Friday. Generally speaking, for many workers Sunday work has a higher level of disutility than Saturday work, though the extent of the disutility is much less than in times past.

2. We agree with the assessment in the PC Final Report that there are likely to be some positive employment effects from a reduction in penalty rates, though it is difficult to quantify the precise effect. Any potential positive employment effects from a reduction in penalty rates are likely to be reduced due to substitution and other effects.

[69] As to proposition 1 above, we are aware that our conclusion is different to that in the PC Final Report. However, in the proceedings before us we have had the opportunity to consider evidence not available to the Productivity Commission, such as the Pezzullo Weekend Work Report, the Rose Report and the Sands Report in addition to a substantial amount of lay employer and employee evidence. None of the above reports concluded that the activities conducted on, and attitudes towards, Saturdays and Sundays were identical.

[70] As to proposition 2, the Hospitality and Retail Employers’ lay evidence supports the proposition that the current level of Sunday penalty rates has led employers to reduce labour costs associated with Sunday trading by imposing a number of operational limitations, such as:

• restricting trading hours;


• lowering staff levels; and


• restrictions on the type and range of services provided.

[71] The Hospitality and Retail Employers’ lay evidence also supports the proposition that a reduction in penalty rates is likely to lead to:

• increased trading hours on Sundays and public holidays;


• a reduction in the hours worked by some owner operations;
• an increase in the level and range of services offered on Sundays and public holidays; and


• an increase in overall hours worked.

[72] We do not suggest that these changes will apply uniformly across all hospitality and retail businesses. The actual impact of a reduction in Sunday penalty rates will depend on the circumstances applying to individual businesses.

[73] As to public holiday penalty rates, we note that the disutility of working on public holidays is greater than the disutility of working on Sundays (which in turn is greater than Saturday work). The notion of relative disutility supports a proportionate approach to the fixation of weekend and public holiday penalty rates. In determining the appropriate penalty rate for public holiday work we have had regard to the level of Sunday penalty rates in the Hospitality and Retail Awards (after applying the decisions we have made to reduce those rates).

[74] We also note that the disutility in relation to public holidays has been ameliorated somewhat by the introduction of the statutory right to refuse to work on such days, on reasonable grounds. Contrary to ABI’s submission, we would not characterise s.114(3) of the FW Act as making public holiday work ‘voluntary’ (it is a limited right to refuse to work, on reasonable grounds), but it is still a significant contextual matter which was not taken into account when the existing 250 per cent penalty was set.

[75] In addition, public holiday work is more common in the Hospitality and Retail sectors and, on the evidence before us, reducing the public holiday penalty rate will increase employment and have a number of positive effects on business.

[76] It is important to appreciate that the conclusions we have reached in relation to the weekend and public holiday penalty rates in the Hospitality and Retail Awards is largely based on the circumstances relating to these particular awards. The Hospitality and Retail sectors have a number of characteristics which distinguish them from other industries.

[77] The distinguishing characteristics of the Hospitality and Retail sectors are alluded to in the PC Final Report, where it explains the rationale for focussing on the ‘HERRC’ (hospitality, entertainment, retail, restaurants and cafes) industries.

‘… the appropriate level for regulated penalty rates for weekend work — particularly on Sundays in a number of discretionary consumer service industries — has become a highly contested and controversial issue. The industries of greatest concern are hospitality, entertainment, retail, restaurants and cafes (HERRC). These are industries where consumer expectations of access to services has expanded over time so that the costs of penalty rates affect consumer amenity in ways they did not when penalty rates were first introduced. Such industries are also important sources of entry-level jobs for, among others, relatively unskilled casual employees and young people (particularly students) needing flexible working arrangements. The provision of discretionary, and therefore demand responsive, services on weekends is less frequent in most other industries, which is a key (but not only) rationale for a focus of concerns on the HERRC industries. It is notable that the FWC is currently also considering appropriate penalty rates in awards, and that their focus almost exactly matches the group of industries that the Productivity Commission has identified as the most relevant.’  22 (footnotes omitted)

[78] The data on weekend work shows that workers in the Retail and Hospitality sectors are more likely to work on weekends than workers in other industries. As shown in Table 3A below (see [457]).

Table 3A 23

Proportion of employees who work on weekends, by industry

[79] The sections that provide an overview of the Retail and Hospitality sectors (see Chapters 7.1 and 8.1) also highlight some differences between these two sectors and other industries. Both industries are much more likely to comprise small businesses (employing fewer than 20 persons) than across all industries and fewer businesses in both the Hospitality and Retail sectors operate on weekdays only, with a greater proportion working 6 or 7 days a week (an average of 6.2 to 6.7 days a week) than businesses across all industries (an average of 5.8 days) as shown in Table 3B below.

Table 3B 24

Structure and operations, 2014

Note: np = not published due to estimate having a relative standard error of greater than 50 per cent.

[80] Data on the characteristics of employees in these industries presented in Chapters 7.1 and 8.1 show that they are more likely to be female, younger (under 25 years), work part-time hours, be employed on a casual basis and be award reliant than employees in other industries. Employees in these industries are also more likely to be low paid.

[81] Given the distinguishing characteristics of the Hospitality and Retail sectors, the decisions we have made in respect of the Hospitality and Retail Awards provide no warrant for the variation of penalty rates in other modern awards. Each case must be determined on its merits. We note the views expressed in the PC Final Report in this regard:

‘There is no case for common penalty rates across all industries The Commission is not recommending a reduction in the Sunday penalty rates beyond HERRC. Regulated penalty rates as currently constructed for essential services and many other industries are justifiable. The original justifications have not altered materially: they align with working arrangements that often involve rotating shifts across the whole week, are not likely to reduce service availability meaningfully, are commensurate with the skills of the employees, and are unlikely to lead to job losses.’ 25

[82] We deal with the implementation of our decision in Chapter 11: Transitional Arrangements.

[83] In the numerous submissions before us little attention was given to the implementation of any variations to Sunday penalty rates arising from these proceedings. One exception was in the PC Final Report which recommends that 12 months’ notice of any change be given, rather than an extended transition process involving staggered small changes to Sunday penalty rates. We also note that some submissions also alluded to the need to protect the take home pay of workers affected by any changes to penalty rates.

[84] A substantial proportion of award-reliant employees covered by these modern awards are low paid and the reductions in Sunday penalty rates we have determined are likely to reduce the earnings of those employees who currently work on Sundays. As observed in the Productivity Commission Inquiry Report: Workplace Relations Framework (PC Final Report), in general, most existing employees would probably face reduced earnings as it is improbable that, as a group, existing workers’ hours on Sundays would rise sufficiently to offset the income effects of penalty rate reductions.

[85] The evidence of the SDA and United Voice lay witnesses puts a human face on the data and provides an eloquent individual perspective on the impact of the award variations. Many of these employees earn just enough to cover weekly living expenses, saving money is difficult and unexpected expenses produce considerable financial distress. The immediate implementation of all of the variations we propose would inevitably cause some hardship to the employees affected, particularly those who work on Sundays. There is plainly a need for appropriate transitional arrangements to mitigate such hardship.

[86] We have concluded that appropriate transitional arrangements are necessary to mitigate the hardship caused to employees who work on Sundays. We have not reached a concluded view as to the form of those transitional arrangements and we propose to seek submissions from interested parties as to that issue. For the assistance of those parties who wish to make submissions as to the form of the transitional arrangements we have expressed the following provisional views:

(i) Contrary to the views expressed by the Productivity Commission we do not think it appropriate to delay making any changes to Sunday penalty rates for 12 months, as it would impose an unnecessary delay on the introduction of any reduction in Sunday penalty rates and would give rise to a sharp fall in earnings for some affected employees at the end of the 12 month period.

(ii) If ‘take home pay orders’ are an available option then they may mitigate the effects of a reduction in Sunday penalty rates. But we do not favour any general ‘red circling’ term which would preserve the current Sunday penalty rates for all existing employees.

(iii) The reductions in Sunday penalty rates should take place in a series of annual adjustments on 1 July each year (commencing 1 July 2017) to coincide with any increases in modern award minimum wages arising from Annual Wage Review decisions.

(iv) As to the number of annual instalments, the 5 annual instalment process which accompanied the making of the modern awards is too long for present purposes. It is likely that at least 2 instalments will be required (but less than 5 instalments). The period of adjustment required will depend on the extent of the reduction in Sunday penalty rates, the availability of ‘take home pay orders’ and the circumstances applying to each modern award.

[87] The changes to public holiday penalty rates will take effect on 1 July 2017.

[88] We deal with the next steps in these proceedings in Chapter 12. The matters addressed include:

• transitional arrangements having regard to the impact of the Sunday penalty reductions for some employees;


• the potential further review of the Clubs Award, the Restaurants Award and other retail modern awards;
• the terminology of penalty rates; and


• the potential for loaded rates in retail modern awards.

[89] As to the last matter, a ‘loaded rate’ in this context refers to a rate which is higher than the applicable minimum hourly rate specified in the modern award and is paid for all hours worked instead of certain penalty rates (such as the penalty rates for Saturday and Sunday work).

[90] It seems to us that, subject to appropriate safeguards, schedules of ‘loaded rates’ may make awards simpler and easier to understand, consistent with the considerations in s.134(1)(g). Schedules of ‘loaded rates’ would also allow small businesses to access additional flexibility without the need to enter into an enterprise agreement.

[91] We also note that the Fair Work Ombudsman (FWO) has reported significant levels of non-compliance in the Hospitality and Retail awards which are before us. It appears from the various FWO reports we mention in Chapter 12 that some businesses in the Hospitality and Retail sectors already provide ‘flat’ (or loaded) rates of pay, in order to simplify their payroll process, but they underestimate the additional premium (or loading) required in order to compensate employees for the loss of penalty rates, resulting in non-compliance. The insertion of ‘loaded rates’ schedules in these modern awards may have a positive effect on award compliance.

[92] In raising this matter, we are alive to the potential complexity involved in the task of developing schedules appropriately for loaded rates. It has to be borne in mind that any loaded rate will remain part of the safety net and will have to be fair and relevant. Determining an appropriate loaded rate would not be straightforward. For example, an employee who worked the vast majority of their hours on a weekend or late at night, when a penalty rate would apply, would require a higher loaded rate than, say, an employee who worked the vast majority of their hours during the ordinary spread of hours, Monday to Friday.

[93] Any loaded rate and the associated roster configuration, would, of course, need to be relevant to the needs of industry and employees. Accordingly, there would be benefit in further engagement with interested parties as to the dominant roster patterns in the relevant industries so that appropriate rates can be developed.

[94] We envisage that the development of loaded rates will be an iterative process undertaken in consultation with interested parties. That process will commence after we have determined the transitional arrangements in respect of the reductions in Sunday penalty rates.

3. The Legislative Framework

3.1 Statutory construction – general observations

[95] This part of our decision deals with the legislative provisions relevant to these proceedings. We begin by making some general observations about the task of statutory construction.

[96] The starting point is to construe the words of a statute according to their ordinary meaning having regard to their context and legislative purpose. Context includes the existing state of the law and the mischief the legislative provisions was intended to remedy. 26 Regard may also be had to the legislative history in order to work out what a current legislative provision was intended to achieve.27

[97] Each provision of the FW Act must be read in context by reference to the language of the FW Act as a whole. 28 The relevant legislative context may operate to limit a word or expression of wide possible connotation.29 The literal meaning (or the ordinary grammatical meaning) of the words of a statutory provision may be displaced by the context and legislative purpose, as the majority observed in Project Blue Sky:

‘… the duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have. Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision. But not always. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning.’ 30

[98] The provisions of an act must be read together such that they fit with one another. This may require a provision to be read more narrowly than it would if it stood on its own. 31

[99] More recently, in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue 32 (Alcan) the High Court described the task of legislative interpretation in the following terms:

‘This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy.’

[100] We now turn to the specific provisions relevant to these proceedings.

3.2 The relevant statutory provisions

[101] Section 156 of the FW Act provides that the Commission must conduct a 4 yearly review of modern awards as soon as practicable after 1 January 2014. Subsection 156(2) deals with what must be done in the Review and provides that the Commission must review all modern awards and may, among other things, make determinations varying modern awards.

[102] The requirement in s.156(5) to review each modern award ‘in its own right’, is intended to ensure that the Review is conducted ‘by reference to the particular terms and the particular operation of each particular award rather than by a global assessment based upon generally applicable considerations’. 33 However, while the review of each modern award must focus on the particular terms and operation of the particular award, this does not mean that the review of a modern award is to be confined to a single holistic assessment of all of its terms.34 In these proceedings we are considering whether the relevant modern awards achieve the modern awards objective in relation to the penalty payments they prescribe for working at certain times.

[103] Subsection 156(5) provides that in the Review each modern award is reviewed in its own right, however, this does not prevent the Commission from reviewing 2 or more modern awards at the same time.

[104] The Commission must be constituted by a Full Bench to conduct the Review and to make determinations and modern awards in the Review (see ss.616(1), (2) and (3) of the FW Act). Section 582 of the FW Act provides that the President may give directions about the conduct of the Review.

[105] In addition to s.156 a range of other provisions in the FW Act are relevant to the Review: s.3 (objects of the Act); s.55 (interaction with the NES); Part 2-2 (the NES); s.134 (the modern awards objective); s.135 (special provisions relating to modern award minimum wages); Divisions 3 (terms of modern awards) and 6 (general provisions relating to modern award powers) of Part 2-3; s.284 (the minimum wages objective); s.577 (performance of functions and exercise of powers of the Commission); s.578 (matters the Commission must take into account in performing functions and exercising powers); and Division 3 of Part 5-1 (conduct of matters before the Commission).

[106] The general provisions relating to the performance of the Commission’s functions apply to the Review. Sections 577 and 578 are particularly relevant in this regard. Section 577 states:

‘FWC must perform its functions and exercise its powers in a manner that:

(a) is fair and just; and

(b) is quick, informal and avoids unnecessary technicalities; and

(c) is open and transparent; and

(d) promotes harmonious and cooperative workplace relations.

Note: The President also is responsible for ensuring that FWC performs its functions and exercises its powers efficiently etc. (see section 581).’

[107] Section 578 states:

‘In performing functions or exercising powers, in relation to a matter, under a part of this Act (including this Part), FWC must take into account:

(a) the objects of this Act, and any objects of the part of this Act; and
(b) equity, good conscience and the merits of the matter; and
(c) the need to respect and value the diversity of the work force by helping to prevent and eliminate discrimination on the basis of race, colour, sex, sexual preference, age, physical or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion, national extraction or social origin.’

[108] As stated in s.578(a), in performing functions and exercising powers under a part of the FW Act (including the Review function under Part 2-3 Modern Awards) the Commission must take into account the objects of the FW Act and any particular objects of the relevant part. The object of Part 2-3 is expressed in s.134, the modern awards objective. The object of the FW Act is set out in s.3, as follows:

‘3 Object of this Act

The object of this Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians by:

(a) providing workplace relations laws that are fair to working Australians, are flexible for businesses, promote productivity and economic growth for Australia’s future economic prosperity and take into account Australia’s international labour obligations; and

(b) ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders; and

(c) ensuring that the guaranteed safety net of fair, relevant and enforceable minimum wages and conditions can no longer be undermined by the making of statutory individual employment agreements of any kind given that such agreements can never be part of a fair workplace relations system; and

(d) assisting employees to balance their work and family responsibilities by providing for flexible working arrangements; and

(e) enabling fairness and representation at work and the prevention of discrimination by recognising the right to freedom of association and the right to be represented, protecting against unfair treatment and discrimination, providing accessible and effective procedures to resolve grievances and disputes and providing effective compliance mechanisms; and

(f) achieving productivity and fairness through an emphasis on enterprise-level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action; and

(g) acknowledging the special circumstances of small and medium-sized businesses.’

[109] In conducting the Review the Commission is able to exercise its usual procedural powers, contained in Division 3 of Part 5-1 of the FW Act. Importantly, the Commission is not bound by the rules of evidence and procedure (s.591) and may inform itself in relation to any matter before it in such manner as it considers appropriate (s.590(1)).

[110] The Review is to be distinguished from inter partes proceedings. Section 156 imposes an obligation on the Commission to review all modern awards and each modern award must be reviewed in its own right. The Review is conducted on the Commission’s own motion and is not dependent upon an application by an interested party. Nor is the Commission constrained by the terms of a particular application. 35 The Commission is not required to make a decision in the terms applied for (s.599) and, in a Review, may vary a modern award in whatever terms it considers appropriate, subject to its obligation to accord interested parties procedural fairness and the application of relevant statutory provisions, such as ss.134, 138 and 578.

[111] The scope of the Review was considered in the 4 Yearly Review of Modern Awards: Preliminary Jurisdictional Issues Decision. 36 We adopt and apply that decision and in particular the following propositions:

(i) The Review is broader in scope than the Transitional Review of modern awards completed in 2013.

(ii) In conducting the Review the Commission will have regard to the historical context applicable to each modern award.

(iii) The Commission will proceed on the basis that prima facie the modern award being reviewed achieved the modern awards objective at the time it was made.

(iv) Variations to modern awards should be founded on merit based arguments. The extent of the argument and material required will depend on the circumstances.

[112] We now turn to the relevance of the ‘modern awards objective’ to the Review.

3.3 The modern awards objective

(i) General observations

[113] The modern awards objective applies to the performance or exercise of the Commission’s modern award powers, which are defined to include the Commission’s functions or powers under Part 2-3 of the FW Act. The Review function is set out in s.156, which is in Part 2-3 and so will involve the performance or exercise of the Commission’s modern award powers. It follows that the modern awards objective applies to the Review.

[114] The modern awards objective is set out in s.134 of the FW Act. It states:

‘134 The modern awards objective

What is the modern awards objective?

(1) The FWC must ensure that modern awards, together with the National Employment Standards, provide a fair and relevant minimum safety net of terms and conditions, taking into account:

(a) relative living standards and the needs of the low paid; and

(b) the need to encourage collective bargaining; and

(c) the need to promote social inclusion through increased workforce participation; and

(d) the need to promote flexible modern work practices and the efficient and productive performance of work; and

(da) the need to provide additional remuneration for:

(i) employees working overtime; or
(ii) employees working unsocial, irregular or unpredictable hours; or
(iii) employees working on weekends or public holidays; or
(iv) employees working shifts; and

(e) the principle of equal remuneration for work of equal or comparable value; and

(f) the likely impact of any exercise of modern award powers on business, including on productivity, employment costs and the regulatory burden; and

(g) the need to ensure a simple, easy to understand, stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards; and

(h) the likely impact of any exercise of modern award powers on employment growth, inflation and the sustainability, performance and competitiveness of the national economy.

This is the modern awards objective.

When does the modern awards objective apply?

(2) The modern awards objective applies to the performance or exercise of the FWC’s modern award powers, which are:

(a) the FWC’s functions or powers under this Part; and

(b) the FWC’s functions or powers under Part 2-6, so far as they relate to modern award minimum wages.

Note: The FWC must also take into account the objects of this Act and any other applicable provisions. For example, if the FWC is setting, varying or revoking modern award minimum wages, the minimum wages objective also applies (see section 284).’

[115] The modern awards objective is to ‘ensure that modern awards, together with the National Employment Standards, provide a fair and relevant minimum safety net of terms and conditions’, taking into account the particular considerations identified in sections 134(1)(a) to (h) (the s.134 considerations). The objective is very broadly expressed. 37 The obligation to take into account the s.134 considerations means that each of these matters, insofar as they are relevant, must be treated as a matter of significance in the decision making process. 38 No particular primacy is attached to any of the s.134 considerations and not all of the matters identified will necessarily be relevant in the context of a particular proposal to vary a modern award.

[116] While the Commission must take into account the s.134 considerations, the relevant question is whether the modern award, together with the NES, provides a fair and relevant minimum safety net of terms and conditions. As to the proper construction of the expression ‘a fair and relevant minimum safety net of terms and conditions’ we would make three observations.

[117] First, fairness in this context is to be assessed from the perspective of the employees and employers covered by the modern award in question. So much is clear from the s.134 considerations, a number of which focus on the perspective of the employees (e.g. s.134(1)(a) and (da)) and others on the interests of the employers (e.g. s.134(1)(d) and (f)). Such a construction is also consistent with authority. In Shop Distributive and Allied Employees Association v $2 and Under (No. 2) 39 Giudice J considered the meaning of the expression ‘a safety net of fair minimum wages and conditions of employment’ in s.88B(2) of the Workplace Relations Act 1996 (Cth) (the WR Act). That section read as follows:

‘88B Performance of Commission’s functions under this Part …

(2) In performing its functions under this Part, the Commission must ensure that a safety net of fair minimum wages and conditions of employment is established and maintained, having regard to the following:

(a) the need to provide fair minimum standards for employees in the context of living standards generally prevailing in the Australian community;

(b) economic factors, including levels of productivity and inflation, and the desirability of attaining a high level of employment;

(c) when adjusting the safety net, the needs of the low paid.’

[118] As to the assessment of fairness in this context his Honour said:

‘In relation to the question of fairness it is of course implicit that the Commission should consider fairness both from the perspective of the employees who carry out the work and the perspective of employers who provide the employment and pay the wages and to balance the interests of those two groups. This must be done in the context of any broader economic or other considerations which might affect the public interest.’ 40

[119] While made in a different (albeit similar) statutory context the above observation is apposite to our consideration of what constitutes a ‘fair … safety net’ in giving effect to the modern awards objective. We would also endorse the following observation by the Full Bench in the Equal Remuneration Decision 2015:

‘We consider, in the context of modern awards establishing minimum rates for various classifications differentiated by occupation, trade, calling, skill and/or experience, that a necessary element of the statutory requirement for ‘fair minimum wages’ is that the level of those wages bears a proper relationship to the value of the work performed by the workers in question.’ 41

[120] Second, the word ‘relevant’ is defined in the Macquarie Dictionary (6^th Edition) to mean ‘bearing upon or connected with the matter in hand; to the purpose; pertinent’. In the context of s.134(1) we think the word ‘relevant’ is intended to convey that a modern award should be suited to contemporary circumstances. As stated in the Explanatory Memorandum to what is now s.138:

‘527 … the scope and effect of permitted and mandatory terms of a modern award must be directed at achieving the modern awards objective of a fair and relevant safety net that accords with community standards and expectations.’ (emphasis added)

[121] Finally, as to the expression ‘minimum safety net of terms and conditions’, the conception of awards as ‘safety net’ instruments was introduced by the Industrial Relations Reform Act 1993 (Cth) (the 1993 Reform Act). The August 1994 Review of Wage Fixing Principles decision 42 summarised the changes made to the legislative framework by the 1993 Reform Act. In particular, the Commission noted that:

‘The Act now clearly distinguishes between the arbitrated award safety net and the bargaining stream. It intends that the actual wages and conditions of employment of employees will be increasingly determined through bargaining at the workplace or enterprise.

Under the Act the Commission, while having proper regard to the interests of the parties and the wider community, is now required to ensure, so far as possible, that the award system provides for ‘secure, relevant and consistent wages and conditions of employment’ (s 90AA(2)) so that it is an effective safety net ‘underpinning direct bargaining’ (s 88A(b)).’

[122] Relevantly for present purposes, the 1993 Reform Act inserted s.88A into the Industrial Relations Act 1988 (Cth) (the IR Act). Section 88A set out the objects to Part VI – Dispute Resolution and Settlement, in the following terms:

‘88A The objects of this Part are to ensure that:

(a) wages and conditions of employment are protected by a system of enforceable awards established and maintained by the Commission; and

(b) awards act as a safety net of fair minimum wages and conditions of employment; and

(c) awards are simplified and suited to the efficient performance of work according to the needs of particular workplaces or enterprises; and

(d) the Commission’s functions and powers in relation to making and varying awards are performed and exercised in a way that encourages the making of agreements between employers and employees at the workplace or enterprise level.’ (emphasis added)

[123] The protective nature of the award safety net at that time is apparent from the language used in s.88A(a) and (b). 43

[124] The Workplace Relations and Other Legislation Amendment Act 1996 (WROLA Act) renamed the IR Act the WR Act and, among other things, restricted the range of matters that would be dealt with in federal awards (see s.89A WR Act) and repealed what had been Part VI C of the IR Act, which dealt with ‘Paid Rates Awards’. The objects of Part VI were amended but the characterisation of awards as a ‘safety net’ which ‘protected’ wages and conditions of employment, remained. It is not necessary to canvass the various legislative amendments from the WROLA Act to the FW Act.

[125] The objects of the FW Act are set out in s.3 (see [108]), relevantly s.3(b) speaks of:

‘ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and minimum wage orders.’

[126] It is apparent from the scheme of the FW Act that modern awards and the NES ‘underpin’ enterprise agreements, through the operation of s.55 and the ‘better off overall test’ (s.186(2)(d) and s.193). 44 Under s.57 a modern award does not apply to the extent that an enterprise agreement applies to a particular employment relationship, even where the award deals with matters not covered in the agreement.45

[127] In their reply submission the Australian Chamber of Commerce and Industry, Australian Business Industrial and the New South Wales Business Chamber (the joint employer reply submission) submit that the reference to a ‘minimum safety net’ in s.134(1) means the ‘least … possible’ to create a ‘minimum floor’:

‘The notion of a ‘safety’ ‘net’ is effectively the creation of a floor ensuring employees are ‘caught’ preventing them from being exposed to ‘hurt, injury, danger or risk’.

The addition of the term ‘minimum’ reinforces the level that this floor is calibrated to: namely, ‘… the least quantity or amount possible …’

The creation of the minimum safety net by sections 134 and 284 of the FW Act illuminates what the phrase ‘only to the extent necessary’ in s 138 relates to.

That is, section 138 is dictating that the Commission may only include terms in a modern award to the extent necessary to create a minimum floor. Once this minimum floor is created, section 138 restrains the Commission from going any further irrespective of what historically would be called the ‘general industrial merits of the case’.’ 46

[128] The proposition advanced relies on dictionary definitions of some individual words within s.134(1). But the argument advanced pays scant regard to the fact the modern awards objective is a composite expression which requires that modern awards, together with the NES, provide ‘a fair and relevant minimum safety net of terms and conditions’. The joint employer reply submission gives insufficient weight to the statutory directive that the minimum safety net be ‘fair and relevant’. Further, in giving effect to the modern awards objective the Commission is required to take into account the s.134 considerations, one of which is ‘relative living standards and the needs of the low paid’ (s.134(1)(a)). The matters identified tell against the proposition advanced in the joint employer reply submission.

[129] We conclude our general observations about the modern awards objective by noting that the nature of modern awards under the FW Act is quite different from the awards made under previous legislative regimes. 47 In times past awards were made in settlement of industrial disputes. The content of these instruments was determined by the constitutional and legislative limits of the tribunal’s jurisdiction; the matters put in issue by the parties (i.e. the ‘ambit’ of the dispute) and the policies of the tribunal as determined from time to time in wage fixing principles or test cases. An award generally only bound the employers, employer organisations and unions who had been parties to the industrial dispute that gave rise to the making of the award and were named as respondents. Modern awards are very different to awards of the past.

[130] Modern awards are not made to prevent or settle industrial disputes between particular parties. Rather, the purpose of modern awards, together with the NES and national minimum wage orders, is to provide a safety net of fair, relevant and enforceable minimum terms and conditions of employment for national system employees (see ss.3(b) and 43(1)). They are, in effect, regulatory instruments that set minimum terms and conditions of employment for the employees to whom the modern award applies (see s.47).

[131] Nor are there named respondents to modern awards. Modern awards apply to, or cover, certain persons, organisations and entities (see ss.47 and 48), but these persons, organisations and entities are not ‘respondents’ to the modern award in the sense that there were named respondents to awards in the past. The nature of this shift is made clear by s.158 which sets out who may apply for the making of a determination making, varying or revoking a modern award. Under previous legislative regimes the named respondents to a particular award would automatically have the requisite standing to make such applications; that is no longer the case. 48

[132] Under the FW Act modern awards form part of a minimum safety net which provides ‘fair, relevant and enforceable minimum terms and conditions’ of employment to national system employees. As such, modern awards, together with the NES and national minimum wage orders, provide a minimum set of terms and conditions that must be provided to the employees to whom a modern award applies. And, as we have mentioned, modern awards also underpin enterprise bargaining.

(ii) Section 138 and the modern awards objective

[133] Section 138 of the FW Act emphasises the importance of the modern awards objective in the following terms:

‘A modern award may include terms that it is permitted to include, and must include terms that it is required to include, only to the extent necessary to achieve the modern awards objective and (to the extent applicable) the minimum wages objective.’

[134] To comply with s.138 the terms included in modern awards must be ‘necessary to achieve the modern awards objective’.

[135] In Shop, Distributive and Allied Employees Association v National Retail Association (No.2) 49 Tracey J considered the proper construction of the expression ‘the Commission is satisfied that making [a determination varying a modern award] … is necessary to achieve the modern awards objective’, in s.157(1). His Honour held:

‘The statutory foundation for the exercise of FWA’s power to vary modern awards is to be found in s 157(1) of the Act. The power is discretionary in nature. Its exercise is conditioned upon FWA being satisfied that the variation is “necessary” in order “to achieve the modern awards objective”. That objective is very broadly expressed: FWA must “provide a fair and relevant minimum safety net of terms and conditions” which govern employment in various industries. In determining appropriate terms and conditions regard must be had to matters such as the promotion of social inclusion through increased workforce participation and the need to promote flexible working practices.

The subsection also introduced a temporal requirement. FWA must be satisfied that it is necessary to vary the award at a time falling between the prescribed periodic reviews.

The question under this ground then becomes whether there was material before the Vice President upon which he could reasonably be satisfied that a variation to the Award was necessary, at the time at which it was made, in order to achieve the statutory objective …

In reaching my conclusion on this ground I have not overlooked the SDA’s subsidiary contention that a distinction must be drawn between that which is necessary and that which is desirable. That which is necessary must be done. That which is desirable does not carry the same imperative for action. Whilst this distinction may be accepted it must also be acknowledged that reasonable minds may differ as to whether particular action is necessary or merely desirable. It was open to the Vice President to form the opinion that a variation was necessary.’ 50

[136] The above observation – in particular the distinction between that which is ‘necessary’ and that which is merely desirable – is apposite to our consideration of s.138. Further, we agree with the observation that reasonable minds may differ as to whether a particular award term or proposed variation is necessary (within the meaning of s.138), as opposed to merely desirable. It seems to us that what is ‘necessary’ to achieve the modern awards objective in a particular case is a value judgment, taking into account the s.134 considerations to the extent that they are relevant having regard to the context, including the circumstances pertaining to the particular modern award, the terms of any proposed variation and the submissions and evidence. 51

[137] The SDA and United Voice submit that the terms of s.138 require that the Commission be satisfied that the variations proposed by the various employer parties are necessary to achieve the modern awards objective. 52 The submission put focuses attention on the particular variation proposed, rather than on the terms of the modern award, as varied.

[138] We do not think the Unions’ contention is correct. In the Preliminary Jurisdictional Issues decision the Full Bench considered what had to be demonstrated by the proponent of an award variation and concluded that:

‘To comply with s138 the formulation of terms which must be included in modern awards or terms which are permitted to be included in modern awards must be terms ‘necessary to achieve the modern awards objective’… In the Review the proponent of a variation to a modern award must demonstrate that if the modern award is varied in the manner proposed then it would only include terms to the extent necessary to achieve the modern awards objective.’ 53

[139] The above proposition is supported by the terms of s.138 and the legislative context. Section 138 requires that ‘[A] modern award may include terms … only to the extent necessary to achieve the modern awards objective’. The section focuses attention on the terms of a modern award, rather than on the terms of a proposed variation. Further, as we have mentioned, the jurisdictional basis for the Review is s.156. Section 157 deals with the variation of modern awards outside the system of 4 yearly reviews. Section 157(1) states, relevantly:

‘The FWC may:

(a) Make a determination varying a modern award … if the FWC is satisfied that making the determination … outside the system of 4 yearly reviews of modern awards is necessary to achieve the modern awards objective.’ (emphasis added)

[140] Section 157(1) makes express reference to the Commission being satisfied that the ‘determination varying a modern award’ is necessary to achieve the modern awards objective. There is no such express reference in either s.138 or s.156. The difference in the language used in ss.138, 156 and 157 tells against the proposition advanced by the SDA and United Voice.

[141] Contrary to the Unions’ contention the Commission’s task in the Review is to make a finding as to whether a particular modern award achieves the modern awards objective. If a modern award is not achieving the modern awards objective then it is to be varied such that it only includes terms that are ‘necessary to achieve the modern awards objective’ (s.138). In such circumstances regard may be had to the terms of any proposed variation, but the focal point of the Commission’s consideration is upon the terms of the modern award, as varied. The approach outlined is supported by the terms of s.138 itself, the legislative context and the judgement of the Full Court of the Federal Court in National Retail Association v Fair Work Commission. 54

[142] We now turn to the application of the modern awards objective to the issues raised in these proceedings.

(iii) The modern awards objective and weekend penalty rates

[143] Historically industrial tribunals have expressed the rationale for weekend penalty payments in terms of both the need to compensate employees for working outside ‘normal hours’ (the compensatory element) and to deter employers from scheduling work outside ‘normal’ hours (the deterrence element). 55 For example, in the 1947 Weekend Penalty Rates case Drake-Brockman ACJ and Sugarman J made the following observation about the expression ‘penalty rate’:

‘‘Penalty rate’ is not a term of art. It is used by those skilled in industrial law in widely divergent meanings. Usually an award provides for an ordinary rate of remuneration, payable for the ordinary work of a standard period performed under normal conditions, and for additional amounts to be paid where work is done under special conditions of time, place or circumstance. In one sense the use of the term ‘penalty’ as applied to such additional amounts is a misnomer, there is no question of punishment about the matter. But in another sense it expresses accurately enough the operation of the requirement of additional payment as, inter alia, a deterrent against calling upon employees to work in the circumstances in which the additional payment is required to be made. Most, if not all, of such requirements combine the element of compensation with that of deterrence.’ 56

[144] Similarly, in 1950 a Full Bench of the NSW Industrial Commission described the rationale for weekend penalty rates in the following terms:

‘In our opinion additional rates for weekend work are given to compensate the employee for having to work on days which are not regular working days for all employees in industry. The aim is to compensate for disturbance of social and family life and the full opportunity of religious observance, and in some cases to discourage employers working employees on non-regular working days.’ 57

[145] More recently industrial tribunals have eschewed any reliance on the historical ‘deterrence element’ in setting appropriate loadings for working ordinary hours on a weekend. For example, in setting weekend penalty rates in the hospitality industry, in 1993, Commissioner Gay said:

‘The rate to apply in the hotel industry for weekend work should have no element designed to deter an employer from requiring work to be performed on Saturdays and Sundays and no punitive element designed to punish when such work is actually required to be performed.’ 58

[146] Similarly, in fixing the rate for Sunday work in the Victorian retail sector, the majority (Watson SDP and Raffaelli C) in Re Shop, Distributive and Allied Employees’ Association and $2 and Under and Ors 59 said:

‘In our view, in the context of the reality that retailing in Victoria is a seven-day a week industry… the Sunday ordinary time penalty… should be directed to the compensation for the disabilities upon employees and should not be directed to deterring the working of Sunday ordinary hours’.

[147] Further, in the 2012 Transitional Review – Penalty Rates decision the Full Bench said:

‘Although described in the modern awards as penalty rates, they are in reality a loading which compensate for disabilities.’ 60

[148] It is apparent from these more recent decisions that the deterrence element is no longer a relevant consideration in setting the rate of pay for working ordinary hours on a weekend. Indeed, as submitted by the Australian Hotels Association (AHA) and Accommodation Association of Australia (AAA) in these proceedings, 61 it is difficult to reconcile the notion of deterrence with the purpose of the FW Act.

[149] The object of the FW Act is ‘to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians’, by the means specified in s.3(a) to (g). Deterring the working of ordinary hours on a weekend is not one of the specified means of achieving the object of the FW Act.

[150] Nor does the notion of deterrence sit conformably with the modern awards objective and the considerations the Commission is required to take into account in giving effect to that objective.

[151] The modern awards objective is to ‘ensure that modern awards, together with the NES, provide a fair and relevant minimum safety net of terms and conditions’. As we have mentioned, fairness in this context is to be assessed from the perspective of the employees and employers covered by the modern award in question. It is difficult to conceive of the circumstances in which setting a rate of pay for work at particular times or on particular days with the objective of deterring the scheduling of work at that time or on those days can be said to be fair to the employers covered by the relevant modern award.

[152] Nor is the notion of deterring the scheduling of work at particular times or on particular days expressly mentioned as a s.134 consideration. Indeed the matters mentioned in s.134(1)(a) to (h) appear to be inconsistent with the concept of deterrence. In particular, the ‘need to promote flexible modern work practices and the efficient and productive performance of work’ (s.134(1)(d)) appears antithetical to the idea of deterring the performance of work at specified times.

[153] Further, s.134(1)(da)(ii) and (iii) refer specifically to employees working ‘unsocial … hours’ and ‘working on weekends or public holidays’ and ‘the need to provide additional remuneration’ for employees in such circumstances. We deal later with the proper construction of s.134(1)(da), but it suffices for present purposes to observe that the provision is focused on the compensatory element of the historical rationale for penalty rates – there is no express reference in s.134(1)(da) to the notion of deterrence.

[154] We also note that the FW Act directly addresses the adverse consequences associated with working excessive hours by providing a right to refuse to work unreasonable hours. Section 62(1) provides:

‘(1) An employer must not request or require an employee to work more than the following number of hours in a week unless the additional hours are reasonable:

(a) for a full-time employee--38 hours; or

(b) for an employee who is not a full-time employee--the lesser of:

(i) 38 hours; and
(ii) the employee’s ordinary hours of work in a week.’

[155] Section 62(2) gives an employee a right to refuse to work additional hours ‘if they are unreasonable’. The criteria for determining whether additional hours are reasonable or unreasonable are set out in s.62(3):

‘(3) In determining whether additional hours are reasonable or unreasonable for the purposes of subsections (1) and (2), the following must be taken into account:

(a) any risk to employee health and safety from working the additional hours;

(b) the employee’s personal circumstances, including family responsibilities;

(c) the needs of the workplace or enterprise in which the employee is employed;

(d) whether the employee is entitled to receive overtime payments, penalty rates or other compensation for, or a level of remuneration that reflects an expectation of, working additional hours;

(e) any notice given by the employer of any request or requirement to work the additional hours;

(f) any notice given by the employee of his or her intention to refuse to work the additional hours;

(g) the usual patterns of work in the industry, or the part of an industry, in which the employee works;

(h) the nature of the employee’s role, and the employee’s level of responsibility;

(i) whether the additional hours are in accordance with averaging terms included under section 63 in a modern award or enterprise agreement that applies to the employee, or with an averaging arrangement agreed to by the employer and employee under section 64;

(j) any other relevant matter.’

[156] The Explanatory Memorandum to what is now s.62(2) makes clear (at paragraph 250) that ‘the relevance of each of these factors and the weight to be given to each of them will vary according to the particular circumstances’, and that in some instances ‘a single factor will be of great importance and outweigh all others’, whilst in other instances it will be necessary to undertake ‘a balancing exercise between factors’.

[157] The cases which have applied these provisions make it clear that an employer cannot simply require an employee to work additional hours without regard to the employee’s personal circumstances. 62 What is ‘reasonable’ is necessarily assessed on a case-by-case basis, by reference to the employee’s circumstances and the employer’s business in accordance with the terms of s.62(3).63

[158] Having regard to recent arbitral authority, the terms of the modern awards objective, and the scheme of the FW Act, it seems to us that deterrence is no longer a relevant consideration in the setting of weekend penalty rates. We accept that the imposition of a penalty rate may have the effect of deterring employers from scheduling work at specified times or on certain days, but that is a consequence of the imposition of an additional payment for working at such times or on such days, it is not the objective of those additional payments. Compensating employees for the disutility associated with working on weekends is a primary consideration in the setting of weekend penalty rates.

[159] We note that the Productivity Commission has expressed a different view in respect of public holiday penalty rates:

‘… by definition, genuine public holidays are intended to serve a special community role and, as such, there are strong grounds to limit the expectation that they are for working. In that sense, the original concept of deterrence continues to have relevance’. 64

[160] We accept that public holidays, by their nature, are intended ‘to serve a special community role’ and that the expectation (and practice) is that the vast majority of employees do not work on public holidays. But these features do not support the adoption of deterrence as an objective in setting an appropriate penalty rate for working on public holidays. Rather, they are relevant considerations in determining the amount of compensation to be provided to employees who work on public holidays, given the additional disutility associated with working on a day when the vast majority of other employees (and, it may be inferred, a substantial proportion of their friends and family) are enjoying a day of leisure.

[161] We now turn to the s.134 considerations.

(iv) The s.134 considerations

[162] In order for the Commission to be satisfied that a modern award is not achieving the modern awards objective it is not necessary to make a finding that the award fails to satisfy one or more of the s.134 considerations. 65 Generally speaking, the s.134 considerations do not set a particular standard against which a modern award can be evaluated; many of them may be characterised as broad social objectives. As the Full Court of the Federal Court said in National Retail Association v Fair Work Commission:

‘It is apparent from the terms of s.134(1) that the factors listed in (a)–(h) are broad considerations which the FWC must take into account in considering whether a modern award meets the objective set by s.134(1), that is to say, whether it provides a fair and relevant minimum safety net of terms and conditions. The listed factors do not, in themselves, however, pose any questions or set any standard against which a modern award could be evaluated. Many of them are broad social objectives. What, for example, was the finding called for in relation to the first factor (“relative living standards and the needs of the low paid”)? Furthermore, it was common ground that some of the factors were inapplicable to the SDA’s claim.’ 66

[163] There is a degree of tension between some of the s.134 considerations. The Commission’s task is to balance the various considerations and ensure that modern awards provide a fair and relevant minimum safety net of terms and conditions. This balancing exercise and the diverse circumstances pertaining to particular modern awards may result in different outcomes in different modern awards. As the Full Bench observed in the Preliminary Jurisdictional Issues decision:

‘The need to balance the competing considerations in s.134(1) and the diversity in the characteristics of the employers and employees covered by different modern awards means that the application of the modern awards objective may result in different outcomes between different modern awards.

Given the broadly expressed nature of the modern awards objective and the range of considerations which the Commission must take into account there may be no one set of provisions in a particular award which can be said to provide a fair and relevant safety net of terms and conditions. Different combinations or permutations of provisions may meet the modern awards objective.’ 67

[164] Some of the s.134 considerations have been the subject of comment in other proceedings and some were the subject of submissions in the present proceedings.

[165] Section 134(1)(a) requires that we take into account ‘relative living standards and the needs of the low paid’. This consideration incorporates two related, but different, concepts. As explained in the 2012–13 Annual Wage Review decision:

‘The former, relative living standards, requires a comparison of the living standards of award-reliant workers with those of other groups that are deemed to be relevant. The latter, the needs of the low paid, requires an examination of the extent to which low-paid workers are able to purchase the essentials for a “decent standard of living” and to engage in community life. The assessment of what constitutes a decent standard of living is in turn influenced by contemporary norms.’ 68

[166] In successive Annual Wage Reviews the Expert Panel has concluded that a threshold of two-thirds of median full-time wages provides ‘a suitable and operational benchmark for identifying who is low paid’, within the meaning of s.134(1)(a). 69 There is, however, no single accepted measure of two-thirds of median (adult) ordinary time earnings. The surveys that provide the information about the distribution of earnings from which a median is derived vary in their sources, coverage and definitions in ways that affect the absolute values of average and median wages (and, accordingly, what constitutes two-thirds of those values).70 The two main Australian Bureau of Statistics (ABS) surveys of the distribution of earnings are the ‘Employee Earnings, Benefits and Trade Unions Membership 71 (the ‘EEBTUM’) and the survey of Employee Earnings and Hours 72 (the ‘EEH’). We note that the EEBTUM is no longer published and the relevant data is now produced as part of the Characteristics of Employment Survey73 (the ‘CoE’). Some data is also available from the HILDA survey.74

[167] In the 2015–16 Annual Wage Review decision the Expert Panel noted that the submissions provided different estimates of the ‘two-thirds of median (adult) ordinary time earnings’ threshold. The relevant extract from that decision, and the Expert Panel’s conclusion, are set out below:

‘In its submission, the Australian Government provided two estimates to identify low-paid workers:

• $18.67 per hour (or about $710.00 per week over a 38-hour week), using the May 2014 EEH data; and


• $18.42 per hour (or about $700.00 per week over a 38-hour week) using the 2014 HILDA survey data.

The Australian Government contended that there were about 1.3 million low-paid employees in 2014 (or 13.3 per cent of all employees), with around one-third of award-reliant workers being low paid in the EEH data. Their analysis took explicit account of the number and the level of pay of junior workers.

The ACTU used unpublished ABS EEH data on the distribution of award only workers by hourly earnings to estimate the number of employees at each award classification level. On the basis of the May 2014 data, the ACTU estimated that 43 per cent of award only employees had hourly earnings at or below the C10 rate of pay in May 2014 ($724.50).

Research Report 6/2013 found that around 75 per cent of adult award-reliant employees in the non-public sector were earning below the C10 rate of $18.60 per hour. 

Whilst no specific conclusion is available, the information as a whole suggests that a sizeable proportion—probably a majority—of employees who are award reliant are also low paid by reference to the two-thirds of median weekly earnings benchmark.’ 75 (footnotes omitted)

[168] The most recent data for the ‘low paid’ threshold is set out below:

Two-thirds of median full-time earnings Characteristics of Employment survey (Aug. 2015) 76 Employee Earnings and Hours survey (May 2016) 77

$/week 818.67 917.33

[169] The assessment of relative living standards focuses on the comparison between award-reliant workers and other employed workers, especially non-managerial workers. 78 As noted in the 2015–16 Annual Wage Review decision:

‘There is no doubt that the low paid and award reliant have fallen behind wage earners and employee households generally over the past two decades, whether on the basis of wage income or household income.’ 79

[170] Award reliance is a measure of the proportion of employees whose pay rate is set according to the relevant award rate specified for the classification of the employee and not above that rate. Table 4.8 from the 2015–16 Annual Wage Review decision sets out the extent of award reliance by industry. 80 Relevantly for present purposes, the most recent data identify the Accommodation and food services and Retail trade industries as among the most award reliant in that they are the industries in which the highest proportion of employees are award reliant (42.7 per cent and 34.5 per cent, respectively).

[171] The relative living standard of employees is affected by the level of wages they earn, the hours they work, tax-transfer payments and the circumstances of the households in which they live. 81 As a general proposition, around two-thirds of low-paid employees are found in low income households (i.e. in the bottom half of the distribution of employee households) and have lower living standards than other employees. Many low-paid employees live in households with low or very low disposable incomes.82

[172] In taking into account ‘relative living standards’ in the context of Annual Wage Reviews, the Expert Panel has paid particular attention to changes in the earnings of all award-reliant employees compared to changes in measures of average and median earnings more generally. 83

[173] In the 2015–16 Annual Wage Review decision the Expert Panel also observed that increases in modern award minimum wages have a positive impact on the relative living standards of the low paid and on their capacity to meet their needs. 84 It seems to us that the converse also applies, that is, the variation of a modern award which has the effect of reducing the earnings of low-paid employees will have a negative impact on their relative living standards and on their capacity to meet their needs.

[174] Section 134(1)(b) requires that we take into account ‘the need to encourage collective bargaining’.

[175] In the context of Annual Wage Review decisions the Expert Panel has consistently adopted the following propositions about the relationship between increases in minimum wages and enterprise bargaining:

• whilst the gap between award minimum wages and bargained wages is likely to increase the incentive for employees to bargain, a large gap may be a disincentive for employers to bargain;


• minimum wages are only one element of the incentive to bargain; and


• there is no evidence that the incentive to bargain has been adversely affected by the increases in minimum wages which have occurred over the last decade. 85

[176] Further, Research Report 7/2013, dealing with incentives to bargain, concluded as follows:

‘The study did not reveal a positive or negative relationship between AWR increases and the incentive to bargain, instead pointing to a complex mix of factors that may contribute to employee and employer decision-making about whether to not to bargain…

The workplace case studies, qualitative relativities analysis and Award Reliance Survey each suggest that there may be a link between minimum wages (and their associated instruments) themselves and over-award wage outcomes, but the extent of this link remains unclear and may require further investigation.’ 86

[177] In the Annual Wage Review 2013–14 decision the Expert Panel commented on the above research, noting that:

‘The research does not reveal any particular relationship between minimum award increases and the incentive to bargain. Instead it points to a complex mix of factors that may contribute to employee and employer decision-making about whether or not to bargain.’ 87

[178] It seems to us that the observations made by the Expert Panel in the context of Annual Wage Reviews are also apposite to the present context. A reduction in penalty rates is likely to increase the incentive for employees to bargain, but may also create a disincentive for employers to bargain. It is also likely that employee and employer decision-making about whether or not to bargain is influenced by a complex mix of factors, not just the level of penalty rates in the relevant modern award.

[179] Section 134(1)(c) requires that we take into account ‘the need to promote social inclusion through increased workforce participation’. The use of the conjunctive ‘through’ makes it clear that in the context of s.134(1)(c), social inclusion is a concept to be promoted exclusively ‘through increased workforce participation’, that is obtaining employment is the focus of s.134(1)(c).

[180] However, we also accept that the level of penalty rates in a modern award may impact upon an employee’s remuneration and hence their capacity to engage in community life and the extent of their social participation. The broader notion of promoting social inclusion is a matter that can be appropriately taken into account in our consideration of the legislative requirement to ‘provide a fair and relevant minimum safety net of terms and conditions’ and to take into account ‘the needs of the low paid’ (s.134(1)(a)). Further, one of the objects of the FW Act is to promote ‘social inclusion for all Australians by’ (among other things) ‘ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through … modern awards and national minimum wage orders’ (s.3(b)). 88

[181] The likely impact of any exercise of modern award powers on ‘employment growth’ is also one of the considerations we are required to take into account, by s.134(1)(h). It is these considerations (i.e. ss.134(1)(c) and (h)) which have led us to assess the likely impact of any proposed change to penalty rates on employment growth, that is the creation of new jobs or an increase in hours worked.

[182] Section 134(1)(d) requires that we take into account ‘the need to promote flexible modern work practices and the efficient and productive performance of work’.

[183] We deal further with this consideration later in our decision when addressing the review of the particular modern awards before us.

[184] Section 134(1)(da) requires that we take into account the ‘need to provide additional remuneration’ for:

‘(i) employees working overtime; or
(ii) employees working unsocial, irregular or unpredictable hours; or
(iii) employees working on weekends or public holidays; or
(iv) employees working shifts.’

[185] Section 134(1)(da) was inserted by the Fair Work Amendment Act 2013 (Cth), with effect from 1 January 2014. The Explanatory Memorandum to the Fair Work Amendment Bill 2013 made the following observation about the addition of s.134(1)(da):

‘Under the FW Act, the FWC must ensure that modern awards, together with the National Employment Standards, provide a fair and relevant safety net of terms and conditions. In making or varying modern awards, the FWC must take into account the modern awards objective (see subsection 134(1) of the FW Act).

Item 1 of Schedule 2 to the Bill amends the modern awards objective to include a new requirement for the FWC to consider, in addition to the existing factors set out in subsection 134(1) of the FW Act, the need to provide additional remuneration for:

• employees working overtime;


• employees working unsocial, irregular or unpredictable hours;


• employees working on weekends or public holidays; or


• employees working shifts.



This amendment promotes the right to fair wages and in particular recognises the need to fairly compensate employees who work long, irregular, unsocial hours, or hours that could reasonably be expected to impact their work/life balance and enjoyment of life outside of work.’

[186] In the second reading speech to the Fair Work Amendment Bill 2013 the then Minister for Employment and Workplace Relations said:

‘… as part of this Bill, the Government is seeking to ensure that work at hours which are not family friendly is fairly remunerated. This will be done by amending the modern awards objective to ensure that the Fair Work Commission, in carrying out its role, must take into account the need to provide additional remuneration for employees working outside normal hours, such as employees working overtime or on weekends…’

[187] Section 134(1)(da) is a relatively new provision and one which did not exist at the time the modern awards under review were made. These provisions have not yet been the subject of substantive arbitral or judicial comment.

[188] Five observations may be made about s.134(1)(da).

[189] First, s.134(1)(da) speaks of the ‘need to provide additional remuneration’ for employees performing work in the circumstances mentioned in s.134(1)(da)(i), (ii), (iii) and (iv).

[190] An assessment of ‘the need to provide additional remuneration’ to employees working in the circumstances identified in paragraphs 134(1)(da)(i) to (iv) requires a consideration of a range of matters, including:

(i) the impact of working at such times or on such days on the employees concerned (i.e. the extent of the disutility);

(ii) the terms of the relevant modern award, in particular whether it already compensates employees for working at such times or on such days (e.g. through ‘loaded’ minimum rates or the payment of an industry allowance which is intended to compensate employees for the requirement to work at such times or on such days); and

(iii) the extent to which working at such times or on such days is a feature of the industry regulated by the particular modern award.

[191] Assessing the extent of the disutility of working at such times or on such days (issue (i) above) includes an assessment of the impact of such work on employee health 89 and work-life balance, taking into account the preferences of the employees for working at those times.

[192] The expression ‘additional remuneration’ in the context of s.134(1)(da) means remuneration in addition to what employees would receive for working what are normally characterised as ‘ordinary hours’, that is reasonably predictable hours worked Monday to Friday within the ‘spread of hours’ prescribed in the relevant modern award. Such ‘additional remuneration’ could be provided by means of a penalty rate or loading paid in respect of, for example, work performed on weekends or public holidays. Alternatively, additional remuneration could be provided by other means such as a ‘loaded hourly rate’. 90

[193] As mentioned, s.134(1)(da) speaks of the ‘need’ to provide additional remuneration. We note that the minority in Re Restaurant and Catering Association of Victoria 91 (the Restaurants 2014 Penalty Rates decision) made the following observation about s.134(1)(da):

‘This factor must be considered against the profile of the restaurant industry workforce and the other circumstances of the industry. It is relevant to note that the peak trading time for the restaurant industry is weekends and that employees in the industry frequently work in this industry because they have other educational or family commitments. These circumstances distinguish industries and employees who expect to operate and work principally on a 9am-5pm Monday to Friday basis. Nevertheless the objective requires additional remuneration for working on weekends. As the current provisions do so, they meet this element of the objective.’ 92 (emphasis added)

[194] To the extent that the above passage suggests that s.134(1)(da) ‘requires additional remuneration for working on weekends’, we respectfully disagree. We acknowledge that the provision speaks of ‘the need for additional remuneration’ and that such language suggests that additional remuneration is required for employees working in the circumstances identified in paragraphs 134(1)(da)(i) to (iv). But the expression ‘the need for additional remuneration’ must be construed in context, and the context tells against the proposition that s.134(1)(da) requires additional remuneration be provided for working in the identified circumstances.

[195] Section s.134(1)(da) is a relevant consideration, it is not a statutory directive that additional remuneration must be paid to employees working in the circumstances mentioned in paragraphs 134(1)(da)(i), (ii), (iii) or (iv). Section 134(1)(da) is a consideration which we are required to take into account. To take a matter into account means that the matter is a ‘relevant consideration’ in the Peko-Wallsend 93sense of matters which the decision maker is bound to take into account. As Wilcox J said in Nestle Australia Ltd v Federal Commissioner of Taxation:

‘To take a matter into account means to evaluate it and give it due weight, having regard to all other relevant factors. A matter is not taken into account by being noticed and erroneously disregarded as irrelevant’. 94

[196] Importantly, the requirement to take a matter into account does not mean that the matter is necessarily a determinative consideration. This is particularly so in the context of s.134 because s.134(1)(da) is one of a number of considerations which we are required to take into account. No particular primacy is attached to any of the s.134 considerations. The Commission’s task is to take into account the various considerations and ensure that the modern award provides a ‘fair and relevant minimum safety net’.

[197] A further contextual consideration is that ‘overtime rates’ and ‘penalty rates’ (including penalty rates for employees working on weekends or public holidays) are terms that may be included in a modern award (s.139(1)(d) and (e)); they are not terms that must be included in a modern award. As the Full Bench observed in the 4 yearly review of modern awards – Common issue – Award Flexibility decision:

‘… s.134(1)(da) does not amount to a statutory directive that modern awards must provide additional remuneration for employees working overtime and may be distinguished from the terms in Subdivision C of Division 3 of Part 2-3 which must be included in modern awards…’ 95

[198] Further, if s.134(1)(da) was construed such as to require additional remuneration for employees working, for example, on weekends, it would have significant consequences for the modern award system, given that about half of all modern awards currently make no provision for weekend penalty rates. 96 If the legislative intention had been to mandate weekend penalty rates in all modern awards then one would have expected that some reference to the consequences of such a provision would have been made in the extrinsic materials.

[199] Third, s.134(da) does not prescribe or mandate a fixed relationship between the remuneration of those employees who, for example, work on weekends or public holidays, and those who do not. The additional remuneration paid to the employees whose working arrangements fall within the scope of the descriptors in s.134(1)(da)(i)–(v) will depend on, among other things, the circumstances and context pertaining to work under the particular modern award.

[200] Fourth, s.134(1)(da)(ii) is not to be read as a composite expression, rather the use of the disjunctive ‘or’ makes it clear that the provision is dealing with separate circumstances: ‘unsocial, irregular or unpredictable hours’ (emphasis added).

[201] Section 134(1)(da)(ii) requires that we take into account the need to provide additional remuneration for employees working in each of these circumstances. The expression ‘unsocial … hours’ would include working late at night and or early in the morning, given the extent of employee disutility associated with working at these times. ‘Irregular or unpredictable hours’ is apt to describe casual employment.

[202] Fifth, s.134(1)(da) identifies a number of circumstances in which we are required to take into account the need to provide additional remuneration (i.e. those in paragraphs 134(1)(da)(i) to (iv)). Working ‘unsocial … hours’ is one such circumstance (s.134(1)(da)(i)) and working ‘on weekends or public holidays’ (s.134(1)(da)(iii)) is another. The inclusion of these two, separate, circumstances leads us to conclude that it is not necessary to establish that the hours worked on weekends or public holidays are ‘unsocial … hours’. Rather, we are required to take into account the need to provide additional remuneration for working on weekends or public holidays, irrespective of whether working at such times can be characterised as working ‘unsocial … hours’. 97 Ultimately, however, the issue is whether an award which prescribes a particular penalty rate provides ‘a fair and relevant minimum safety net.’ A central consideration in this regard is whether a particular penalty rate provides employees with ‘fair and relevant’ compensation for the disutility associated with working at the particular time(s) to which the penalty attaches.

[203] For completeness we note that the Australian Chamber of Commerce and Industry (ACCI) and ABI drew attention to the fact that s.134(1)(da)(iii) speaks of ‘working on weekends’ and does not distinguish between Saturdays and Sundays and submit that:

‘It is noteworthy that the FW Act does not prescribe that Sundays are to receive an increased loading. Instead, section 134(1)(da)(iii) accords Saturdays and Sundays equal treatment by referring to both days as the “weekend”.

Unless there is an evidentiary basis that justifies providing employees working Sundays with increased remuneration, employees working weekends should all be treat in the same manner. There is nothing contained within the modern awards objective that would suggest a different approach.’ 98

For our part we do not think that any particular significance attaches to the reference to ‘weekends’ in s.134(1)(da)(iii), rather than ‘Saturdays and Sundays.’ It cannot be reasonably inferred that the use of the word ‘weekends’ manifests a legislative intention that there be no distinction between the level of additional remuneration provided for Saturday and Sunday work. Any additional remuneration provided for Saturday or Sunday work in a particular modern award will depend on the circumstances and merits in each case.

[204] Section 134(1)(e) requires that we take into account ‘the principle of equal remuneration for work of equal or comparable value’.

[205] The ‘Dictionary’ in s.12 of the FW Act states, relevantly:

‘In this Act:

equal remuneration for work of equal of comparable value: see subsection 302(2).’

[206] The expression ‘equal remuneration for work of equal or comparable value’ is defined in s.302(2) to mean ‘equal remuneration for men and women workers for work of equal or comparable value’.

[207] The appropriate approach to the construction of s.134(1)(e) is to read the words of the definition into the substantive provision such that in giving effect to the modern awards objective the Commission must take into account the principle of ‘equal remuneration for men and women workers for work of equal or comparable value’. 99

[208] United Voice contends that women make up the majority of the hospitality workforce and a significant proportion of the workers who receive penalty rates. On this basis United Voice submits that:

‘Cuts to penalty rates will disproportionality affect women’. 100

[209] To make good the proposition advanced, it would have to be shown that more female hospitality workers usually work on Sundays, than males. But no data has been presented which shows the number of hospitality workers who usually work on Sundays, by gender. Further, the available data does not appear to support the proposition advanced.

[210] Dr Oliver’s expert report deals with the impact of penalty rates on the wages of hospitality workers. The report utilises unit record data from both the HILDA Survey and the Australian Workplace Relations Study (AWRS) to show that:

• of all hospitality workers who receive penalty rates, 50.7 per cent are male compared to 49.3 per cent who are female (AWRS data). 101


• Of all hospitality workers who usually work on either Saturdays and/or Sundays, 57.4 per cent are male compared with 42.6 per cent who are female (HILDA data). 102

[211] The SDA advanced a similar submission 103 to that put by United Voice in relation to retail workers and submits that any cuts to penalty rates in the General Retail Industry Award 2010 will ‘disproportionately affect women’.104 There is no evidence before us which shows the number of retail workers who usually work on Sundays, by gender.

[212] Data drawn from the ABS Working Time Arrangements series shows that across surveys conducted in 2006, 2009 and 2012 the proportion of male employees who usually work on Sundays was greater than the proportion of female employees who usually work on Sundays. 105 But this is ‘all industries’ data. It is not confined to the retail industry.

[213] Using HILDA data, Dr Watson and Peetz conclude that females outnumbered males among young workers (i.e. aged 15–18 years) in the weekend retail workforce.¹⁰⁶ The SDA acknowledges that this material does not directly deal with the question of whether more female retail workers work on Sundays than males, but submits that this data:

‘… does provide a strong basis to infer that women working in retail on Sundays outnumber men in some material proportion.’ 107

[214] We disagree. The data relied on deals with weekend retail work, it is not confined to Sunday work and, further, it only relates to young workers not all retail workers. In this regard it is relevant to observe that over the past decade the proportion of 15–19 year olds in the retail workforce has gradually declined from 23.5 per cent in November 2004 to 18.3 per cent in November 2013. 108

[215] Further, even if it was shown that a reduction in Sunday penalty rates disproportionately impacted on women workers that fact would not necessarily enliven s.134(1)(e). Section 134(1)(e) requires that we take into account the principle of equal remuneration for men and women workers ‘for work of equal or comparable value’. Any reduction in Sunday penalty rates in these awards would apply equally to men and women workers.

[216] However, if it was shown that a reduction in penalty rates did disproportionately affect female workers then it is likely to have an adverse impact on the gender pay gap. Such an outcome may well be relevant to an assessment of whether such a change would provide a ‘fair and relevant minimum safety net’, but it does not necessarily enliven s.134(1)(e).

[217] Section 134(1)(f) requires that we take into account ‘the likely impact of any exercise of modern award powers on business, including on productivity, employment costs and the regulatory burden’.

[218] We note at the outset that s.134(1)(f) is expressed in very broad terms. We are required to take into account the likely impact of any exercise of modern award powers ‘on business, including’ (but not confined to) the specific matters mentioned, that is, ‘productivity, employment costs and the regulatory burden’.

[219] It is axiomatic that the exercise of modern award powers to vary a modern award to reduce penalty rates is likely to have a positive impact on business, by reducing employment costs for those businesses that require employees to work at times, or on days, which are subject to a penalty rate. The impact of a reduction in penalty rates upon productivity is less clear.

[220] The term ‘productivity’ appears in several Parts of the FW Act:

• Part 1-1 – Introduction: s.3 Object of the Act


• Part 2-3 – Modern Awards: s.134 The modern awards objective


• Part 2-4 – Enterprise agreements: s.171 Objective of the Part, ss.241 and 243 Low paid bargaining and authorisation


• Part 2-5 – Workplace determinations: ss.262 and 275


• Part 2-6 – Minimum wages: s.284 The minimum wages objective


• Part 2-8 – Transfer of business: ss.318–320 Making and variation of transferable instruments.

[221] ‘Productivity’ is not defined in the FW Act but given the context in which the word appears it is clear that it is used to signify an economic concept.

[222] The Productivity Commission defines productivity as:

‘… a measure of the rate at which outputs of goods and services are produced per unit of input (labour, capital, raw materials, etc). It is calculated as the ratio of the quantity of outputs produced to some measure of the quantity of inputs used’. 109

[223] Similarly, the Commonwealth Treasury also defines productivity by reference to volumes of inputs and output:

‘Productivity is a measure of the rate at which inputs, such as labour, capital and raw materials, are transformed into outputs. The level of productivity can be measured for firms, industries and economies. Productivity growth implies fewer inputs are used to produce a given output or, for a given set of inputs, more output is produced.’ 110

[224] The conventional economic meaning of productivity is the number of units of output per unit of input. It is a measure of the volumes or quantities of inputs and outputs, not the cost of purchasing those inputs or the value of the outputs generated. As the Full Bench observed in the Schweppes Australia Pty Ltd v United Voice – Victoria Branch:

‘… we find that ‘productivity’ as used in s.275 of the Act, and more generally within the Act, is directed at the conventional economic concept of the quantity of output relative to the quantity of inputs. Considerations of the price of inputs, including the cost of labour, raise separate considerations which relate to business competitiveness and employment costs.

Financial gains achieved by having the same labour input – the number of hours worked – produce the same output at less cost because of a reduced wage per hour is not productivity in this conventional sense.’ 111

[225] While the above observation is directed at the use of the word ‘productivity’ in s.275, it is apposite to our consideration of this issue in the context of s.134(1)(f).

[226] Section 134(1)(g) requires that we take into account ‘the need to ensure a simple, easy to understand, stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards’.

[227] We deal further with this consideration later in our decision when addressing the review of the particular modern awards before us.

[228] Section 134(1)(h) requires that we take into account ‘the likely impact of any exercise of modern award powers on employment growth, inflation and the sustainability, performance and competitiveness of the national economy’.

[229] We note that the requirement to take into account the likely impact of any exercise of modern award powers on ‘the sustainability, performance and competitiveness of the national economy’ (emphasis added) focuses on the aggregate (as opposed to sectorial) impact of an exercise of modern award powers. We deal further with this consideration later in our decision when addressing the review of the particular modern awards before us.

3.4 The proposed ‘material change in circumstances test’

[230] A central contention advanced by the SDA and United Voice in these proceedings is that in order to enliven its discretion in the Review to vary a modern award the Commission must first be satisfied that since the making of the modern award there has been a material change in circumstances pertaining to the operation or effect of the award such that the modern award is no longer meeting the modern awards objective (the ‘material change in circumstances test’). It is said to follow from this proposition that a sufficient merit argument and supporting probative evidence must be directed at establishing the existence of the requisite material change in the period since the making of the modern award. The material change in circumstances test is said to be consistent with the approach articulated in the Preliminary Jurisdictional Issues decision; more recent Full Bench decisions and the statutory context of the Review. The more recent Full Bench decisions referred to are: Re Security Services Industry Award 2010 112 and Re Stevedoring Industry Award 2010.113

[231] The Australian Council of Trade Unions (ACTU) puts the test somewhat differently:

‘… the safety net has evolved on the basis of whether particular conditions of employment are a necessary or desirable minimum for workers and whether such conditions are achievable given the impact on employers and the economy more generally. In this framework, it is unsurprising that the minimum conditions contained in awards are rarely eroded: to do so would effectively require proof that economic and social development had regressed to a point where it is no longer economically sustainable to continue to provide such minimums, notwithstanding their desirability.’ 114

[232] It is convenient to refer to the proposition advanced by the ACTU as the ‘economic unsustainability test’.

[233] We turn first to the relevant statutory context. The SDA advances this aspect of its argument in the following way:

‘… The critical aspect of the statutory context is the legislative acceptance (recognised by the Full Bench in the Preliminary Jurisdictional decision) that, at the time a modern award was made, it was meeting the modern award objectives. In this way, the award is in effect deemed to meet the modern award objective. Once this is understood, it necessarily follows that a material change in circumstances must be established in order to properly justify a proposed variation to a modern award - to do otherwise is to ignore the statutory mandate that modern awards, when made, achieved the modern award’s objective. The fact of the making of the modern awards and their legal character as meeting the modern award objective forms an essential part of the historical context of the Review recognised by the Full Bench in the Preliminary Jurisdictional decision.

The fact that particular minimum entitlements in a modern award might not have been the subject of detailed evidentiary consideration in award modernisation is irrelevant to a proper understanding of the Commission’s statutory function in the 4 yearly review. That function is directed at ensuring instruments which, when made 6 years ago met the modern award’s objective, continue to meet that objective.

Given the character of modern awards as being deemed to have met the modern award objective when made, it must necessarily follow that any variation of their terms requires the making of a finding by the Commission of some material change in the circumstances pertaining to the operation or effect of an award such that it no longer can be said to meet the modern awards objective. That task necessarily directs attention to the existence, or otherwise, of change in relevant circumstances since the making of a modern award.’ 115

[234] Section 156 sets out the requirement to conduct 4 yearly reviews of modern awards and what may be done in such reviews. As we have mentioned, ascertaining the meaning of s.156 necessarily begins with the ordinary and grammatical meaning of the words used. 116 These words must be read in context by reference to the language of the Act as a whole and to the legislative purpose.117 Section 578(a) of the FW Act also directs attention to the objects of the FW Act. Of course it must be borne in mind that the purpose or policy of the Act is to be gleaned from a consideration of all of the relevant provisions of the Act.118 Section 15AA of the Acts Interpretation Act 1901 (Cth) requires that a construction that would promote the purpose or object of the FW Act is to be preferred to one that would not promote that purpose or object. The purpose or object of the FW Act is to be taken into account even if the meaning of a provision is clear. When the purpose or object is brought into account an alternative interpretation may become apparent. If one interpretation does not promote the object or purpose of the FW Act, and another does, the latter interpretation is to be preferred. Of course, s.15AA requires us to construe the FW Act, in the light of its purpose, not to rewrite it.119

[235] Section 156(1) provides that the Commission must conduct a 4 yearly review of modern awards starting as soon as practicable after each 4^th anniversary of the commencement of Part 2-3 of the FW Act. Part 2-3 commenced on 1 January 2010, 120 hence the first Review is to start as soon as practicable after 1 January 2014.

[236] Section 156(2) deals with what has to be done in a Review; it provides that the Commission:

• must review all modern awards (s.156(2)(a));


• may make one or more determinations varying or revoking modern awards (s.156(2)(b)(i) and (iii)) and may make one or more modern awards (s.156(2)(b)(ii)); and


• must not review, or make a determination to vary, a default fund term of a modern award (s.156(2)(c)).

[237] Section 156(3) deals with the variation of modern award minimum wages in a Review. ‘Modern award minimum wages’ are defined in s.284(3) as the rates of minimum wages in modern awards, including:

(a) wage rates for junior employees, employees to whom training arrangements apply and employees with a disability; and
(b) casual loadings; and
(c) piece rates.

[238] Section 156(3) provides that the Commission may vary modern award minimum wages ‘only if’ the Commission is satisfied that the variation is justified by ‘work value reasons’. ‘Work value reasons’ is defined in s.156(4):

‘Work value reasons are reasons justifying the amount that employees should be paid for doing a particular kind of work, being reasons related to any of the following:

(a) the nature of the work;
(b) the level of skill or responsibility involved in doing the work;
(c) the conditions under which the work is done.’

[239] We note here that subsections 156(3) and (4) were the subject of some consideration in the Equal Remuneration Decision 2015 121 in which the Full Bench said:

‘We see no reason in principle why a claim that the minimum rates of pay in a modern award undervalue the work to which they apply for gender-related reasons could not be advanced for consideration under s.156(3) or s.157(2). Those provisions allow the variation of such minimum rates for ‘work value reasons’, which expression is defined broadly enough in s.156(4) to allow a wide-ranging consideration of any contention that, for historical reasons and/or the application of an indicia approach, undervaluation has occurred because of gender inequity. There is no datum point requirement in that definition which would inhibit the Commission from identifying any gender issue which has historically caused any female-dominated occupation or industry currently regulated by a modern award to be undervalued.’ 122 (emphasis added)

[240] The absence of a datum point requirement in s.156(4) is a matter of some significance in the present context and we return to it later.

[241] Section 156(5) requires that each modern award must be reviewed in its own right, though this does not prevent the Commission from reviewing 2 or more modern awards at the same time.

[242] The mode of expression used in s.156 is a significant textual indicator of legislative purpose. As Spigelman CJ observed in Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd:

‘Substantial, indeed often, but not always, determinative weight must be given to language which is in mandatory form.’ 123

[243] The words ‘must’ and ‘must not’ in ss.156(1), (2)(a), (2)(c) and (5) constitute language in mandatory form. 124 The use of these words may be contrasted with the use of ‘may’ in s.156(2)(b)(i), as in the Commission ‘may make one or more determinations varying modern awards’. The word ‘may’ usually connotes the conferral of a discretion.125 That is plainly the intent of s.156(2)(b)(i) and no party contended otherwise.

[244] Section 156 clearly delineates what must be done in a Review, what must not be done and what may be done. Further, where the legislative intent is to qualify a discretion it is done expressly, as in s.156(3). The Commission may vary modern award minimum wages ‘only if’ it is satisfied that the variation is justified by work value reasons. This may be contrasted with the discretion in s.156(2)(b)(i) to make determinations varying modern awards in a Review which is expressed in general, unqualified, terms.

[245] An unqualified discretion is confined only by the subject matter and the legislative context and purpose. 126 The apparent scope of a discretion such as that in s.156(2)(b)(i) may be limited by other sections of the FW Act.

[246] A number of provisions in the FW Act which are relevant to the Review operate to constrain the breadth of the discretion in s.156(2)(b)(i). As we have already mentioned, in exercising its powers in a Review the Commission is exercising ‘modern award powers’ (see s.134(2)(a)) and hence the modern awards objective and s.138 apply to the Review.

[247] Any variation of a modern award arising from the Review must also comply with the requirements of the FW Act which relate to the content of modern awards. Division 3 of Part 2-3 deals with the terms of modern awards, in particular terms that may or must be included in modern awards, and terms that must not be included in modern awards. This division also deals with the interaction between the NES and modern awards. These provisions are relevant to the Review and, in an appropriate case, may operate to constrain the power in s.156. 127

[248] Similarly, Division 6 of Part 2-3 contains specific provisions relevant to the exercise of modern award powers – these provisions apply to the Review. If the Commission were to make a modern award, or change the coverage of an existing modern award in the Review, then the requirements set out in s.163 must be satisfied. Sections 165 and 166 deal with when variation determinations come into operation. Determinations varying modern awards arising from the Review will generally operate prospectively, unless the Commission is satisfied that the variation is made under s.160 (which deals with variations to remove ambiguities or uncertainties, or to correct errors: see ss.165(2)(a) and 166(3)(a)) and there are exceptional circumstances that justify retrospectivity (ss.165(2)(b) and 166(3)(b)).

[249] As is apparent from their submissions, the Unions’ contention relies on ‘the legislative acceptance … that at the time a modern award was made, it was meeting the modern awards objective’. It is said to necessarily follow from this ‘legislative acceptance’ that a ‘material change in circumstances’ must be established in order to justify the variation of a modern award in the Review because ‘to do otherwise is to ignore the statutory mandate that modern awards, when made, achieved the modern awards objective’.

[250] In support of this general proposition counsel for the SDA 128 relied on the observations of Kirby P (as he then was) in Commissioner of Stamp Duties v Permanent Trustee Co Ltd (Trustee for Anzareno dal Bon and Silvanio dal Bon),129 regarding the preferred construction of inter-related legislation. In particular, the SDA relied on the following paragraphs from his Honour’s judgment:

‘Upon the hypothesis (which is admittedly often sorely tried) that there is a rational integration of the legislation of the one Parliament, it is proper for courts to endeavour to so construe inter related statutes as to produce a sensible, efficient and just operation of them in preference to an inefficient, conflicting or unjust operation. This is the approach which I take to the task of statutory interpretation…

The result is that, in construing the legislation under consideration here, I will prefer that construction which is available in the language used and which facilitates the sensible operation together of the four statutes mentioned, avoiding inefficiency and the capricious operation of revenue law which would seriously impede or discourage the availability of beneficial statutory provisions for the sale or partition of property held by co-owners. In the case of ambiguity of the legislation I consider this to be the modern approach which this Court should adopt in implementing the will of Parliament. We should presume that Parliament intended its legislation to operate rationally, efficiently and justly, together.’ 130

[251] The above observation has been endorsed by other intermediate appellate courts 131 and we have applied it to our consideration of s.156. But the adoption of such an approach does not warrant the importation of a condition on the exercise of the discretion in s.156(2)(b)(i).

[252] The terms of s.156 and the statutory context do not support the ‘material change in circumstances test’ advanced by the SDA and United Voice.

[253] The modern awards objective provides that the Commission must ensure that modern awards, together with the NES, provide a fair and relevant minimum safety net of terms and conditions, taking into account the s.134 considerations. One of those considerations is the need to ensure a ‘stable’ modern award system (s.134(1)(g)). A ‘stable’ modern award system implies that the variation of a modern award be supported by a merit argument. The extent of the argument required will depend on the circumstances. This issue was the subject of some debate in the proceedings which led to the Preliminary Jurisdictional Issues decision. In that decision the Full Bench said:

‘The Commission is obliged to ensure that modern awards, together with the NES, provide a fair and relevant minimum safety net taking into account, among other things, the need to ensure a ‘stable’ modern award system (s.134(1)(g)). The need for a ‘stable’ modern award system suggests that a party seeking to vary a modern award in the context of the Review must advance a merit argument in support of the proposed variation. The extent of such an argument will depend on the circumstances. We agree with ABI’s submission that some proposed changes may be self evident and can be determined with little formality. However, where a significant change is proposed it must be supported by a submission which addresses the relevant legislative provisions and be accompanied by probative evidence properly directed to demonstrating the facts supporting the proposed variation.

In conducting the Review the Commission will also have regard to the historical context applicable to each modern award. Awards made as a result of the award modernisation process conducted by the former Australian Industrial Relations Commission (the AIRC) under Part 10A of the Workplace Relations Act 1996 (Cth) were deemed to be modern awards for the purposes of the FW Act (see Item 4 of Schedule 5 of the Transitional Act). Implicit in this is a legislative acceptance that at the time they were made the modern awards now being reviewed were consistent with the modern awards objective. The considerations specified in the legislative test applied by the AIRC in the Part 10A process is, in a number of important respects, identical or similar to the modern awards objective in s.134 of the FW Act. 132 In the Review the Commission will proceed on the basis that prima facie the modern award being reviewed achieved the modern awards objective at the time that it was made.

Although the Commission is not bound by principles of stare decisis it has generally followed previous Full Bench decisions. In another context three members of the High Court observed in Nguyen v Nguyen:

‘Where a court of appeal holds itself free to depart from an earlier decision it should do so cautiously and only when compelled to the conclusion that the earlier decision is wrong. The occasion upon which the departure from previous authority is warranted are infrequent and exceptional and pose no real threat to the doctrine of precedent and the predictability of the law: see Queensland v The Commonwealth per Aickin J at 620.’ 133

While the Commission is not a court, the public interest considerations underlying these observations have been applied with similar, if not equal, force to appeal proceedings in the Commission. 134 As a Full Bench of the Australian Industrial Relations Commission observed in Cetin v Ripon Pty Ltd (T/as Parkview Hotel) (Cetin)135:

“Although the Commission is not, as a non-judicial body, bound by principles of stare decisis, as a matter of policy and sound administration it has generally followed previous Full Bench decisions relating to the issue to be determined, in the absence of cogent reasons for not doing so.” 136

These policy considerations tell strongly against the proposition that the Review should proceed in isolation unencumbered by previous Commission decisions. In conducting the Review it is appropriate that the Commission take into account previous decisions relevant to any contested issue. The particular context in which those decisions were made will also need to be considered. Previous Full Bench decisions should generally be followed, in the absence of cogent reasons for not doing so.’ 137

[254] It is apparent from the above extract that the adoption of the prima facie position that the modern award being reviewed achieved the modern awards objective at the time it was made is but an example of the general proposition that previous Full Bench decisions should generally be followed, in the absence of cogent reasons for not doing so.

[255] As observed by the Full Bench in the Preliminary Jurisdictional Issues decision, while it is appropriate to take account of previous decisions relevant to a contested issue arising in the Review it is necessary to consider the context in which those decisions were made. The particular context may be a cogent reason for not following a previous Full Bench decision, for example:

• the legislative context which pertained at that time may be materially different from the FW Act;


• the extent to which the relevant issue was contested and, in particular, the extent of the evidence and submissions put in the previous proceeding will be relevant to the weight to be accorded to the previous decision; or


• the extent of the previous Full Bench’s consideration of the contested issue. The absence of detailed reasons in a previous decision may be a factor in considering the weight to be accorded to the decision.

[256] It is convenient to deal now with the submission that the proposed ‘material change in circumstances test’ is consistent with the approach articulated in more recent Full Bench decisions. As mentioned earlier, the Full Bench decisions referred to are Re Security Services Industry Award 2010 138 and Re Stevedoring Industry Award 2010.139

[257] The Unions rely upon the two Full Bench decisions mentioned to support the contention that there must be ‘some material change in circumstances’ from when the award was made before the Commission’s discretion to vary the award is enlivened. However, no such requirement is evident from either decision. The Full Bench’s comments in Re Security Services Industry Award 2010 express no such requirement, rather the decision simply stands for the proposition that the proponent of an award variation should present a persuasive evidentiary case. This is apparent from the following extract from the decision:

‘While this may be the first opportunity to seek significant changes to the terms of modem awards, a substantive case for change is nevertheless required. The more significant the change, in terms of impact or a lengthy history of particular award provisions, the more detailed the case must be. Variations to awards have rarely been made merely on the basis of bare requests or strongly contested submissions. In order to found a case for an award variation it is usually necessary to advance detailed evidence of the operation of the award, the impact of the current provisions on employers and employees covered by it and the likely impact of the proposed changes. Such evidence should be combined with sound and balanced reasoning supporting a change. Ultimately the Commission must assess the evidence and submissions against the statutory tests set out above, principally whether the award provides a fair and relevant minimum safety net of terms and conditions and whether the proposed variations are necessary to achieve the modern awards objective. These tests encompass many traditional merit considerations regarding proposed award variations.’ 140 (emphasis added)  

[258] In that matter the Full Bench declined to vary the definition of ‘permanent night work’ for reason of the lack of an evidentiary case, not because of a failure to show ‘some material change in circumstance’. In declining that variation the Full Bench said:

‘In our view, a matter such as this should be considered in the light of other award provisions regarding permanent night shift penalties with appropriate adaptations for the nature of the industry. If an evidentiary case established that the current provisions were inappropriate and that the matter cannot be conveniently addressed by way of enterprise agreements or the award flexibility provision, then a case may exist for an appropriate award variation. However, the case presented fell well short of the detailed review of circumstances that might warrant a variation. In our view, the variation should not be made.’ 141 (emphasis added)

[259] In Re Stevedoring Industry Award 2010 the majority applied the approach set out in Re Security Services Industry Award 2010 142 and rejected an employer application to reduce penalty rates. The basis for the majority’s rejection of that application is set out at paragraphs [156] and [161] of their decision:

‘… the evidence led by the Applicants is inadequate to justify the significant variations to penalty rates sought, particularly in circumstances where the evidence supports a finding that there are factors unique to this industry which are relevant when considering the level of penalty rates in this Award necessary to meet the modern awards objective…

While it is not disputed that the level of penalty rates in this industry are above those in comparable industries, we are not satisfied that the Applicants have established the case for their proposed variation to penalty rates or that the variation is necessary to meet the modern awards objective. In our view, the evidence before us indicates that there are factors unique to this industry when compared to other industries that work on a 24/7 basis. However, the Applicants and other parties who appeared before us failed to go the next step and provide probative evidence which would have enabled us to determine whether the existing or some other level of penalty rates was appropriate. On such a significant issue, it is just too simplistic to argue that the level of penalty rates should be reduced in the absence of such probative evidence and on the basis that the existing level of penalty rates in the Award are above those applying in other modern awards. We acknowledge that there is an important issue to be tested here. However, simply showing that the existing level of penalty rates are above those applying in comparable awards and industries is in our view insufficient, in the absence of probative evidence, to satisfy us that the Award needs to be varied to meet the modern awards objective. As discussed earlier, the Award achieved the modern awards objective at the time that it was made and the Applicants have not established that the Award no longer meets that objective.’ 143

[260] It is apparent from the above extract that it was the absence of probative evidence that led to the rejection of the employer claim, not the failure to establish a material change in circumstances since the award was made.

[261] For completeness we would note that a proposition similar to that advanced by the Unions in these proceedings was rejected by the majority in the Restaurants 2014 Penalty Rates decision. We will deal with this decision in more detail later in our consideration of the application to vary the Restaurant Industry Award 2010, but it suffices to note here that the majority concluded that the decision of the Member at first instance was attended by appealable error because the Deputy President adopted ‘a significant change of circumstances’ as the apparent criterion for variation. The majority held that the adoption of such a test was not derived from the relevant statutory provisions and accordingly the exercise of discretion was artificially confined and thereby miscarried. 144

[262] The SDA 145 and United Voice146 submit that the Restaurants 2014 Penalty Rates decision was wrong and should not be followed. Those submissions are predicated upon our acceptance of the Unions’ argument in support of the ‘material change in circumstances test’. We do not accept the argument put in respect of the ‘material change in circumstances test’, nor are we persuaded that the views expressed by the majority in the Restaurants 2014 Penalty Rates decision were wrong.

[263] In our view there is no warrant in the text of the section for the importation of a material change in circumstances test. The Commission’s approach that prima facie modern awards achieved the modern awards objective at the time that they were made addresses the point made in the Preliminary Jurisdictional Issues decision that awards made under Part 10A of the WR Act were deemed to be modern awards for the purposes of the FW Act (and by implication, consistent with the modern awards objective at that time). The Unions’ proposition would place a constraint on the discretion conferred by s.156(2)(b)(i) which is not warranted by the terms of s.156 or the relevant statutory context and purpose. The Commission must assess the evidence and submissions in support of an award variation against the statutory tests, principally whether the award provides a fair and relevant minimum safety net of terms and conditions and whether the proposed variation is necessary in order for the award to achieve the modern awards objective. The proposition advanced by the Unions would preclude the Commission from varying a modern award where the Commission was satisfied that the award was not meeting the modern awards objective, unless there was a material change in circumstances. This would be inconsistent with s.138 of the FW Act and could not have been intended.

[264] The adoption of the proposed ‘material change in circumstances test’ would obfuscate the Commission’s primary task in the Review of determining whether the modern award achieves the modern awards objective. To adopt such a test would be to add words to the text of s.156 in circumstances where it is not necessary to do so in order to achieve the legislative purpose. As the plurality (French CJ, Crennan and Bell JJ) observed in Taylor v Owners – Strata Plan No 11564: 147

‘The question whether the court is justified in reading a statutory provision as if it contained additional words or omitted words involves a judgment of matters of degree. That judgment is readily answered in favour of addition or omission in the case of simple, grammatical, drafting errors which if uncorrected would defeat the object of the provision. It is answered against a construction that fills “gaps disclosed in legislation” or makes an insertion which is “too big, or too much at variance with the language in fact used by the legislature”.’ 148 (citations omitted)

[265] In the present case, there is no basis for the introduction of additional requirements or conditions on the exercise of the discretion in s.156(2)(b)(i) which might have been, but which have not been, enacted. 149

[266] The adoption of the proposed test would also be an unwarranted fetter on the exercise of what the legislature clearly intended would be a discretionary decision. As Bowen LJ observed in Gardner v Jay 150:

‘When a tribunal is invested by Act of Parliament or by Rules with a discretion, without any indication in the Act or Rules of the grounds upon which the discretion is to be exercised, it is a mistake to lay down any rules with a view to indicating the particular grooves in which the discretion should run, for if the Act or the Rules do not fetter the discretion of the Judge why should the court so do.’ 151

[267] For the same reasons we reject the ‘economic unsustainability test’ advanced by the ACTU. There is no proper legislative basis for such a test and to adopt it would be an unwarranted fetter on the discretion conferred by s.156(2)(b)(i).

[268] For completeness we record our agreement with the point advanced by the Australian Industry Group (Ai Group) in its submission in reply 152 that the variation of a modern award may be warranted if it was established that there was a ‘material change in circumstances’ since the modern award was made, but the establishment of such a change is not a condition precedent to the variation of a modern award in the Review.

3.5 Summary

[269] The following general propositions apply to the Commission’s task in the Review:

1. The Commission’s task in the Review is to determine whether a particular modern award achieves the modern awards objective. If a modern award is not achieving the modern awards objective then it is to be varied such that it only includes terms that are ‘necessary to achieve the modern awards objective’ (s.138). In such circumstances regard may be had to the terms of any proposed variation, but the focal point of the Commission’s consideration is upon the terms of the modern award, as varied.

2. Variations to modern awards must be justified on their merits. The extent of the merit argument required will depend on the circumstances. Some proposed changes are obvious as a matter of industrial merit and in such circumstances it is unnecessary to advance probative evidence in support of the proposed variation. 153 Significant changes where merit is reasonably contestable should be supported by an analysis of the relevant legislative provisions and, where feasible,154 probative evidence.

3. In conducting the Review it is appropriate that the Commission take into account previous decisions relevant to any contested issue. For example, the Commission will proceed on the basis that prima facie the modern award being reviewed achieved the modern awards objective at the time it was made. The particular context in which those decisions were made will also need to be considered.

4. The particular context may be a cogent reason for not following a previous Full Bench decision, for example:

• the legislative context which pertained at that time may be materially different from the FW Act;


• the extent to which the relevant issue was contested and, in particular, the extent of the evidence and submissions put in the previous proceeding will bear on the weight to be accorded to the previous decision; or


• the extent of the previous Full Bench’s consideration of the contested issue. The absence of detailed reasons in a previous decision may be a factor in considering the weight to be accorded to the decision.

[270] We note that the significance of historical context applicable to some of the modern awards which are the subject of these proceedings is a matter of contention between the parties. We deal with those disputes later in our decision.

4. Award Modernisation and the Transitional Review

4.1 Overview

[271] As mentioned in Chapter 3, the Commission’s task in the Review is to determine whether a particular modern award achieves the modern awards objective. In addressing that task, it is appropriate that we take into account previous decisions relevant to any contested issue. We proceed on the basis that prima facie the modern awards before us achieved the modern awards objective at the time they were made. It is in this context that the award modernisation process and the subsequent Transitional Review assume some significance.

[272] We use the term ‘award modernisation’ to refer to the processes under Part 10A of the Workplace Relations Act 1996 (the WR Act). The current 122 modern awards were made during 2008–09 as a consequence of that process and came into operation on 1 January 2010. The awards were the subject of further variations (in some cases before they commenced operation) during the award modernisation process and were then reviewed in a ‘Transitional Review’ commencing in 2012, under the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the TPCA Act).

[273] This chapter sets out some background material on the award modernisation process that led to the making of the current 122 modern awards, including the modern awards which are the subject of these proceedings. We also set out some material in relation to the Transitional Review which followed the award modernisation process. The background relevant to the particular awards that are the subject of this decision are summarised in the various chapters dealing with those awards.

4.2 Award modernisation

[274] The award modernisation process was initiated by a request by the Minister for Employment and Workplace Relations on 28 March 2008, pursuant to s.576C(1) of the WR Act). The Ministerial Request provided the framework and overarching timetable for the award modernisation process.

[275] Following the Ministerial Request, the then President issued a statement 155 which attached a ‘Draft List of Priority Industries’ and called for submissions as to which industries should be dealt with first in the process (the ‘priority industries’). The Award Modernisation Full Bench comprising seven Members then dealt with all award modernisation matters between 2008–09. In determining the priority industries the Award Modernisation Full Bench took a number of factors into consideration, including the size and importance of the industry, an assessment of the dimensions of the modernisation exercise in each case, the views of the parties and the desire to include industries from across the spectrum of the economy.156 The hospitality and retail industries were included in the list of priority industries.

[276] A further Statement issued on 22 July 2008 157 outlined the proposed approach and timeline for the award modernisation process which, in accordance with the Ministerial Request, had to be completed by 31 December 2009.

[277] Commission staff prepared lists of federal awards and Notional agreements preserving State awards (NAPSAs 158) (which were federal system instruments derived from awards previously operating in State systems) to be considered by the Award Modernisation Full Bench in the making of the modern award(s) in each industry. A comparison was undertaken of the range of entitlements under the key federal awards and NAPSAs in each industry. This analysis was published on the Australian Industrial Relations Commission (AIRC) website159 in a series of spreadsheets setting out provisions including wage rates, hours of work, penalty rates and overtime.

[278] After the determination of the priority industries, the remaining industries were divided into three further tranches and each generally followed a four step process:

(i) parties were invited to make initial written submissions and/or file parties’ draft awards, followed by oral hearings regarding the scope and content of proposed awards;
(ii) exposure drafts were prepared by the Commission and published for comment;
(iii) further written and oral submissions were made regarding the exposure drafts; and
(iv) the awards were issued in ‘final form’.

[279] The Ministerial Request stated that one of the objectives of the award modernisation process was to reduce the number of awards operating in the workplace relations system. 160 Consistent with that objective, the Full Bench initially proposed only one award in the hospitality industry covering accommodation, hotels, pubs, taverns and gaming (including casinos); restaurants and catering; and clubs. On 20 June 2008, in response to the parties’ proposals to create four separate modern awards in the hospitality industry, the Award Modernisation Full Bench stated:

‘… we think the proposals for a split into three or more awards have the potential for significant overlap and duplication. At the level of the safety net it may be difficult to justify the creation of four separate modern awards if the peculiar circumstances of each part of the industry could be dealt with satisfactorily by minor modifications to some of the terms of one industry award.’ 161

[280] A Statement was issued on 12 September 2008 162 by the Award Modernisation Full Bench which confirmed its intention to create a single Retail award (covering general retail; fast food; community pharmacies; and hair and beauty), but decided that while the Hospitality award would cover restaurants it would no longer cover employers and employees in registered and licensed clubs. The Clubs sector was deferred to Stage 3.

[281] Further submissions were made regarding the exposure drafts for the priority industries. A decision was issued on 19 December 2008 with a single ‘final’ award for the hospitality industry (including restaurants), however a later amendment to the Ministerial Request led to the making of a separate Restaurant Award in Stage 4.

[282] In the 19 December 2008 decision the Award Modernisation Full Bench stated that it was difficult to address the disparate provisions across the various segments of the retail industry without significant changes to the safety net 163 (an earlier statement164 had identified 118 awards operating in the Retail sector across Australia). Accordingly, 4 separate retail awards were made covering general retail; fast food; pharmacies and hair and beauty. As a result of the late disaggregation of the proposed general retail award, no exposure drafts were published for comment for the separate modern awards covering the fast food and pharmacy industries. We deal with the background to these modern awards in Chapters 7.5.2 and 8.3.2.

[283] In determining the final provisions in each modern award the Full Bench generally adopted the terms and conditions in the preponderance of pre-reform instruments:

‘The consolidated request also provides that the process is not intended to disadvantage employees or increase costs for employers – objectives which are potentially competing. The content of the awards we have formulated is a combination of existing terms and conditions in relevant awards and existing community standards. In order to minimise disadvantage to employees and increases in costs for employers we have generally adopted terms and conditions which have wide application in the existing awards in the relevant industry or occupation. However the introduction of modern awards applying across the private sector in place of the variety of different provisions in the Federal and State awards inevitably means that some conditions will change in some States. Some wages and conditions will increase as a result of moving to the terms which apply elsewhere in the industry. Equally some existing award entitlements will not be reflected in the applicable modern award because they do not currently have general application.

The creation of modern awards which will constitute the award elements of the safety net necessarily involves striking a balance as to appropriate safety net terms and conditions in light of diverse award arrangements that currently apply. It is in that context that the formulation of appropriate transitional provisions arises.’ 165

[284] To mitigate the impact of modern awards on employers and employees the Award Modernisation Full Bench determined that modern awards should contain transitional provisions to phase in changes to minimum wage rates, loadings, penalties and shift allowances over a period of up to five years. These transitional provisions were outlined in the decision of 2 September 2009 166. Broadly speaking, variations to minimum wages, loadings penalties and allowances were implemented in equal increments between 1 July 2010 and 1 July 2014.

[285] It should be noted that while the introduction of modern awards increased penalty rates payable by employers in some jurisdictions, for many employers penalty rates remained constant, and for some the modern award provided lower penalty rates (e.g. Cafes and Restaurants (South Australia) Award provided a penalty of 200 per cent for working on a Sunday compared to 150 per cent under the modern award 167). Further, some modern awards restrict when penalty rates apply, relative to the position in pre modernisation instruments. For example, the Cafes and Restaurants (South Australia) Award provided that the 10 per cent penalty for working in the evening commenced at 6.00 pm rather than 10.00 pm under the modern award168. A comparison of penalty rates in certain pre modernisation instruments with the terms of the relevant modern awards rates is set out at Attachment C.

4.3 Transitional Review 2012

[286] The TPCA Act required Fair Work Australia (the predecessor tribunal to the Commission) to conduct a review of all modern awards 169 as soon as practicable after 1 January 2012 (the Transitional Review). The legislative context for the Transitional Review is principally set out in Item 6 of Schedule 5 of the TPCA Act:

“6 Review of all modern awards (other than modern enterprise awards and State reference public sector modern awards) after first 2 years

(1) As soon as practicable after the second anniversary of the FW (safety net provisions) commencement day, FWA must conduct a review of all modern awards, other than modern enterprise awards and State reference public sector modern awards.

Note: The review required by this item is in addition to the annual wage reviews and 4 yearly reviews of modern awards that FWA is required to conduct under the FW Act.

(2) In the review, FWA must consider whether the modern awards:

(a) achieve the modern awards objective; and

(b) are operating effectively, without anomalies or technical problems arising from the Part 10A award modernisation process.

(2A) The review must be such that each modern award is reviewed in its own right. However, this does not prevent FWA from reviewing 2 or more modern awards at the same time.

(3) FWA may make a determination varying any of the modern awards in any way that FWA considers appropriate to remedy any issues identified in the review.

Note: Any variation of a modern award must comply with the requirements of the FW Act relating to the content of modern awards (see Subdivision A of Division 3 of Part 2-3 of the FW Act).

(4) The modern awards objective applies to FWA making a variation under this item, and the minimum wages objective also applies if the variation relates to modern award minimum wages.

(5) FWA may advise persons or bodies about the review in any way FWA considers appropriate.

(6) Section 625 of the FW Act (which deals with delegation by the President of functions and powers of FWA) has effect as if subsection (2) of that section included a reference to FWA’s powers under subitem (5)”.

[287] Item 6(1) of Schedule 5 to the TPCA Act provides a review must be conducted of all modern awards (other than modern enterprise awards and State reference public sector modern awards) as soon as practicable after 1 January 2012 (being the second anniversary of the Fair Work (Safety Net Provisions) commencement day). Item 6(2) provides that in conducting the Transitional Review the Tribunal must consider two questions:

(a) whether modern awards achieve the modern awards objective in s.134 of the Fair Work Act 2009 (the Act); and

(b) whether modern awards are operating effectively, without anomalies or technical problems arising from the Part 10A award modernisation process.

[288] The Transitional Review commenced in early 2012 and the scope of that review was the subject of a Full Bench decision issued on 29 June 2012 170 (Re Modern Awards Review decision). The Full Bench concluded that the Transitional Review was quite separate from, and narrower in scope than, the 4 yearly review of modern awards provided for in s.156 of the FW Act:

‘To summarise, we reject the proposition that the Review involves a fresh assessment of modern awards unencumbered by previous Tribunal authority. It seems to us that the Review is, intended to be narrower in scope than the 4 yearly reviews provided in s.156 of the FW Act.’ 171

[289] Many of the applications made as part of the Transitional Review involved matters expressly dealt with by the Commission in the award modernisation process. In those circumstances the need to advance probative evidence in support of an application to vary a modern award was particularly important as the Transitional Review did not involve a fresh assessment of modern awards unencumbered by previous Tribunal decisions. The June 2012 decision stated, in the context of the Transitional Review:

‘… the Tribunal is unlikely to revisit issues considered as part of the Part 10A award modernisation process unless there are cogent reasons for doing so, such as a significant change in circumstances which warrants a different outcome.’ 172

[290] It is important to recognise that the Transitional Review was dealing with a system in transition. Item 6 of Schedule 5 formed part of transitional legislation, intended to facilitate the movement from the WR Act to the FW Act. The Transitional Review was a “one off” process required by the transitional provisions and conducted a relatively short time after the completion of the award modernisation process. The fact that the transition to modern awards was taking place at the time of the Transitional Review militated against the adoption of broad changes to modern awards as part of that review.

[291] During the Transitional Review the Commission considered a number of applications to vary penalty rates in modern awards, including those that are the subject of the present proceeding. The decisions arising from those claims are summarised below.

Modern Awards Review 2012—Penalty Rates 173

[292] In March 2012, several parties lodged applications to vary penalty rate provisions contained in 5 awards. These applications were dealt with by a single Full Bench. The Full Bench had before it applications from employer organisations, individual employers and the SDA. The relevant variations sought were as follows 174:

● Fast Food Industry Award 2010 (AM2014/240 and others)

• Alter the span of hours for penalty rates applying to evening work from Monday to Sunday


• Delete clauses which provide for penalty rates on the weekend


• Vary clause to specify time at which penalty rate ceases



● General Retail Industry Award 2010 (AM2014/177)

• Reduce penalty for Sunday from 200% to 150%


• Remove the 25% penalty payment for evening work that presently applies to all non-casual hours



● Hospitality Industry (General) Award 2010 (AM2014/204 and others)

• Reduce the Sunday penalty from 175% to 150%


• On a public holiday, reduce the penalty from 275% to 250%

[293] Although a number of penalty rate provisions were sought to be varied, the major focus of both the evidence and the submissions was on the penalty for Sunday work in the Retail Award and on the weekend and other penalties in the Fast Food Award. 175

[294] Other than the applications relating to the proposed reduction in existing penalty rates in the Retail Award and Fast Food Award, there was little or no probative evidence dealing with other aspects of the applications before the Commission.

[295] The essence of the employers’ contentions, particularly in the retail sector, was that the existing penalty rate provisions resulted in employers engaging fewer employees than they would prefer to employ on a Sunday, and that the mix of employees engaged on a Sunday, in terms of age and experience, was less than optimal. It was submitted that if the Sunday penalty rate was reduced employers would be willing to offer more hours of work on Sundays and the mix of employees engaged would promote more efficient and productive performance of work.

[296] The Commission decided that while there was some evidence in support of these submissions, the evidence was far from compelling. In rejecting the substantive claims, the Full Bench commented that:

‘There is a significant ‘evidentiary gap’ in the cases put. It is particularly telling that there is no reliable evidence regarding the impact of the differing Sunday (or other) penalties when applied upon actual employer behaviour and practice. This is a most unfortunate omission given that the transitional provisions, which rely upon the differing NAPSA entitlements, provide an opportunity for evidence to be led from employers operating in multiple States to provide these comparisons. There is also no reliable evidence about the impact of the existing differential Saturday and Sunday penalties upon employment patterns, operational decisions and business performance.

We are not persuaded that a sufficient case has been made out to warrant varying the relevant awards in the manner proposed by the employers. While aspects of the applications before us are not without merit - particularly the proposals to reassess the Sunday penalty rate in light of the level applying on Saturdays - the evidentiary case in support of the claims was, at best, limited.

The 4 yearly review of these awards is to commence in 2014. That review will be broader in scope than the Transitional review and will provide an opportunity for the issues raised in these proceedings to be considered in circumstances where the transitional provisions relating to the relevant awards will have been fully implemented. In the event that the claims before us are pressed in the 4 yearly review we would expect them to be supported by cogent evidence. We would be particularly assisted by evidence regarding the matters referred to above and the likely impact upon employment levels, the organisation of work and employee welfare of any change in the penalty rates regimes.’ 176

[297] As mentioned in Chapter 3, in conducting the Review it is appropriate that the Commission take into account previous decisions relevant to any contested issue. The extent of the evidence and submissions put in the previous decision may be a factor in considering the weight to be accorded to that decision.

[298] As noted by the Full Bench in the Modern Awards Review 2012 – Penalty Rates decision, the evidentiary case presented in support of the various applications before it ‘was, at best, limited’. Further, the Full Bench expressly indicated that the 4 yearly review would provide an opportunity for the issues which had been raised in the Transitional Review proceedings to be considered ‘in circumstances where the transitional provisions relating to the relevant awards will have been fully implemented’. In these circumstances the Modern Awards Review 2012 – Penalty Rates decision has limited relevance to the present proceedings.

[299] In addition to the Modern Awards Review 2012 – Penalty Rates decision an application by RCI to vary the Restaurant Industry Award 2010 was also considered during the Transitional Review. RCI’s application was rejected at first instance. 177Permission to appeal was granted and, by majority, the Appeal bench decided to reduce the Sunday penalty rates for casual employees engaged at classification levels 1 and 2, from 175 per cent to 150 per cent (including the 25 per cent casual loading). The essence of the majority’s reasons for providing for differential Sunday penalty rates is set out at paragraph 154 of the decision:

‘Although a 50% Sunday penalty rate is generally appropriate for employees under the Restaurant Award, for transient and lower-skilled casual employees working mainly on weekends, who are primarily younger workers, the superimposition of the casual loading of 25% in addition to the 50% penalty tends to overcompensate them for working on Sundays and is more than is required to attract them for work on that day. In that respect, the Restaurant Award is not meeting the modern awards objective in s.134 of the FW Act.’ 178

[300] We deal with the Restaurants 2014 Penalty Rates decision in more detail in Chapter 7.4.5.

[301] The significance of the historical context applicable to some of the modern awards which are the subject of these proceedings is a matter of contention between the parties. We deal with the relevant background to the modern awards before us at Chapters 7.2.2, 7.3.2, 7.4.2, 7.5.2, 8.2.2 and 8.3.2.

5. Submissions: Overview

5.1 Principal parties

[302] This section briefly describes the principal parties in these proceedings. For this purpose we have characterised an employer association as a ‘principal party’ if they have made an application to vary one or of the more modern awards before us. Tables 1 and 74 set out the various claims before us. The principal employer parties were:

• the Australian Hotels Association and the Accommodation Association of Australia (the Hospitality Employers);


• Clubs Australia Industrial (CAI);


• Australian Business Industrial and the New South Wales Business Chamber (jointly, ABI);


• Restaurant and Catering Industry Australia (RCI);


• the Australian Industry Group (Ai Group);


• the Australian Retailers Association (ARA), the National Retail Association (NRA) and the Master Grocers Association (MGA) (collectively, the Retail Employers); and


• the Pharmacy Guild of Australia (PGA).

[303] The NRA was party to both a joint application with the other Retail Employers, to vary the General Retail Industry Award 2010 and made a separate application to vary the Fast Food Industry Award 2010. We only refer to the NRA in instances where it was acting separately, rather than in concert with the other Retail Employers. Some uncertainty remains as to the exact nature of the NRA’s role in these proceedings. While the NRA filed a draft determination on 13 February 2015 outlining the changes it sought to the Fast Food Award, 179 its final written submissions noted that:

‘At the outset of these proceedings, the National Retail Association (“NRA”) sought to vary the weekend and public holiday penalty rates in relation to the Fast Food Industry Award 2010 (“Fast Food Award”). However, because of similar claims having also been filed by other employer parties and in order to avoid duplication, the NRA determined that it would be more practical for it to adopt a supporting role in relation to the claims for the reduction of Sunday penalties in the Fast Food Award and to act as an interested party in these proceedings.’ 180

[304] The Commission published a draft summary of the claims before the Full Bench and directed that corrections or amendments to that summary be filed in the Commission’s registry. 181 The draft summary included the NRA’s proposal, and the NRA did not advise the Commission that this was incorrect. A final version of the summary of claims was subsequently published by the Commission.182

[305] As it is unclear exactly what the NRA means when it states that its role will be ‘to act as an interested party’ and, given the NRA did not dispute the accuracy of the Commission’s summary, we have proceeded on the basis that the NRA is still an active party to these proceedings and is seeking the variations outlined in the summary of claims published by the Commission.

[306] We also note that ACCI supported the applications advanced by ABI and joined in ABI’s submissions.

[307] The claims of the principal employer parties were opposed by the Shop, Distributive and Allied Employees Association (SDA) and United Voice. The Association of Professional Engineers, Scientists and Managers, Australia (APESMA) and the Australian Council of Trade Unions (ACTU) made submissions in support of the positions put by the SDA and United Voice. APESMA called one lay witness in relation to the Pharmacy Industry Award 2010, and the ACTU called one expert witness, Professor Markey 183 to give evidence in response to the expert evidence by Ms Lynne Pezzullo.184

5.2 Productivity Commission Inquiry Report: Workplace Relations Framework

5.2.1 Admissibility and Overview

[308] The Productivity Commission Inquiry Report: Workplace Relations Framework (the PC Final Report) was published by the Productivity Commission on 30 November 2015 following an inquiry into the ‘Workplace Relations Framework’ arising from a request made by the Commonwealth Government pursuant to Parts 2 and 3 of the Productivity Commission Act 1998 (Cth). The terms of reference for the Productivity Commission inquiry are set out at Attachment D.

[309] Ai Group sought to tender the PC Final Report in totality, for completeness, but only sought to rely on Chapters 9, 10, 11, 12, 13, 14 and 15 and Appendix F of that report. These Chapters and the Appendix deal with, among other things, penalty rates for ‘long hours and night work’ and the ‘level of weekend penalty rates’. They also include data and information about Australia’s social, working and consumer demographics, as well as expressing views about the appropriate level of penalty rates in Australian workplaces. Ai Group’s application was supported by a number of other employer parties (RCI, PGA, ARA, NRA, MGA and ABI) and opposed by the SDA and United Voice.

[310] In a decision 185 issued on 12 February 2016 we admitted Chapters 9, 10, 11, 12, 13, 14 and 15 and Appendix F of the PC Final Report as part of the common evidence in these proceedings, noting that:

‘The PC Final Report contains information and discussion that is properly regarded as evidentiary in nature and some elements that should properly be considered as submissions. It contains considerable factual material based upon sources that are also set out in the report. These matters are relevant to the factual context for this Review. The report also contains the views of the Productivity Commission, including specific recommendations that it makes to the Commonwealth Government. To the extent that the Productivity Commission comments upon some of the evidence that has been presented us as part of this Review and expresses its views about what we should do as a result of this Review these observations are in the nature of submissions, rather than evidence, and will be considered as such by us. We note that to the extent that the PC Final Report considers the expert evidence given in these proceedings the employer parties place no reliance on such consideration.’ 186

[311] Four points may be made about the basis upon which the PC Final Report has been admitted:

(i) The Employer parties did not seek to have the PC Final Report treated as expert opinion evidence and accordingly it was not admitted on that basis.

(ii) The Employer parties place no reliance on those aspects of the PC Final Report which considers the expert evidence given in these proceedings.

(iii) The opinions expressed by the Productivity Commission as to the appropriateness of current penalty rates will be treated as submissions, not evidence.

(iv) The PC Final Report contains factual material and data that is relevant to the review of penalty rates in the awards before us. We refer to this material in more detail in Chapter 6.

[312] Penalty rates for long hours and night work are considered in Chapter 9 and weekend penalty rates are considered in Chapters 10, 13, 14, 15 and Appendix F of the report. Chapters 11 and 12 dealt with the shift to a 7 day consumer economy and the social effects of weekend work.

[313] The consideration of penalty rates in the PC Final Report was limited to penalty rates that apply to the hospitality, entertainment, retail, restaurant and caf� industries, referred to as the HERRC industries in the report. While acknowledging that there are good reasons to take different approaches to different industries, the Productivity Commission report suggested that the HERRC industries have some distinctive features in terms of their business environments, labour market and employees. The Productivity Commission explains the rationale for focussing on the HERRC industries, as follows:

‘… the appropriate level for regulated penalty rates for weekend work — particularly on Sundays in a number of discretionary consumer service industries — has become a highly contested and controversial issue. The industries of greatest concern are hospitality, entertainment, retail, restaurants and cafes (HERRC). These are industries where consumer expectations of access to services has expanded over time so that the costs of penalty rates affect consumer amenity in ways they did not when penalty rates were first introduced. Such industries are also important sources of entry-level jobs for, among others, relatively unskilled casual employees and young people (particularly students) needing flexible working arrangements. The provision of discretionary, and therefore demand responsive, services on weekends is less frequent in most other industries, which is a key (but not only) rationale for a focus of concerns on the HERRC industries. It is notable that the FWC is currently also considering appropriate penalty rates in awards, and that their focus almost exactly matches the group of industries that the Productivity Commission has identified as the most relevant.’  187 (footnotes omitted)

[314] The modern awards considered by the Productivity Commission to be applicable to the HERRC industries are:

• Restaurant Industry Award 2010;


• Registered and Licensed Clubs Award 2010;


• General Retail Industry Award 2010;


• Hospitality Industry (General) Award 2010;


• Amusement, Events and Recreation Award 2010;


• Fast Food Industry Award 2010;


• Pharmacy Industry Award 2010; and


• Hair and Beauty Industry Award 2010. 188

[315] In this part of our decision we consider those aspects of the PC Final Report dealing with weekend penalty rates, public holidays and penalty rates for night work. As mentioned, Chapters 11 and 12 of the PC Final Report deal with the shift to a 7 day consumer economy and the social effects of weekend work. We refer to some of that material in Chapter 6 of this decision.

5.2.2 Weekend penalty rates

[316] In relation to weekend penalty rates the central recommendation in the PC Final Report (Recommendation 15.1) is that the Fair Work Commission should, as part of its current award review process:

• set Sunday penalty rates that are not part of overtime or shiftwork at the higher rate of 125 per cent and the existing Saturday award rate for permanent employees in the hospitality, entertainment, retail, restaurant and caf� industries;


• set weekend penalty rates to achieve greater consistency between the above industries, but without the expectation of a single rate across all of them; and


• investigate whether weekend penalty rates for casuals in these industries should be set so that casual penalty rates on weekends would be the sum of the casual loading and the revised penalty rates applying to permanent employees, with the principle being that there should be a clear rationale for departing from this. 189

[317] The PC Final Report concluded that penalty rates for weekend work that does not involve shift or overtime work are justified and ‘a legitimate and continuing feature of the safety net for all non-standard hours across all industries’. 190

[318] We deal with each of the proposed changes below.

(i) Reduced rates for Sunday work

[319] It is important to appreciate that the Productivity Commission’s recommendations in respect of the reduction of Sunday penalty rates are confined to the HERRC industries. In particular the PC Final Report states:

‘There is no case for common penalty rates across all industries The Commission is not recommending a reduction in the Sunday penalty rates beyond HERRC. Regulated penalty rates as currently constructed for essential services and many other industries are justifiable. The original justifications have not altered materially: they align with working arrangements that often involve rotating shifts across the whole week, are not likely to reduce service availability meaningfully, are commensurate with the skills of the employees, and are unlikely to lead to job losses.’ 191

[320] The arguments advanced in the PC Final Report in support of the reduction of Sunday penalty rates in the HERRC industries fall into three broad categories:

• the asocial impacts of Sunday work are similar to working on Saturdays;


• consumer benefits; and


• employment effects.

[321] The Productivity Commission acknowledges that lower Sunday penalty rates will reduce the income of existing employees in the HERRC industries. 192

[322] We deal with each of these matters below.

(a) Sunday vs Saturday work

[323] In Chapter 13 of the PC Final Report, the Productivity Commission deals with the level of weekend penalty rates and observes that:

‘The present Sunday rates for these industries seem to be much less clearly justified either on economic grounds or according to community norms compared with other working times … the social disabilities associated with weekend work — for which there is sound evidence (chapter 12) — does not strongly support the large gap between penalty rates on Saturdays and Sundays.’ 193

[324] The social effects of weekend work are dealt with in Chapter 12 of the PC Final Report and we refer to some of that material in Chapter 6 of this decision.

(b) Consumer benefits¹⁹⁴

[325] The Productivity Commission contends that consumers (including tourists) would be major beneficiaries for the proposed reduction in Sunday penalty rates in the HERRC industries:

‘With lower Sunday penalty rates, consumers would gain access to more services for longer hours and with higher staffing ratios. Sunday surcharges would be likely to disappear, and average prices for consumer services throughout the week would be likely to be a little lower.’ 195

[326] The Productivity Commission also notes that there would be potential productivity improvements from reform:

‘… as the fixed costs of running a business would be spread over greater opening times and demand … [and that] [b]etter capital utilisation would put further downward pressure on average unit costs and prices. Moreover, the lower labour costs associated with reduced penalty rates may permit the payment of targeted incentive based payments that motivate staff and enhance productivity… All of these will benefit consumers.’ 196

(c) Employment effects¹⁹⁷

[327] The Productivity Commission concludes that there would be significant employment effects associated with its proposed reduction in Sunday penalty rates:

‘Given the characteristics of the demand for HERRC goods and services, and the high labour shares in these industries (chapter 11 and table 15.1 in chapter 15), it seems very likely that there would be considerable growth in hours worked and, to a lesser extent, employment on Sundays from lowering penalty rates on these days. If a labour demand elasticity for Sunday of -0.6 (a hypothetical, but probably conservative estimate) were to apply, the anticipated increase in hours from say a 33 per cent reduction in wage rates would be around 27 per cent. The change would also be likely to reduce the trend towards capital substitution in the relevant industries (noting that the scope for automation and self-service is rising). A shift in total hours of this magnitude would take the form of greater hours for existing staff and hiring of new employees. The mix is unclear and would depend on the characteristics of labour supply and demand for would-be employees and existing employees in each sub-market.’ 198 (footnotes omitted)

(d) The impact on the earnings of existing employees¹⁹⁹

[328] The Productivity Commission observes that the degree to which the labour earnings change for people currently employed on Sundays depends on the:

• new regulated Sunday penalty rate for each relevant award;


• extent to which some negotiated weekend wages might lie above a new lower penalty rate for Sundays;


• timing of new enterprise agreements, as any penalty rates in existing agreements would continue to apply;


• relative proportion of an employee’s time spent working on Sundays; and


• extent to which lower wage rates induced greater demand for labour on Sundays. 200

[329] As to the last point, the Productivity Commission concludes that, in general, most existing employees would probably face reduced earnings as it is improbable that, as a group, existing workers’ hours on Sundays would rise sufficiently to offset the income effects of penalty rate reductions. 201

[330] While acknowledging that lower Sunday penalty rates will reduce the income of existing employees in the HERRC industries, the Productivity Commission notes that:

• only the minority of HERRC employees work only on weekends, which reduces the importance of lower wage rates on Sundays;


• the reduction in wage rates for casual employees is less than for permanent employees because of existing anomalies in the interaction of casual loadings and premium rates for Sunday work;


• the net effect would be lower given offsets through the tax and transfer system; and


• many HERRC employees do not come from low paid households. Many are in households with two other income earners. 202

(ii) Greater consistency in weekend penalty rates

[331] There is a wide disparity in the weekend penalty rates in the HERRC industries, as the Productivity Commission notes in Table 10.1 (reproduced below as Table 4). 203

Table 4

Penalty rate arrangements for selected modern awards

Permanent				Casual
	Percentage of permanent base rate			Percentage of permanent base rate
Award applying in 2015	Base rate	Sat	Sun	Base rate	Sat		Sun
	%	%	%	%		%	%
Restaurant Industry	100	125	150	125		150	150 (175)
Registered and Licensed Clubs	100	150	175	125		150	175
General Retail Industry	100	125	200	125		135	200
Hospitality Industry (General)	100	125	175	125		150	175
Amusement Events and Recreation	100	100	150	125		125	175
Fast Food Industry	100	125	150	125		150	175
Pharmacy Award	100	125, 150 200	200	125	150 175, 225		225
Hair and Beauty	100	133	200	125	133		200

[332] The Productivity Commission states that there are grounds for greater consistency (short of uniformity) between penalty rates across the HERRC industries, noting that ‘Differences in rates create compliance costs and uncertainty for employers and employees’. 204

(iii) Weekend penalty rates for casuals

[333] The PC Final Report made reference to the interaction of penalty rates and casual loadings and concluded:

‘In some awards, penalty rates for casual employees fail to take into account the casual loading, which distorts the relative wage cost of casuals over permanent employees on weekends (and particularly Sundays). The wage regulator should reassess casual penalty rates on weekends, with the goal of delivering full cost neutrality between permanent and casual rates on weekends, unless clearly adverse outcomes can be demonstrated. This would imply that casual penalty rates on weekends would be the sum of the casual loading and the penalty rates applying to permanent employees.’ 205

[334] The Productivity Commission recommended that modern awards be amended to ensure that casual loadings are applied to penalty rates in the same way across all awards. It stated:

‘For neutrality of treatment, the casual loading should be added to the penalty rate of a permanent employee when calculating the premium rate of pay over the basic wage rate for weekend work. This would make an employer indifferent, at the margin, between hiring a permanent employee over a casual employee. It would also be consistent with the desirability of ‘equal pay for equal’ work.’ 206

[335] The PC Final Report sets out the three methods currently used for determining the rate of pay for casual employees in the modern awards relevant to the penalty rates case. Each method arrives at a different rate of pay for casual employees during times when weekend penalty rates apply. The methods are set out below.

• the ‘default’ approach where the casual loading is always set as a percentage of the ordinary/base wage (and not the ordinary wage plus the penalty rate). The rate of pay for a casual employee is therefore always 25 percentage points above the rate of pay for non-casual employees;


• casual loading applies to the rate of pay once penalty rates are applied to the ordinary/base wage; and


• in some instances, casual employees do not receive a loading as well as the penalty rate, so their rate of pay on weekends is the same as permanent employees.

[336] The casual loading for weekend work for the modern awards relevant to the penalty rates case is determined using different methods across the modern awards and, in some cases, different methods within the same modern award. These are described below:

• Fast Food Industry Award 2010: the casual loading applies to the rate of pay once penalty rates are applied on Saturdays. The casual loading is applied as per the ‘default’ method on Sundays.


• Restaurant Industry Award 2010: the casual loading is applied as per the ‘default’ method on Saturdays and Levels 3 to 6 on both Saturdays and Sundays; there is no casual loading for Levels 1 and 2 on Sundays (the penalty rate is inclusive of casual loading).


• General Retail Industry Award 2010: 207 a casual loading of 10 per cent is applied per the default approach on Saturdays. No casual loading applies on Sundays (the penalty rate is inclusive of casual loading).


• Registered and Licensed Clubs Award 2010: no casual loading applies on weekends (the penalty rate is inclusive of casual loading).


• Hospitality Industry (General) Award 2010: a casual loading is applied on Saturdays as per the ‘default’ approach. No casual loading applies on Sundays (the penalty rate is inclusive of casual loading).


• Pharmacy Industry Award 2010: the casual loading is applied as per the ‘default’ approach on both Saturdays and Sundays.

[337] The PC Final Report argued that, in order for employers to be indifferent or neutral (at the margin) in choosing between a permanent and casual employee, 208 the ‘default’ method should be preferred. As we observe later, the casual loading is paid to compensate casual employees for the nature of their employment and the fact that they do not receive the range of entitlements provided to full-time and part-time employees, such as annual leave, personal/carer’s leave, notice of termination and redundancy benefits.

[338] For our part we would observe that the ‘default’ approach is also consistent with one of the considerations we are required to take into account in determining whether a modern award satisfies the modern awards objective, in that it provides a casual loading that is simple and easy to understand, consistent with s.134(1)(g) of the FW Act.

5.2.3 Penalty rates for long hours and night work

[339] Chapter 9 of the PC Final Report focuses on penalty rates for long hours and night (and associated shift) work. The Productivity Commission’s observations about night work penalties are relevant to the current proceedings as there are applications to vary the late night penalties in a number of the modern awards before us.

[340] In 2013–14 almost 1.2 million Australian employees (about 11 per cent of employees) reported working schedules likely to involve night work (including regular night shifts and rotating shifts). 209 The incidence of night work varies substantially across industries ranging from 38.8 per cent in Accommodation and food services and 21.1 per cent in Retail trade to 5.3 per cent in Financial and insurance services.210

[341] The Productivity Commission comments on the adverse health effects of night work, 211 and concludes:

‘There is strong evidence that night work has adverse health costs. Moreover, these costs are unlikely to be factored into freely negotiated wages given the imbalance of market power between many employers and employees. Given that night shift loadings likely reduce the incidence of night work, and compensate employees for the additional costs associated with working these hours, there is a case for a regulated wage premium associated with night work.’ 212

5.2.4 Public holiday penalty rates

[342] The Productivity Commission recommended that: ‘The Fair Work Commission should not reduce penalty rates for existing public holidays’, 213 noting that, by definition:

‘… genuine public holidays are intended to serve a special community role and, as such, there are strong grounds to limit the expectation that they are for working. In that sense, the original concept of deterrence continues to have relevance’. 214

5.2.5 Conclusion

[343] The PC Final Report contains useful references and research material that is of assistance to us in our present task.

[344] We observe that the Productivity Commission considered reports and materials authored by some of the expert witnesses who gave evidence in this matter. However, unlike the Productivity Commission, the Commission has had the benefit of having that material challenged through the process of expert witnesses giving evidence and being subject to cross-examination. Further, the expert witnesses have also given direct evidence in response to contrary views and this has permitted us to fully consider the competing assumptions and approaches underpinning that material. We have also heard the direct evidence of many business proprietors and employees as part of this Review.

[345] Further, whilst the Productivity Commission assessed various considerations, it was not required to apply the particular statutory considerations which we are obliged to apply in the Review. The Productivity Commission’s role in the present context was substantially to inquire and make policy recommendations to Government²¹⁵ and this is to be contrasted with the determinative role of this Commission. In that regard, in our earlier decision concerning this matter we noted that the PC Final Report was not advanced by the employer parties as expert evidence.²¹⁶ This does not mean that the Productivity Commission is not comprised of experts, rather, the authors of the PC Final Report were not called to give evidence in relation to the matters before us and the parties advancing the report as part of their respective cases did not do so on that basis.

[346] In sum, we have had regard to the relevant material and propositions published by the Productivity Commission as part of the PC Final Report in reaching our findings in these matters, subject to the evidence before the Commission and the statutory considerations bearing upon our present task.

[347] For reasons outlined in Chapter 9 of our decision, we do not consider that the observations of the Productivity Commission regarding public holidays take account of the impact of s.114 of the FW Act upon the operation of public holidays under the relevant modern awards.

[348] We also note that the Productivity Commission treated all of the industries under its HERRC grouping on a common basis. As would be clear from our decision, whilst we have grouped the modern awards in the hospitality and retail industries together for convenience, we have considered each of the awards in their own right, consistent with the statutory directive in s.156(5) of the FW Act,²¹⁷ and found that there are some differentiating factors that bear upon the current issues. These include the composition of the workforce and the context in which some of the modern awards operate.

5.3 Other Submissions

[349] Some 36 submissions were filed by a range of organisations, community groups, State and Territory Governments, and other entities. These submissions can be characterised as either supporting or opposing the claims advanced by the principal employer parties.

5.3.1 Submissions supporting Employer claims

[350] A number of state-based employer associations provided submissions in support of the claims advanced by the principal employer parties. These associations were: the Chamber of Commerce and Industry of Western Australia (CCIWA); Chamber of Commerce and Industry of Queensland (CCIQ) Victorian Chamber of Commerce and Industry (VECCI) and the South Australian Employers Chamber of Commerce and Industry Inc T/A Business SA (BSA).

[351] CCIWA supports the employer applications to reduce penalty rates in the modern awards before us. In summary terms CCIWA submits:

‘… the current penalty rates for Sunday work reflect out-dated cultural norms which contemplate Sunday as a day of rest and for religious observance, in which work was to be discouraged.

However, cultural norms have since changed across the bulk of Australian society. While for large parts of the workforce “Saturdays and Sundays remain a focal point for community and family interactions”, there is no longer any significant distinction between the way people treat and view Sundays as opposed to Saturdays.

The changing way in which people spend their leisure time has also increased the demand for retail and hospitality services on Sundays and public holidays…

the current regime of high penalties for work performed on Sundays and public holidays is limiting the number of jobs because of the impact it has on the operation of many retail and hospitality businesses…

For those businesses which do trade, it also impacts upon staffing levels: with many businesses rostering fewer staff; utilising cheaper less experienced junior staff; choosing to work the hours themselves; or enlisting the support of family members.

CCIWA members in the retail and hospitality industry have identified that a reduction in these penalty rates will have a positive impact on their employment decisions, both in term of how many people they employ and the number of hours offered to staff.’ 218 (footnotes omitted)

[352] In support of its submissions CCIWA relied extensively on the Productivity Commission Inquiry Report: Workplace Relations Framework. We deal with that report in Chapter 5.2.

[353] CCIWA also relies on a survey of its retail and hospitality members. The survey was undertaken for the purpose of establishing the views of businesses on the impact of penalty rates. An overview of the survey and the survey results are set out at Appendices A, B and C to the CCIWA submission. A summary of the survey results is set out at paragraphs 48–58 and 63 of the submission.

[354] As to the impact of a reduction in Sunday penalty rates, CCIWA submits that the survey results reveal that:

‘If Sunday penalty rates were reduced to the levels sought in these applications 10.5 per cent of respondents in the retail sector would choose open on Sunday and 31.5 per cent would open for more hours. In the case of hospitality employers, 15.8 per cent would choose to open and 26.3 per cent would open for more hours on a Sunday.

The respondents also identified that this would generally have a positive impact upon their employment decisions. Of the retail members, 36.8 per cent identified that they would employ more staff whilst 21 per cent would opt to roster a staff member instead of working themselves. Similar level of response was also recorded for hospitality members, with 37.9 per cent indicating that they would employ more staff, whilst 31 per cent would roster a staff member instead of themselves.’ 219

[355] We note that the figures quoted above in respect of the responses of the hospitality employers are incorrect. The references to 15.8 per cent and 26.3 per cent footnote the responses to questions 17, 21 and 25 from Appendix C. Survey Question 17 asks: ‘If penalty rates were reduced to base rate + 25 % loading on Sundays, what impact would that have on your opening hours on that day?’ It will be recalled that the extract from CCIWA’s submissions set out above is prefaced with the words ‘If Sunday penalty rates were reduced to the levels sought in these applications…’. Contrary to what is suggested in Survey Question 17, in these proceedings the Hospitality Employers are seeking to reduce the Sunday penalty rate in the Hospitality Industry (General) Award 2010 from 175 per cent to 150 per cent, for all employees.

[356] The relevant responses are those made to Survey Question 21, which asks: ‘If penalty rates were reduced to base rate + 50 % loading on Sundays, what impact would this have on your opening hours on that day?’. There were only 34 responses to this question, as set out below:

[357] These results are somewhat curious. For example, 2 of the 34 employers who responded say that they would close or open for less hours on Sunday if penalty rates were reduced. Four of the respondents say they would open on Sundays if penalty rates were reduced. This too is curious, given that of the 49 Hospitality Employers who responded to the survey, 46 said that they currently regularly trade on Sunday. 220

[358] Almost 60 per cent of the Hospitality Employers who responded to this question said that the reduction in Sunday penalty rates sought by the Hospitality Employers would have no influence on Sunday opening hours in their business.

[359] It is not apparent to us how CCIWA arrived at the figures in respect of the responses from hospitality employers which are in the extract from its submission set out at [354] above.

[360] The SDA submits that we should not consider the survey material contained in CCIWA’s submission, essentially on the basis that it had not been tendered as evidence and hence they have not had the opportunity to test it. 221

[361] We note from CCIWA’s written submission of 8 February 2016, and its reply submission of 1 May 2016, that the survey material was not submitted as evidence: ‘Rather, it is provided as indicative data on the views and experience of Western Australian employers in these industries’. 222

[362] Contrary to the SDA’s submission, we propose to consider the CCIWA survey material, but for the reasons which follow, the survey data is of limited assistance.

[363] The CCIWA survey was conducted online through ‘Survey Monkey’ and sent to 8,500 WA businesses via CCIWA’s weekly e-newsletter. CCIWA only analysed complete responses from respondents who identified themselves as being in either the retail or hospitality industry – there were only 50 such responses from retail businesses and 49 from hospitality businesses. No information is provided as to the survey response rate among retail and hospitality businesses.

[364] Given the small number of respondents to the relevant survey questions and the limited information provided in relation to the survey methodology, response rates and results, the CCIWA survey data is of limited assistance. It may be regarded as providing some indicative anecdotal data, rather than anything that can be said to be representative of the views of retail and hospitality businesses in WA.

[365] The Busselton Chamber of Commerce and Industry (BCCI) made a submission supporting the submission advanced by CCIWA regarding the impact of the current weekend and public holiday penalty rates on regional tourism. BCCI submits:

‘In many instances the significant costs associated with engaging staff on Sundays and public holidays makes it unviable for local businesses to operate on these days. In this situation the business simply closes. Not only does this negatively impact on the revenue for the business concerned, but it also translates to reduced employment opportunities for the local community…

Weekend and public holiday penalty rates currently act as a brake on the development of the local tourism industry, and in doing so limits employment opportunities for the local community.’ 223

[366] The BCCI submission also set out some comments by local businesses about the impact of the current Sunday and public holiday penalty rates. 224 These businesses are only identified in a generic way, ‘a caf� restaurant’, ‘a clothing retailer’ etc., rather than identifying the specific business. BCCI submits that this material ‘is not intended as evidence, but is reflective of the general views of many of our members on the impact of weekend and public holiday penalty rates on local businesses, employees and the broader community’.

[367] We have had regard to this material but accord it little weight as the relevant businesses were not identified and hence there was no opportunity to test the views expressed.

[368] CCIQ filed 2 submissions, dated 29 June 2015 and 9 November 2015. The June 2015 submission is said to ‘provide high level commentary on the impact of penalty rates on the hospitality and retail sectors in Queensland’. 225 CCIQ submits that ‘penalty rates need to be more pragmatic in order to effectively deal with emerging economic, social and demographic trends facing Australia’s working landscape’.226 In support of its submission, CCIQ relies on a survey of Queensland businesses conducted between 11 February and 13 March 2015, ‘to assess the impact of the FW Act, including penalty rates provisions’ (the CCIQ March 2015 Survey). In addition to the CCIQ March 2015 Survey, CCIQ hosted an ‘Industry Roundtable’ and several consultative forums across regional Queensland, though little detail was provided in respect of this qualitative material.

[369] CCIQ also relied on the CCIQ March 2015 Survey data in its final submission of 9 November 2015. We summarise that data below.

[370] Around 58 per cent of businesses who responded to the survey said that penalty rates and public holiday entitlements are a major or critical concern. 227 A higher proportion of retail businesses (17 per cent) reported that penalty rates and overtime increased substantially as a result of the creation of modern awards compared with businesses in other industries (6 per cent).228 The majority of responses in retail and other industries reported reduced employment or operating hours, particularly employment hours.229 This was more evident among small retail businesses, while a higher proportion of small hospitality businesses reduced both employment and opening hours.230

[371] When asked about reforms to penalty rates, 80 per cent of the responses from businesses in the hospitality sector and 70 per cent of businesses in retail sector supported the continued regulation of penalty rates but with reduced loadings. 231

[372] The CCIQ March 2015 Survey reports on the 1,038 responses received and provides a breakdown by business size and industry. But no information is provided about the number of businesses contacted to undertake the survey or how the survey sample was constructed. As a consequence, response rates cannot be calculated and nor can we reach any sensible conclusions about the representativeness of the survey results. We also note that small business respondents to the survey appear to have included non-employing businesses.

[373] CCIQ conducted another survey in September 2015 ‘to assess the adequacy of a number of the proposed recommendations, particularly regarding penalty rates in the retail and hospitality sectors’ from the Productivity Commission Draft Report. CCIQ reported that around 28 per cent of those who responded to that survey were from the HERRC industries. 232 Over one quarter of these businesses did not open on Sundays, with the majority (71 per cent) responding that it was due to the level of penalty rates.233

[374] Some 62 per cent of the responses from businesses in HERRC industries that already opened on Sundays said that they would increase their staffing levels if Sunday penalty rates were reduced to the Saturday rate. 234

[375] The CCIQ September 2015 Survey has the same limitations as the CCIQ March 2015 Survey. Given these limitations, we propose to treat the results as indicative or anecdotal in character.

[376] We would also observe that the September 2015 survey poses questions predicated on the equalisation of Saturday and Sunday penalty rates, as proposed by the Productivity Commission. Yet the claims in respect of the General Retail Industry Award 2010 and the Hospitality Industry General Award 2010 propose a reduction in Sunday penalty rates, short of equalisation with the penalty rate for Saturday work.

[377] VECCI and BSA 235 also made submissions supporting the claims filed by ABI in these proceedings. In addition, VECCI submits:

‘Furthermore, the Victorian Chamber has advocated strongly on behalf of Victorian business regarding the deleterious effect of State governments gazetting further public holidays which impose significant additional costs to Victorian business for negligible economic benefit or productivity gains. As we submitted to the Productivity Commission in the recent review of the Workplace Relations framework, the cost to pay many of Victoria’s almost 2 million full time employees not to come to work on the ‘Friday before Grand Final public holiday’ could reach $543 million.’ 236

[378] A number of regional chambers of commerce and individual businesses also made submissions in support of ABI’s claims in these proceedings: Bangalow Chamber of Commerce; Coffs Harbour Deep Sea Fishing Club; Coopers Surf Australia; eGoli Day Spa; Gosford City Chamber; Mayfield Business Association; the Moonee Beach Tavern & Bottle Shop and the Yamba District Chamber of Commerce. These submissions, and those made by VECCI and BSA, have a certain template character in that they all include the following statement:

‘We have reviewed the written submissions filed on behalf of Australian Chamber of Commerce and Industry (ACCI), the New South Wales Business Chamber (NSWBC) and Australian Business Industrial (ABI) in the above proceedings on 2 February 2016.

We understand that ABI and NSWBC have filed claims seeking:

1. to reduce the public holiday penalty rate for full-time and part-time employees employed under the Restaurant Industry Award 2010 (Restaurant Award) and the General Retail Industry Award 2010 (Retail Award) from 250% to 200%;
2. to reduce the public holiday penalty rate for casual employees employed under the Restaurant Award and the Retail Award from 250% to 125% (including the casual loading);
3. to reduce the Sunday penalty rate for all employees employed under the Retail Award from 200% to 150% (inclusive of casual loading for casual employees); and
4. to vary the relevant pay rates for employees who receive time off in lieu when they work a public holiday under the Restaurant Award so that employees would receive 100% of their ordinary pay for working the public holiday, whilst also receiving time off in lieu.
We support all of these claims.

Based on feedback from our membership, [name of organisation making the submission] has become aware that the present regime of penalty rates is currently constraining:

(a) the number of hours that our members open;
(b) the number of trading days that our members operate;
(c) the number of employees that our members can hire and keep employed;
(d) the number of hours that our members can offer their employees to work; and
(e) the revenue and profit generated by our members.

If the NSWBC and ABI claims are granted, we envisage that the adverse effects discussed above would be lessened.’ 237

[379] The template character of these submissions reduces the weight we attach to them.

[380] The Federal Member for Durack, Ms Melissa Price MP, also made a short submissions in which she says:

‘I met with some small business owners from Geraldton to discuss issues they face and a common concern was the complex penalty rate system for employees…

I found that many businesses in the retail and hospitality industries simply do not open on a Sunday or public holiday due to increased wage costs. This is a concern to me as I believe in Durack, Sunday and Public Holiday trading is desired by the constituents.’ 238

[381] The submission refers to a proposal put by a small business owner in Geraldton involving ‘a change from the current multi-tiered penalty rate system to a two-tiered penalty rate system one rate for normal hours … then a rate for non-standard hours, including public holidays’. Ms Price asks that we consider this proposal as part of these proceedings and submits that the proposal ‘has merit and would result in an increase in business opening hours and therefore employment in Durack’. 239

[382] No details were provided as to the particular penalties that would operate in the proposed ‘two-tiered penalty rate system’. Further, to the extent that the proposal seeks a common penalty rate for all work performed on Saturdays, Sundays and public holidays, that is not a proposal being advanced by any of the principal employer parties in these proceedings.

[383] As to the expressed concern about the complexity of the current penalty rate system, that is a matter we deal with in Chapter 12: Next Steps.

5.3.2 Submissions opposing Employer claims

[384] Some 22 submissions were received in opposition to a reduction in Sunday penalty rates sought by the principal employer parties. These submissions may be categorised into the following broad groups:

• State and Territory governments;


• Church based organisations;


• Political entities;


• Women’s organisations; and


• Other organisations.

(i) State and Territory Governments

[385] The Governments of Victoria, Queensland, South Australia and the ACT all oppose the reduction of penalty rates.

[386] The Victorian Government submits that:

‘… a change to penalty rates, while providing some financial benefit to business, comes at too high a price. Many employees face the prospect of losing a significant proportion of their income. The businesses that will benefit from a lower wages bill may find that people have less discretionary income to spend on their products. A long-term implication is that further pressure may be placed on the social security system as low paid workers seek assistance from the government to make up for their lost wages.’ 240

[387] The Appendix to the Victorian Government’s submission contains material about the impact of the proposed reductions in penalty rates on employees covered by the General Retail Industry Award 2010; the Restaurant Industry Award 2010; the Fast Food Industry Award 2010 and the Hospitality Industry (General) Award 2010 (also see Figure 3 on p. 26 of the submission).

[388] The Queensland Government submits:

‘Workers in the Hospitality, Restaurant, Retail and related industries are some of the lowest paid in Australia. These workers rely upon penalty rates to provide the basics for their families and themselves. The hours they work on evenings, weekends and public holidays have a significant impact on them and their family. Existing penalty rates go some way to compensate these workers for giving up this valuable time with their family and friends. This is time the rest of the community accepts as the norm.

Reducing penalty rates may also have a negative impact on the economy with low income earners more likely to spend a far greater proportion of their income – including that derived from penalty rate – on local goods and services. Any reduction in spending in local Queensland economies – especially in regional communities where businesses are doing it tough – would have a negative impact.’ 241

[389] The South Australian Government submits:

‘Penalty rates play a critical role in compensating employees working long or unsociable hours. Thousands of South Australians rely on penalty rates to make ends meet. Removing or reducing penalty rates will have a negative impact on South Australian workers and their families.

It is vitally important that penalty rates are upheld to maintain workers’ take home pay. Many of those paid penalty rates rely on them financially – to pay their bills, put food on their tables or pay for theirs or their children’s education. Reducing penalty rates will have the effect of increasing inequity in Australian society.

Further, reducing penalty rates is likely to have a negative impact on South Australia’s economy. Our economy is in a state of transition and we face challenges ahead. To reduce the pay of many South Australians will reduce consumption and serve to exacerbate those challenges.’ 242

[390] The ACT Government opposed changing the penalty rate arrangements in the modern awards under review:

‘Penalty rates have an important and legitimate role in compensating employees and should be maintained for those working long hours or at unsociable times…

A reduction in penalty rates is effectively asking some of the lowest paid and most vulnerable workers in our community to take a pay cut.’ 243

(ii) Church based organisations

[391] The Anglican Church Diocese of Melbourne expresses concern about the proposal to cut Sunday penalty rates to the level of those applying to Saturday work noting that weekend penalty rates are a significant part of the income of low paid workers and that Sundays remain days of special significance:

‘Sunday is a time when we can slow down to the pace of the very young, old, and disabled. Sunday is most often the day when these vulnerable people are paid attention or are visited or called. It is a day that resists today’s pervasive fragmentation and social erosion…

Sunday is not just a day for the devout – it’s a day for rest, families, friends, young and old.

Sunday penalty rates recognise the special nature of Sunday as a shared day of rest for what should be kept as a minority who miss out for emergency work or economic necessity.’ 244

[392] A similar submission is made by the Social Issues Committee of the Anglican Church Diocese of Sydney.

[393] Baptist Churches NSW-ACT, said to represent over 100,000 people, also affirmed its support for the existing Sunday penalty rates regime:

‘In Australian culture, Sundays are a day for rest, worship, family and community…

Reductions in Sunday penalty rates will increase both time and financial pressure on low-paid households…

Sunday penalty rates in low-skilled industries such as hospitality and retail allow students, immigrants, low-paid workers, and people trying to escape poverty to accumulate some savings or make ends meet. Reducing Sunday penalty rates leaves marginal households more precarious and makes it harder for people to escape or stay out of poverty…

We do not support any action which increases Sunday trading beyond the current levels. Despite the employer group rhetoric, plenty of businesses currently open on Sunday. Reductions in penalty rates will simply transfer wealth from the have nots to the haves.’ 245

[394] The Burwood-Croydon Uniting Church and the Leichardt Uniting Church also made submissions supporting the existing Sunday penalty rates regime. 246

[395] The Uniting Church Synod of NSW & ACT calls on the Commission ‘to maintain the current Australian tradition of compensating workers for being available on Sundays’ and ‘do not support any action which increases Sunday trading beyond the current levels’. 247

[396] The Justice and Peace Office of the Catholic Archdiocese of Sydney strongly oppose the Productivity Commission’s recommendation to reduce Sunday penalty rates in the retail and hospitality industries and submit:

‘We are concerned that the recommendation does not provide a proper balance between the rights of employers and the rights of employees in several respects. As Christians we are also troubled by the effort to encroach further on time with family and communities as well as time for rest, recreation and worship on Sundays…

Reducing penalty rates will punish some of Australia’s already most vulnerable and low-paid workers.’ 248

[397] The Justice, Peace and Integrity Creation Commission of the Australia Timor Leste Carmelite Order, a religious order within the Catholic Church, opposes reduction in Sunday penalty rates , for similar reasons to those set out above and submits:

‘Sunday, a day of rest and recreation, does remain important for a wholesome social life and builds on community cohesion. The vast majority of the Australian community spends time with friends or in community groups. We believe that this day is a day made for the good of all people, not just a select few who do not enjoy higher economic comfort’ 249

[398] The Bosco Social Justice Group, mainly compromising of parishioners of St John Bosco Parish, Engadine NSW, also oppose the reduction of penalty rates for Sunday work for both social justice and religious reasons. 250

(iii) Political Entities

[399] The Federal Opposition and the State Labor Oppositions in NSW, Tasmania and WA, oppose the employer applications before us.

[400] The Federal Opposition notes that changes to penalty rates:

‘… will represent significant changes to the total earnings and income of workers in hospitality and retail industries that have a higher prevalence of casualisation, and accordingly impact on fairness across our society and the performance of the Australian economy…

In short, there is clear and well-founded evidence that reducing the take home pay of low paid Australian workers will have a negative impact on domestic consumption. At the same time, it is highly unlikely that the benefits claimed by individual businesses will be seen across the aggregate economy.’ 251

[401] The Federal Opposition also submits that:

‘Penalty rates continue to be a fundamental part of a strong safety net for Australia workers, enabling low income workers and workers in highly casualised industries to share in the nation’s economic prosperity…[and] in the context of current economic circumstances and in the interests of supporting inclusive and fair growth, any changes to the modern awards should not cut the take home pay of affected workers.’ 252

[402] We deal with the potential use of ‘take home pay orders’ in Chapter 11, Transitional Arrangements.

(iv) Women’s organisations

[403] Asian Women at Work Inc (AW@W) is a community organisation which provides assistance and support to over 2,000 low paid Asian women in precarious employment. AW@W supports the retention of weekend penalty rates and opposes the reduction or abolition of those rates. It submits:

‘Migrant women workers in low paid and precarious employment are already very vulnerable and are under considerable financial stress. They do not need more stresses that can worsen their situations in the workplaces, bring about more family tension, drive them into poverty, impact on their health.’ 253

[404] The National Foundation for Australian Women (NFAW) submits that there are no grounds for changing existing penalty rates in the modern awards before us. 254 The NFAW advances a number of points in support of its central contention that the PC Final Report does not provide a sufficient basis for change, in particular it submits:

• the Productivity Commission is not bound to take into account the full range of considerations set out in the modern awards objective and it has not done so in reaching its recommendations;


• women would be disproportionately affected by a reduction in Sunday penalty rates in the HERRC industries; and


• the Productivity Commission contention that the negative impact of working on Sundays is no different to that associated with Saturday work is wrong (citing Skinner and Pocock 255 and the Expert Report of Professor Sara Charlesworth and Dr Fiona Macdonald in these proceedings.256

(v) Other organisations

[405] The National Union of Students (NUS) supports the retention of the existing regulatory arrangements regarding penalty rates. The submission focuses on the impact of a reduction in penalty rates on students and provides information about the interaction between student employment income and various student income support programs. The NUS submits:

‘Hundreds of thousands of university students are juggling work and study commitments to the point where their academic performance is being adversely affected. A loss or reduction in penalty rates will mean that students will have to work longer hours to maintain current income levels [which]… will exacerbate existing problems with student academic performance and campus engagement. It is also likely to lead to an increase in student withdrawal/deferment from university study as the knife-edge juggle being paying bills and study gets too hard.’ 257

[406] The Curtin Student Guild raised similar concerns and contended that there was a relationship between the cost of living, income from employment and student attrition rates. 258

[407] The Queensland Police Union of Employees (QPU) submits that:

‘… any proposal to reduce penalty rates is nothing more than an unfair and unjust money grab that will disadvantage the employees most deserving of just recompense for the impact shiftwork has on their health and lifestyle.’ 259

[408] The QPU expresses its concern that a reduction in penalty rates arising from these proceedings will flow on to police officers – ‘thereby affecting their income and negatively impacting on the efficient operation of the Queensland Police Service’. 260

5.4 Public contributions

[409] On 15 January 2016 261 we issued directions which provided that:

‘Any interested person who is not a party to the proceedings may put forward a position (and file material in support of their position) in relation to varying the penalty rate provisions in the above awards by no later than 4.00pm Wednesday 17 February 2016.’

[410] The above direction was advertised in major newspapers nationally on 20 January 2016 262, as set out below:

4 yearly review of modern awards – Penalty rates

Since January 2014, the Fair Work Commission has been conducting a four yearly review of all modern awards in accordance with s.156 of the Fair Work Act 2009.

Following the publication of an Issues Paper in January 2014 and a public conference, any interested persons were invited to make submissions relating to the conduct of the review including any claims which affected multiple modern awards.

One of the common issues identified as a result of the consultation process involved applications by a number of organisations to vary penalty rates in certain awards.

As a result, the Commission is currently reviewing penalty rates in the following awards:

Hospitality group Retail group

- Hospitality Industry (General) Award 2010 - Fast Food Industry Award 2010

- Registered and Licensed Clubs Award 2010 - General Retail Industry Award 2010

- Restaurant Industry Award 2010 - Hair and Beauty Industry Award 2010

- Pharmacy Industry Award 2010

All directions for filing and the schedule of hearings have been published on a dedicated Penalty Rates page on the Commission’s website [www.fwc.gov.au]. Material filed by interested parties has also been made publically available on this webpage.

The Penalty Rates Review is nearing completion and directions have been issued for the filing of final submissions. There is a further opportunity for any interested person who is not a party to the proceedings to put forward a position (and file material in support of their position) in relation to varying the penalty rate provisions in the above awards in accordance with those directions.

Material is to be filed electronically by email to amod@fwc.gov.au

Those persons wishing to put forward a position are encouraged to view the Commission’s website for further information.

[411] In response to the invitation to make submissions, some 5,960 public contributions from individual employees and employers were received and 5,845 published on the Commission’s website. The remaining 115 contributions were confidential 263 and were provided to the principal parties (in redacted form) but not published.

[412] ABI and a number of employer parties 264 undertook a review of the public contributions and filed a joint submission.265 Attached to the submission was a spreadsheet outlining their analysis. The review assessed the public contributions available for review266 against the following questions:

• Is it impossible to identify what industry the contribution relates to?


• If it is possible to identify the relevant industry, what industry does the contribution relate to?


• Is the identified industry relevant to the present proceedings?


• Is the identified industry relevant to the restaurant and retail industries?


• Does the contribution seek to oppose the abolition of penalty rates?


• Does the contribution seek to oppose the reduction of penalty rates?


• Does the contribution differentiate between Saturdays and Sundays?


• Does the contribution refer to church or religious observance?


• Does the contribution identify that the author works Sundays?

[413] On the basis of their joint review, the employer parties submit:

(i) The clear majority of contributions reviewed (3513 out of 5873 or just under 60 per cent) do not indicate the industry to which the contribution relates.

(ii) Of those contributions that do indicate the industry referred to, approximately 45 per cent do not relate to the industries affected by these proceedings.

(iii) Accordingly, in total, only 1291 of 5873 contributions reviewed (approximately 22 per cent) actually relate to the industries affected by the present proceedings.

(iv) Of the 1291 contributions which actually relate to the industries affected by the present proceedings, 682 (approximately 53 per cent) appear to assume that the employer claims include a proposal to abolish penalty rates, rather than reducing penalty rates.

(v) Once all contributions that are not identifiably relevant to the current proceedings are removed including those which misunderstand the employer party claims, only 823 of the 5873 contributions (approximately 14 per cent) have potential relevance to the proceedings.

[414] The employer parties also submit that none of the 823 contributions of potential relevance are supported by evidence.

[415] Ai Group (which was one of the employer groups who undertook the review of the public contributions) filed a separate submission in which it observed that the contributions were general in nature, lacked supporting evidence and ‘in some cases are quite emotive rather than considered’. 267

[416] United Voice 268 and the SDA269 conducted their own analysis of the public contributions and commented on the review undertaken by the employer parties.

[417] United Voice submit that the review conducted by the employer parties demonstrates systematic errors and mischaracterisations. 270 It submits that the employer parties sought to artificially limit the number of contributions that are relevant (in particular by disregarding those where the industry of the individual had not been identified), inappropriately relied upon redactions and mischaracterised the contributions on the basis of whether the contribution opposes the abolition or reduction of penalty rates. United Voice submits that the employer parties’ adopted a systematically inaccurate approach to the characterisation of the public contributions such as to render the employer review ‘unreliable and lacking credibility’.271

[418] We accept that the approach adopted in employer review of the public contributions may have excluded some relevant contributions. The analysis appears to disregard those contributions which do not identify the industry in which the individual concerned works. While one cannot presume that all of these individuals are employed in the hospitality or retail sectors, it is reasonable to presume that at least some of them are. Such a presumption is reasonable having regard to both the size of these sectors (in terms of persons employed) and the fact that the contributions were made in response to an advertisement which specified the modern awards which are the subject of these proceedings.

[419] But it seems to us that undertaking a further review of these contributions for the purpose of determining the precise number which are of direct relevance to these proceedings would be an arid exercise. We accept the submission advanced by the SDA in this regard:

‘… the SDA has endeavoured to ensure that the analysis undertaken reflects the contributions, the SDA accepts that its analysis will contain errors just as there are errors in the Joint Employers’ submissions. The Commission should view the analysis of the Union parties and the Employer parties as providing a broad overview or impression of some of the sentiments expressed’. 272

[420] In particular we accept that a broad, impressionistic, view of this material is appropriate. In that regard we note that the overwhelming majority of the contributions received opposed the reduction or abolition of penalty rates. 273

[421] As acknowledged by all parties, the public contributions do not constitute evidence and, importantly, the views expressed have not been tested in cross-examination. These considerations are relevant to the weight we attach to this material and, plainly, we attach less weight to these contributions than we give to the evidence advanced in the proceedings. But we do not propose to simply disregard the views expressed.

[422] Those who responded to the public call for submissions provided various reasons for opposing cuts to penalty rates. In its submission the SDA summarises these views and in doing so limited its analysis to those contributions which can be attributed to one of the modern awards which are the subject of these proceedings. Based on its analysis the SDA submits:

‘The broad themes which emerge from this material are that the contributors express that there are real disabilities associated with working on Sundays and the loss of opportunities to spend time with family, to socialise and to relax, and that there are real concerns about the financial impact upon them of cuts to penalty rate entitlements in their work.’ 274

[423] The themes identified by the SDA as emerging from the public contributions form part of the broad context of the proceedings and can be said to provide some support for the evidence before us about the disability of working at times when penalty rates apply and about the financial impact upon individual workers of reducing those penalty rates.

6. Weekend work

6.1 Overview of data and evidence

[424] Parties called a number of witnesses and referred to several reports when discussing social changes in Australia across, and in particular, the incidence and effects of weekend work. Data and evidence in this section are drawn from the following:

• Fair Work Commission, Changing work patterns, material to assist the AM2014/305 Penalty rates case (Changing work patterns Report).


• Exhibit ABI 3: Professor Lewis, Penalty rates and the retail and caf� restaurant; and hairdressing and beauty industries, a report prepared for ABI (Lewis Report).


• Exhibit UV 25: Professor Borland, Report by Professor Jeff Borland, (Borland Report).


• Exhibit ABI 1: Professor Rose, Value of Time and Value of Work Time during Public Holidays (Rose Report).


• Common Exhibit 1: Productivity Commission Inquiry Report: Workplace Relations Framework – Chapters 9, 10, 11, 12, 13, 14, 15 and Appendix F (PC Final Report).


• Exhibit Retail 2; Dr Sean Sands, Retail award research report, (Sands Report).


• Bittman M (2005), ‘Sunday working and family time’, Labour & Industry, Vol. 16, No. 1, pp. 59–81.


• Exhibit ABI 13; Craig L and Brown JE (2014), Weekend work and leisure time with family and friends: who misses out?, Journal of Marriage and Family, Vol. 76, pp. 710–727.


• Exhibit Ai Group 26: ABS, Australian Social Trends, Nov 2013: Losing my religion, Catalogue No. 4102.0.


• Exhibit SDA 36: Dr Ian Watson and Professor David Peetz, Characteristics of the workforce in the national retail industry: with regard to age, weekend work and student status.

[425] The Commission’s Changing work patterns Report 275 was published to assist the parties and present data on changes in the labour market, work arrangements and preferences, and how people spend their time when not working. Data were sourced from the ABS and the Household, Income and Labour Dynamics in Australia (HILDA) survey.

[426] The HILDA Survey is a longitudinal household-based panel study that collects information on economic and subjective well-being, labour market dynamics and family dynamics. Interviews are conducted annually with all adult members of each household who are followed over time. The survey began in 2001 and includes 15 waves of data that cover the period from 2001 to 2015.

[427] The Changing work patterns Report 276 was first published in December 2015 and updated with new data in January, March, September and October 2016. The Report was updated for the most recent wave of the HILDA survey in January 2017 and that update included additional data from the ABS. Parties were invited to make submissions on this report in late October 2016 and were also given an opportunity to comment on additional data which was included in the report in January 2017.

6.1.1 Trends in the labour market

[428] Labour market indicators were presented in the Commission’s Changing work patterns Report and in the Lewis Report. The first two parts of the Lewis Report provided an overview of the trends in the Australian labour market and the economic environment in which the retail, cafe and restaurant industries operate. This material is largely uncontentious. The contentious part of the Lewis Report is that part dealing with the employment effects of introducing penalty rates on Sundays and public holidays. We deal with that aspect of the Lewis Report in Chapter 6.3.1.

[429] The data from the Lewis Report is sourced from the ABS. In some instances, the data presented in the Lewis Report captured trends over a longer period to show how much the labour market has changed since the late 1970s. 277

[430] The composition of the labour market has changed significantly over the last 25 years or so and this has contributed to the changing nature of weekend work. Between 1978 and 2016, the participation rate for females increased by around 15 percentage points, while the participation rate for males decreased by around 8 percentage points (Chart 1).

Chart 1 278:

Participation rate—male and female, per cent, 1978–2016

[431] The increase in the female participation rate has been associated with changes in the composition of employment and, in particular, a rise in part-time employment (Chart 2). The Lewis Report notes that there has been a substitution of female employment, particularly part-time, for male full-time employment. 279 Lewis added that flexibility in hours worked is required to meet peaks in demand in the services sector which is facilitated by part-time employees.280

[432] Part-time employment is defined as those who usually worked less than 35 hours a week (in all jobs) and either did so during the reference week, or did not work in the reference week. 281The ABS define full-time employment as those who usually work 35 hours or more a week (in all jobs) and those who, although usually working less than 35 hours a week, worked 35 hours or more during the reference week.

[433] Chart 2 shows that male full-time employment decreased from 61.5 per cent of total employment in February 1978 to 43.5 per cent in August 2016. This decrease was offset by an increase in male part-time employment (from 3.2 per cent to 10.1 per cent) and female part-time employment (from 11.9 per cent to 21.7 per cent). Female full-time employment remained relatively steady over the period at around 25 per cent of total employment.

Chart 2 282:

Composition of employment, per cent of total employed, 1978–2016

[434] The Lewis Report explains that the more recent increase in part-time employment for males is likely to be due to the effects of the global financial crisis, as businesses preferred to reduce hours worked rather than the number of employees. 283 The increase in part-time employment has contributed to a fall in average hours worked per month from a peak of 150.3 hours in December 1999 to 138.5 hours worked per month in August 2016 (Chart 3).

[435] The most recent labour force data released by the ABS shows that strong growth in part-time work continues, increasing by 3.5 per cent over the year to January 2017, while full-time employment fell by 0.5 per cent. 284

Chart 3 285:

Proportion of employment by full-time and part-time status and average monthly hours worked, August 1991 to August 2016

[436] There have also been changes over time in the status of employment categories considered by the ABS and whether employees have paid sick and/or holiday leave entitlements.

[437] The ABS categorises employed persons into employment types according to the reported employment relationship or contract. The categories separate employed people who operate their own business into owner managers of incorporated enterprises (OMIEs) or owner managers of unincorporated enterprises (OMUEs). 286 OMIEs are people who operate an incorporated enterprise, which is a business entity registered as a separate legal entity to its members or owners. OMUEs are people who operate an unincorporated enterprise, which is a business entity in which the owner and the business are legally inseparable and includes those engaged independently in a profession or trade.287 The remaining workers are made up of employees who are grouped into whether they have sick and/or holiday leave entitlements (i.e. permanent employees) or not (i.e. casual employees). This group is reported separately to full-time and part-time employment.

[438] In 2015, over 60 per cent of employed persons were employed on a permanent basis, around 20 per cent were casual, 7 per cent were OMIEs and 11 per cent were OMUEs (Chart 4). Between August 1995 and August 2015 the proportion of casual employees had increased more than other employment types with most of the increase in the first half of the period.

Chart 4 288:

Proportion of total employment by employment type, 1995, 2005 and 2015

Note: Estimates are for August of each year. OMIEs are people who work in their own incorporated enterprises, that is, a business entity which is registered as a separate legal entity to its members or owners. OMUEs are persons who operate their own unincorporated enterprise or engage independently in a profession or trade.

[439] Chart 5 reproduces and updates Figure 4 from the Lewis Report and shows the proportion of employees working on a casual basis from 1985 to 2015. It shows that casuals increased from over 15 per cent of all employees in 1985 to about 25 per cent in 2000 and has remained relatively stable since. 289

Chart 5 290:

Casual employment, per cent of employees

[440] Much of the demand for part-time and casual employment has come from the services sector. The services sector comprises the remaining industries not specifically identified in Chart 6: Wholesale trade; Retail trade; Accommodation and food services; Financial and insurance services; Rental, hiring and real estate services; Professional, scientific and technical services; Administrative and support services; Public administration and safety; Education and training; Health care and social assistance; Arts and recreation services; and Other services.

[441] The Lewis Report shows that employment in the services sector increased from around 50 per cent of total employment in 1975 to over 70 per cent of total employment in 2014 (Chart 6). 291

Chart 6 292:

Proportion of total employment by industry, 1975 to 2014

[442] Chart 7 presents a separate breakdown of industries to show the growth in the services sector. It shows that Household services increased from around 27 per cent of total employment in 1990–91 to around one third of total employment in 2015–16, while Business services rose from over 15 per cent in 1990–91 to around 19 per cent in 2015–16 (Chart 7).

Chart 7 293:

Proportion of total employment by industry, 1990–91, 2000–01 and 2015–16

Note: Total employment and employment for each industry is calculated by taking the average of the four quarters over the year. Business services are Information media and telecommunications; Financial and insurance services; Rental, hiring and real estate services; Professional, scientific and technical services and Administrative and support services. Household services are Accommodation and food services; Education and training; Health care and social assistance; Arts and recreation services and Other services.

[443] The above data provides an indication of the extent of change in the Australian labour market. These changes have occurred in response to shifts in consumer demand and preferences for goods and services (largely confined to the hospitality and retail sectors), that are often accessed on weekends, as discussed in the overview of the hospitality sector at Chapter 7.1 and the retail sector at Chapter 8.1.

6.1.2 Changing nature of weekend work

[444] The PC Final Report presented data showing that the proportion of employees working weekends has increased over the period between 1993 and 2013 (Chart 8 below). 294

Chart 8 295:

Patterns of working weekends over time, employees^a, 1993 to 2013

Note: a) While substantially overlapping, the surveys employ different definitions for employees and jobs, which should be noted. Survey 1 is the ABS Forms of Employment survey and only covers people employed as wage and salary earners under a contract of service (an employment contract). The data relate to people categorised as such employees in their main job, but includes periods of work in all their jobs if they are multiple jobholders. Survey 2 is the Working Time Arrangements survey (WTA), and includes owner managers of incorporated enterprises as ‘employees’. As for survey 1, the data cover people working in single and multiple jobs. Survey 3 is the Working Arrangements survey, the predecessor to the WTA, and uses the same definition of employees, but only relates to periods of work in the employee’s main job.

[445] Similar data in the Changing work patterns Report analysed changes in work arrangements and the prevalence of weekend work. Analysis of ABS data on days of the week and number of days worked showed that the majority of employees worked Monday to Friday and that this had remained constant over recent times, as shown in Table 5 below.

Table 5 296:

Days of the week and number of days worked in all jobs, employees, November 2008, November 2013, and August 2015

Note: For multiple jobholders, the responses refer to their total pattern of work in all their jobs. ^Refers to the days of the week people usually worked, therefore people may appear in more than one category. People who reported that they worked from Monday to Friday inclusive were categorised as working Monday to Friday. These people may have reported that they also worked on Saturday and Sunday in the job/s. People who reported that the usual days of the week worked varied were categorised only to days varied. A response of days varied could not be provided with any other response. For multiple jobholders, the responses refer to their total pattern of work in all their jobs. *The status of employment categories for August 2015 are different to the previous years.

[446] The PC Final Report also presented the same data from the ABS, but included and combined all other non-employee categories (independent contractors and other business operators) to compare the days of the week worked. This appears as Figure F.1 in the PC Final Report and is reproduced below as Chart 9.

[447] Chart 9 shows that the share of employed persons that work on weekends is far below the share of employed persons who work on weekdays, while the share that work on Saturdays is also higher than the share that work on Sundays. The figure also shows that, compared with non-employees, employees are less likely to work across each day, particularly on weekends.

Chart 9 297:

Patterns of work by the day, share of the employed working on given days, per cent, November 2013

[448] Further evidence showing that employees are less likely to work on weekends compared with non-employees is provided in Table 6, which is reproduced from Table F.1 in the PC Final Report. The data from November 2013 shows that employees are more likely to work Monday to Friday only, while non-employees are more likely to work 5 weekdays and 1–2 weekend days than other periods.

Table 6 298:

Who works on weekends?, November 2013

Note: The data relate to the nature of working in a reference week.

[449] Providing a comparison between 2008 and 2013, the PC Final Report presented the change in the total numbers of employees on Saturdays and Sundays with all workers. Chart 10 shows that over the period, the number of employees increased by around 11 per cent, as did the increase in employees working on Saturdays. However, the percentage increase in the number of employees on Sundays was twice as much, at almost 24 per cent.

Chart 10 299:

Relative growth in Saturday and Sunday work, percentage change in numbers employed, 2008 to 2013

Note: In some cases, people said that their days of work varied, in which case they could not be identified as usually working on Sundays, and are therefore excluded from the calculations for Sundays.

[450] In an ABS article, data from the Forms of Employment Survey 2008 showed that casual employees were more likely to work on weekends than other employees, who were more likely to work on weekdays. 300 However, no more recent data has been published on casual employees working weekends by the ABS.

[451] The Changing work patterns Report also presented data from the HILDA survey on the nature of weekend work. From a series of questions asked in the survey, employed persons could be classified by whether they usually worked weekends or whether they worked weekdays only. Changes in the proportions of these two groups are presented in the following tables.

[452] Table 7 shows that around one in three employed persons usually worked weekends in both 2006 and 2015.

Table 7 301:

Whether usually worked weekends, all employed persons

Note: The data in this table are for all employed persons.

[453] Table 8 shows that, overall, around half of employed persons worked Monday to Friday, around one in three employed persons worked other regular days, and the remaining employed persons working days varied. Between 2006 and 2015, the proportion of employed persons whose working days varied increased while the proportion who worked other regular days (that were not Monday to Friday) decreased.

[454] The data shows that around three-quarters of employed persons who worked weekdays only worked from Monday to Friday and, of the remaining employed persons, around three times as many worked other regular days than varied days.

[455] Most employed persons who usually worked weekends worked on regular days. However, this proportion decreased between 2006 and 2015 and the proportion for those whose working days varied increased. Employed persons who worked on weekends were relatively more likely to have their work days vary than those who worked weekdays only.

Table 8 302:

Type of work schedule

Note: ‘Days vary’ refers to responses ‘nine day fortnight’, ‘days vary from week to week’ and ‘day vary from month to month’.

[456] Table 9 shows the proportion of employees that work on weekends from 2002 to 2016 by industry, comparing the first half of the period with the second. The table ranks the industries by the proportion of employees that usually worked weekends in the second period. The table shows that across all industries at least one in four employees work on weekends, with a slight increase between the two periods.

[457] The highest proportion of employees that work on weekends was in Accommodation and food services and Retail trade, with a slight increase for both industries between the two periods.

Table 9 303:

Proportion of employees who work on weekends, by industry

[458] Using the HILDA survey, both the Changing work patterns Report and research undertaken by Dr Ian Watson in his report with Professor David Peetz (Characteristics of the Workforce in the National Retail Industry with regard to age, weekend work and student status) showed that at least 60 per cent of employees in Retail trade usually worked weekends. 304

[459] A paper 305 by Commission staff provides a framework for ‘mapping’ modern award coverage to the Australian and New Zealand Standard Industrial Classification (ANZSIC).

[460] More detailed data for some industries that have been mapped to the relevant modern awards are shown in Table 10. For most of these industries, over half of employees work on weekends and, for all of them, the proportion increased between the two periods. 306

Table 10 307:

Proportion of employees who work on weekends, by selected industry subdivisions and groups

[461] Overall, the data show that employees in the industries that align most with the hospitality and retail group of awards are more likely to work on weekends than other industries, suggesting that weekend work is more common in these industries. In many of these industries, more than half of employees work on weekends.

[462] Although weekend work has increased over recent times, the number of employees working on weekends is still far below the number of employees that work on weekdays, and working on Saturdays is still more common than working on Sundays.

6.1.3 Shifts in consumer demand and preferences

[463] We set out material on trends in consumer preferences in relation to the Retail sector in Chapter 8, which incorporates data from the PC Final Report and the Sands Report.

[464] The PC Final Report highlighted that employment on weekends has increased with the rise in consumer demand, with a greater share of the workforce working on weekends and a “non-trivial” share only working on weekends. 308 The PC Final Report stated that employment patterns in the HERRC industries have developed with the shift in consumer demand, noting that:

“… the customer is buying convenience and variety as much as the good itself, and cost increases frustrate the extent to which those consumer preferences can be met by businesses.” 309

[465] Data from the ABS presented in the PC Final Report compared the share of weekly retail sales by each day of the week (Chart 57 at [1589]) and which suggested that although consumer demand for shopping on Sundays has increased significantly since the early 1980s, the preference to shop still remains higher on Saturdays than Sundays.

[466] In further analysis, the PC Final Report showed that growth in average daily foot traffic in shopping centres between 2009 and 2014 was greatest for Sunday. Data on shopping by days of the week as measured by supermarket trips and transactions provided similar results to the ABS data in Chart 58. Although transaction values were greater on Sunday than Monday and Tuesday, they were lower than on Saturday 310 (see below at [1590]).

6.1.4 Changing role of weekends

[467] This section considers the time use surveys undertaken by the ABS and analysed in academic papers, the Lewis Report and the PC Final Report as well as additional evidence provided in the Rose Report. Fair Work Commission staff published a Research reference list of academic papers cited in the expert evidence and the submissions (set out in Attachment D).

[468] An important consideration is not just the days of the week that people work but also the differences in the activities that are performed on weekdays and weekends and how this has changed over time. This assists in determining the importance of weekends and is relevant to the assessment of the appropriate compensation for working on weekends.

[469] Time use surveys collect information on the daily activities of people to determine how they allocate time. They are able to provide data on the patterns of paid work, as well as unpaid household and community work, and the way people balance work and family obligations. Time use surveys rely on respondents completing diaries which record their activities in five-minute intervals (including the nature, timing and duration) over particular days. Other information collected include for whom the activity was done, who else was present and where the activity took place. 311

[470] The ABS has conducted three time use surveys—in 1992, 1997 and 2006. Changes were made between the 1992 and 1997 surveys and the 1997 and 2006 surveys, although the ABS considered the 2006 survey to be highly comparable with the 1997 survey. Unfortunately these data have not been updated in the last ten years.

[471] Two Australian studies which utilised the Time Use Survey, Bittman 312 and Craig and Brown,313 found that more time was allocated to leisure and family on weekends than weekdays, demonstrating the continuing importance of weekends and how activities undertaken on weekends differ from those undertaken on weekdays.

[472] Bittman found that, over time, there was a gradual increase in the proportion of Sunday workers, although the chance of working on a Sunday was much lower than a weekday. Sunday was found to be the day on which the most time was allocated to personal care activities, recreation and leisure, and the most critical day for families to spend time together. 314 In the first model, Bittman found that those who worked at least 2 hours on Sundays had fewer opportunities for family time and social contacts than those who did not work on Sundays.315 In the second model, Bittman tested whether those who worked on Sundays made up family time and social contacts relative to those who only worked on weekdays. After controlling for a number of factors, Bittman found that, compared with those that work on weekdays, ‘Sunday workers miss out on key types of social participation and have less opportunity to balance the demands of work and family’.316

[473] Craig and Brown (2014) 317 incorporated the more recent 2006 Time Use Survey to assess total daily minutes spent on social and community interaction as well as recreation and leisure while in the company of others among different household types.

[474] Craig and Brown found that weekend work was negatively associated with shared leisure activities on weekdays across all household types. However, for couples and singles without children, no significant differences were found between Saturdays and Sundays in terms of displacing shared leisure time, while for couples with children, Sunday work was associated with more displaced leisure time than Saturdays:

‘For parents only, Sunday work had an extra negative association, beyond that of Saturday. The forms of shared leisure most displaced on Sundays were with spouse and children. We also found that, on average, less Sunday leisure time was spent with friends, so the results confirmed our expectation that the two days have a different flavor and that Sunday in particular is a day for sharing leisure time with family.’ 318

[475] Overall, Craig and Brown did not find large differences in time allocation between Saturdays and Sundays. Craig and Brown concluded that making up shared leisure time is also contingent on other people’s schedules and there are limited opportunities to make up this time if others are not available on weekdays.

[476] United Voice called Dr Olav Muurlink to provide expert evidence on the impact of weekend and public holiday work. Dr Muurlink provided a report: ‘The impact of weekend work: consecutivity, overload, uncontrollability, unpredictability, asynchronicity and arrhythmia’ (‘the Muurlink Report’). Dr Muurlink claimed that the Craig and Brown paper:

‘… strongly suggests that Saturday and Sunday work reduces the time spent with children and on social activities, and workers are not able to ‘make up’ the time during the working week in the way that those who work purely Monday to Friday ‘make up’ time with their children on the weekends’. 319

[477] However, as Dr Muurlink acknowledged in cross examination, in two of the three family types examined, Craig and Brown did not find differences between Saturdays and Sundays. 320

[478] SDA and United Voice cautioned against relying on the Bittman and Craig and Brown papers. They argued that Dr Bittman did not focus on the overall equivalence between Saturdays and Sundays, while Craig and Brown provides commentary and not analysis of the disability experienced by weekend workers. 321

[479] Dr Bittman’s study is of limited assistance as it refers to data from 1997. In addition, as noted by the SDA, 322 the main focus of the paper is on the impact of working on Sundays, not on a comparison between Saturdays and Sundays.

[480] Craig and Brown used more recent data and considered whether individuals worked on Saturday or Sunday. It is limited in that it considered only one aspect of weekend work, whether shared leisure time is made up during the week, for certain household types. While it did not find large differences between Saturday and Sunday work, this is only one aspect of time allocation for weekend workers.

[481] In his analysis of the 2006 Time Use Survey, Professor Lewis claimed that the amount of time spent on sport and outdoor activity increased by only 17 minutes per day on the weekend for men and by only five minutes per day for women 323 compared with during the week. Professor Lewis argued that “for most working on weekends [it] would not significantly impose on their time spent on sport and outdoor activities.”³²⁴

[482] Table 11 is reproduced from the Lewis Report. 325 It shows that total free time spent on leisure activities increased by 133 minutes (49 per cent) on weekends for males and 87 minutes (34 per cent) for females. In fact, the time spent on all leisure activities, except for community participation, is higher on weekends compared with weekdays.

[483] Professor Jeff Borland from the Department of Economics, The University of Melbourne, provided a response to the Lewis Report: ‘Report by Professor Jeff Borland’ (‘the Borland Report’). 326 He claimed that expressing the differences in activities in minutes rather than percentages obscures the actual extent of differences in activities between weekdays and weekends.327 Professor Borland also suggested that any judgement about how extra work on weekends affects recreation and leisure activities requires individual-level data rather than averages.328

Table 11 329:

Average time spent on leisure activities, 2006, minutes per day

Note: *estimate has a relative standard error of 25 per cent to 50 per cent and should be used with caution. – nil or rounded to zero (including null cells). (a) includes cultural venues. (b) includes ritual ceremonies. (c) includes additional activities not separately included. (d) includes talking on phone or reading/writing own correspondence.

[484] The conclusions that Professor Lewis draws from this table are not unexpected as weekends are meant for social and leisure activities. Using an approach similar to that suggested by Professor Borland, the PC Final Report provided charts showing the difference in the number of hours spent on weekend days compared with average weekdays for time spent with different categories of people and different activities. 330

[485] However, the tables in the Lewis Report and the charts from the PC Final Report both present data that refer to all people and not only those who work on weekends 331 and therefore should be considered as a guide to understanding the types of activities undertaken across the entire community rather than for weekend workers.

[486] Chart 11 shows that more time is spent with friends and family on weekends than weekdays, with more time spent with friends on Saturday. More time is spent with shop personnel and services providers on Saturdays and less on Sundays. Chart 12 shows that more time is spent on social and community interaction on weekends and less time on employment and education. More time is spent purchasing goods and services on Saturdays than weekdays, whereas less time is spent doing this on Sundays than weekdays.

Chart 11 332:

Who do people spend time with, deviation of hours per day on weekend from the average weekday, per cent

Chart 12 333:

What do people do with their time, deviation of hours per day on weekend from the average weekday, per cent

[487] The SDA submits that the assertions made in the PC Final Report that ‘there is very little difference in the degree to which people engage in social activities between Saturdays and Sundays (compared to weekdays)’ and ‘the largest deviation in social activities between weekdays and weekends – “social and community interaction” – is actually higher on Saturdays’ say nothing ‘about the level of disamenity experienced by employees who work on Sundays’ and note, correctly, that the data in Chart 12 above ‘shows that the largest deviation in “recreation and leisure” between weekdays and weekends is higher on Sundays than Saturdays’. 334

[488] We accept that this is so, but the differences are not large. The difference between Saturdays and Sundays is generally smaller than between weekends and the average weekday. In addition, as we have explained above, the usefulness of the data are limited as the sample is not restricted to people who work on weekends or even to employed persons, so the SDA is correct to highlight that Sunday workers are not identified in the data.

[489] ABI and the NSWBC called Professor John Rose, Institute for Choice, University of South Australia who provided a report Value of Time and Value of Work Time during Public Holidays (Rose Report). 335 The first part of the Rose Report sought to determine the importance of times of the day and days of the week. Survey respondents filled in an activity diary that captured information related to the activities they undertook during the week prior to the survey and were required to indicate the importance of the activity. Importance was defined as “an ability or desire to change that activity should a conflicting event, such as a work shift, arise at the time of the activity”.336

[490] The Rose Report activity diary results showed little variation across days of the week and greater variation within days. Thursday was rated the most important day, while Sunday was found to be marginally less important than Saturday. 337 In our view these data do not provide a basis for the fixation on penalty rates. Indeed if the data were used for that purpose then pay rates would vary for different times on each day. Nor does the diary data sit conformably with the choice experiment data in that report. The remaining part of the Rose Report is discussed in Chapter 6.2.2.

[491] As an explanation for the finding that weekend days are not the most important days, Bittman and Craig and Brown found that more time is spent with friends and family on weekends and hence such activities may be more amenable to change to suit work requirements. This may result in a lower importance being attributed to weekends than is actually the case. Whether an activity can be changed does not directly indicate the importance of an activity, although it is clearly a relevant consideration.

[492] While the evidence referred to in this section is not without limitations, it points to a clear difference of time use between weekdays and weekends. However, based on limited data before us, it is difficult to discern the differences in time use between Saturdays and Sundays for weekend workers compared with other workers.

6.1.5 Religious observance

[493] This section uses data drawn from the ABS, the Lewis Report, the Changing work patterns Report and the National Church Life Survey to assess changes in religious observance over time.

[494] The ABS explains that the number of people reporting “no religion” has “increased substantially over the past hundred years, from one in 250 people to one in five.” 338 Data from the ABS Census of Population and Housing (Census) shows that since the 1971 Census (which first included the specific instruction “no religion, write none”), the proportion of people reporting no religion increased from 6.7 per cent to 22 per cent in 2011. The greatest increase of 6.8 percentage points was reported between 2001 and 2011.

[495] Although a majority of people report a religious affiliation and most of them Christian, the ABS contend that “a religious affiliation is not the same as actively participating in religious activities.” 339 Data from the National Church Life Survey (NCLS)340 shows that the proportion of the population attending “church regularly” has fallen over time, from 44 per cent in 1950 to 17 per cent in 2007 (Chart 13).341

Chart 13 342:

Regular church attenders, per cent of population

[496] Chart 13 is consistent with data presented in the Changing work patterns Report, using the HILDA survey, which demonstrates that a majority of Australians attended church as rarely as once a year or less, 343 with almost half of respondents reporting “never” in 2014 (Table 12). However, we acknowledge the point made by United Voice that these data do not identify whether attendance is on Saturday, Sunday or another day.344

Table 12 345:

Frequency of attendance at religious services

[497] Analysis undertaken using the ABS Time Use Survey in the Lewis Report also showed that the average time spent on religious activities was minor compared with time spent on activities such as “Audio visual and media” and “Talking and correspondence”, which occupied most time spent on weekdays and weekends for both males and females. 346

[498] Census data provides evidence that “the rising trend of reporting no religion is driven by younger people.” 347 Chart 14 shows that people aged between 15 to 34 years reported a significant increase in “no religion” in 2011. The ABS note that the proportion of 20–24 year olds with no religion in 2011 was nearly 11 percentage points higher than the proportion of 15–19 year olds in 2006.348

Chart 14 349:

Change in proportion of people reporting no religion between 2006 and 2011 by age group in 2011

Note: Percentage of people that reported no religion in 2006 compared with percentage of people with no religion in the age cohort they would be part of in 2011. Negative numbers mean a decrease of reporting no religion between 2006 and 2011, positive numbers mean an increase. Excludes people who were not residents in Australia in 2006.

[499] This was also evident in data obtained from the NCLS 2010 which found that a small percentage of young people aged 15–19 years and 20–29 attended church, less than 6 and 9 per cent, respectively. 350

[500] The evidence suggests that there is a decline in religious observance. The cohort driving this trend are young people aged between 15 to 34 years, which comprise a significant proportion of those employed in the Retail trade and Accommodation and food services industries and covered by the modern awards which are the subject of these proceedings.

[501] While the data also show that a majority of the population continue to report a religious affiliation, most of them Christian, it is likely that only a minority of this group consider attending church an important activity. For this group, weekend work may interfere with their religious observance.

6.1.6 Summary

[502] The Australian labour market has changed markedly over the last 40 years. These changes have been dominated by an increase in female and part-time employment and an increase in employment in the services industries.

[503] The data has also shown that the number of employees working on weekends is still far below the number of employees that work on weekdays, and working on Saturdays is still more common than working on Sundays.

[504] Data from the ABS and the HILDA survey show that employees in the industries that align most with the Hospitality and Retail awards are more likely to work on weekends than employees in other industries. More than half of employees in Accommodation and food services usually work on weekends, the highest of all the industries, and almost half of Retail trade employees usually work on weekends, the second highest proportion of all the industries in recent time. Further, weekend work appears to have increased in these industries more than many other industries.

[505] In part, these changes have occurred in the context of shifts in consumer demand and preferences for goods and services (largely confined to the hospitality and retail sectors) that are often accessed on weekends, as presented in the PC Final Report and discussed in detail in Chapter 8. The share of weekly retail sales and supermarket trips and transactions on Sunday are comparable to that of Monday and Tuesday, although still below Saturday. The share of weekly retail sales on Sunday has more than doubled over the last few decades. This suggests that while consumer demand for retail shopping on Sundays has increased over time, there remains a preference to do so on Saturdays than Sundays. As a result, weekend work is more prevalent in these industries.

[506] In relation to religious activities, the data suggests that the decline in religious observance has been driven by young people aged between 15 to 34 years who are more likely to work in the retail and hospitality sectors and are amenable to working on weekends. Nonetheless, a majority of the population continue to report faith in a religion most of them Christian, 351 although it is likely that only a minority of this group attend church regularly, it is for this group that weekend work may interfere with their religious observance.

[507] The data and evidence on time use presented in the PC Final Report and the papers by Bittman and Craig and Brown indicate that work and leisure activities remain largely separated between weekdays and weekends. Further, while the differences between Saturdays and Sundays have converged over time, there remain significant differences in the activities performed on these days. Sunday is more reserved for family time than Saturdays, when spending time with friends and shopping is preferred to Sundays. The nature and role of Sundays therefore makes it a day that remains unique to Saturdays. However, the lack of information in regards to weekend workers means it is difficult to discern how they would use their time on Saturdays and Sundays differently to the remainder of the population.

6.2 Expert evidence

[508] Parties called a number of expert witnesses to provide reports on weekend work. This section discusses the following expert evidence and responses:

• Ms Margaret Lynne Pezzullo, Lead Partner and Director, Health Economic and Social Policy, Deloitte Access Economics, provided a report titled The modern face of weekend work: survey results and analysis (the Pezzullo Weekend Work Report). 352


• Responses to the Pezzullo Weekend Work Report were received from:


• Professor Raymond Markey, Director, Centre for Workforce Futures, Faculty of Business and Economics, Macquarie University, who provided a response called The continuing importance of penalty rates for weekend work: a review of the evidence. 353


• Ms Helen Bartley of Bartley Consulting (the Bartley Report) 354


• Professor Sara Charlesworth, Centre for Sustainable Organisations & Work, RMIT University. (Ms Pezzullo also responded to the expert reports which critiqued the Pezzullo Weekend Work Report). 355


• Professor John Rose, Institute for Choice, University of South Australia who provided a report Value of Time and Value of Work Time during Public Holidays (Rose Report). 356


• Responses to the Rose Report were received from:


• Professor Morris Altman, Dean and Head, Newcastle Business School and Professor of Behavioural & Institutional Economics, University of Newcastle. 357


• Professor Rose also provided a comment on Professor Altman’s response. 358


• Professor Sara Charlesworth and Dr Fiona Macdonald of RMIT University provided a report to the SDA. 359


• Dr Olav Muurlink, senior research fellow (adjunct) at Griffith University and senior lecturer in organisational behaviour at Central Queensland University, provided a report The impact of weekend work: consecutivity, overload, uncontrollability, unpredictability, asynchronicity and arrhythmia. 360

6.2.1 The Pezzullo Weekend Work Report

[509] In support of their applications to reduce Sunday penalty rates, ABI, the Retail Employers and others rely on the report by Ms Lynne Pezzullo : The Modern Face of Weekend Work: Survey Results and Analysis (the Pezzullo Weekend Work Report) 361. Ms Pezzullo is the Lead Partner, Health Economics and Social Policy with Deloitte Access Economics (Deloittes). Deloittes was engaged by the PGA to produce the Pezzullo Weekend Work Report for use in these proceedings.

[510] The Pezzullo Weekend Report is comprised of a literature review and the results of two surveys. On the basis of that material, the report draws various conclusions and expresses opinions about matters including time use patterns, preferences, characteristics and consumer behaviour of weekend and non-weekend workers.

[511] The literature review was limited and added little to the material already before us – either in primary sources or referred to in submissions.

[512] The first survey collected information from 1000 weekend workers to understand their time use patterns, the frequency and duration of their weekend work and their attitudes to working on weekends. The second survey used a sample of 1100, drawn from non-weekend workers and asked a series of questions related to their time use and their use of services undertaken by the relevant industries as well as their preferred time for accessing these services. 362 A sample of 500 weekend workers also participated in the second survey for comparative purposes.

[513] The survey sample was obtained from approximately 282,000 members of an online survey population. The report explains that the survey was emailed to 18,312 people, of whom 5375 (29 per cent) participated and 3154 completed the survey. 363

[514] ABI, the Retail Employers and others rely extensively on the weekend worker survey, but place no reliance on the survey of non-weekend workers.

[515] The weekend worker survey found that around one-third of weekend workers had “no real problem” working on either Saturday or Sunday, with more responses having “no real problem” on Saturdays than Sundays. The respondent’s main concerns with working on weekends were that it “interferes with socialising or spending time with friends or family” and that “it makes it hard to maintain work/life balance”. 364

[516] For those that had “some problem working on the weekend”, the following reasons were listed, in order of number of respondents:

• interferes with socialising or spending time with friends or family;


• interferes with responsibilities or activities outside of work (e.g. sport);


• makes it hard to maintain work/life balance;


• interferes with religious observance; and


• none of the above.

[517] The results were similar between Saturdays and Sundays for the number of respondents reporting a problem, although there was a higher number reporting that it interferes with religious observance on Sundays.

[518] Over half of casual workers reported “no real problem” with Saturday work and half reported “no real problem” with Sunday work, while over two in five part-time workers reported “no real problem” with Saturday or Sunday work. 365

[519] The report concludes that a large percentage of weekend workers were untroubled by weekend work even when specifically prompted to list their difficulties with their work schedules. 366 When including responses of “minor”, this resulted in over half of weekend workers reporting either no or minor difficulties working on Saturdays or Sundays.

[520] Weekend workers were also asked their reasons for working on weekends. Over half of respondents answered that they were required to by their employer or there is an expectation of weekend work in their industry. The next most common responses were higher hourly pay (just over one quarter) and to earn additional disposable income (around one quarter). Fewer than one in five reported they worked weekends to cover expenses. 367

[521] The report concludes that “most weekend workers do not choose to work weekends primarily on the basis of penalty rates” and that “casual workers were even less concerned about penalty rates than other weekend workers”. 368

[522] Respondents were also asked which day of the weekend was more important to keep mostly free from work. These data are set out in Table 4.4 of the Pezzullo Weekend Work report, reproduced below as Table 13.

Table 13 369

Most valuable weekend day – all weekend workers

[523] The report also found some evidence that the amount of staff on weekends did not align with workloads and concluded that penalty rates may have an impact on labour demand. 370

[524] As to the proper process for survey data collection, and the conduct of surveys more generally, the SDA and United Voice relied upon the expert evidence of Ms Helen Bartley 371 (the Bartley Report). Ms Bartley contended that because the survey participants were required to be an internet user, individuals who did not have internet access were excluded, which could lead to biased results.372 Ms Bartley also explained that registered members of the online survey are paid to complete surveys and can choose how often they participate in a survey, introducing sampling bias that could also affect the reliability of the results.373

[525] Ms Bartley concluded that she could not be confident that the weekend worker survey in the Pezzullo Weekend Work Report was a representative sample and considered the response rate to be low such that the responses by individuals who did not participate in the survey could potentially be different to those that did participate. 374

[526] We deal later with the Bartley report in more detail ([1091]–[1097]) but it suffices to note here that the Productivity Commission characterises the reliability test proposed by Bartley as ‘overly stringent’. We agree with that observation and as we note in our consideration of the RCI survey evidence in Chapter 7.4.4, most survey evidence has methodological limitations, the central issue is the extent to which those limitations impact on the reliability of the results and the weight to be attributed to the survey data.

[527] As mentioned above, United Voice called Dr Olav Muurlink to provide evidence on the impact of weekend work, in particular Sundays. Dr Muurlink was also asked to comment on the Pezzullo Weekend Work report. 375

[528] Dr Muurlink considered the age demographic of the sample to be a “major limitation” as the dataset is not representative of 15–18 year olds who account for over one-fifth of the target population 376 despite the sample size being “more than adequate”.377 We deal later with some other aspects of the Muurlink Report.

[529] The central problem with the weekend worker survey is that it is plainly not representative of the views of the employees covered by the modern awards which are the subject of these proceedings. This is made clear from Chart 4.2 on page 44 of Exhibit PG 34 – almost two thirds (64.3 per cent) of the employee respondents to the weekend worker survey work in ‘other’ industries, that is, industries which are not covered by the modern awards before us. Ms Pezzullo accepted that only 357 of the 1000 weekend workers were from the hotels, cafes, fast food, retail or pharmacy industries. 378

[530] While the Pezzullo Weekend Work survey has its limitations, its findings support other studies which have found that while differences between Saturdays and Sundays are not as large as they once were, there are still differences in the activities undertaken on Sundays.

[531] The report also attempted to determine indirectly labour demand issues by assessing how staffing levels, workloads and operating hours on weekends compared with weekdays. However, the information obtained from workers is only about their perceptions of labour demand and should be interpreted with caution as the data are subjective and collected from a secondary source. This was highlighted in the Markey Report which noted the higher non-response rate for this question. 379 Data on business operations are generally more reliable if obtained from employers.

[532] It is convenient to now return to the Muurlink Report.

[533] The Muurlink Report examined the impact, if any, on the physical, psychological and social well-being of a person who works on Saturdays, Sundays or public holidays and whether people are able to recover, mitigate or compensate for any negative impact identified. 380 The report is an extensive but not exhaustive381 literature review that contains numerous Australian and international studies.

[534] The Muurlink Report focused on six characteristics that relate to weekend work: consecutivity, overload, uncontrollability, unpredictability, synchronicity and arrhythmia and suggests that the impact of weekend work effects such workers through a range of factors including:

• working patterns being out of step with the majority of society;


• lower predictability in the working week;


• lower sense of control, or actual control, over working hours;


• increased chance of working more than five consecutive days in a row; and


• increased chance of working more than 40 hours a week. 382

[535] United Voice relied on the Muurlink Report to support the following propositions:

“(i) Working on weekends is associated with…negative health …The presence of these factors also spill over into a negative impact on the wellbeing, social life, and relationships of the worker.

(ii) Weekend work disrupts social patterns, because the majority of social and leisure activity takes place on weekends, and particularly on Sundays. Research shows that Sunday is traditionally reserved to a degree greater than Saturday to rest and family activities and there are elevated well-being consequences that are particular to Sunday. The negative impact of weekend work on the employee also has a secondary impact on the partner and/or the children of the worker.

(iii) Weekend workers are not able to fully off-set or mitigate the negative effects of weekend work by reshuffling activities usually done on weekends done on other days. Sunday workers in particular lose even more recreation time relative to standard workers.” 383

[536] Dr Muurlink was cross-examined about a number of the international studies referred to in his report and conceded that the following matters would be different in other countries to Australia:

• labour laws or employment conditions;


• cultural or societal values;


• wage rates;


• unemployment rates;


• social welfare systems; and


• occupational health and safety laws. 384

[537] Dr Muurlink also agreed that the studies in his report do not separately identify the four industries in which he was asked to report on although, where possible, he included research related to industries that “heavily overlap” with the four industries 385 and he was “very confident” that his conclusion is representative of the target populations and relevant industries.386

[538] SDA and United Voice submitted that the general principles in the Muurlink Report have broad application and that there is no evidence that the consequences of weekend work would be different across occupations or that only Australian studies are relevant. 387

[539] In this context, United Voice submit that the choice to work weekends is illusory as it fails to recognise that many hospitality employees work on weekends because that is when they are available in light of their other commitments and because the weekends are when work is available. 388 We have considered these submissions and agree that employees exercising a ‘choice’ to work on weekends are likely not doing so free of other considerations, including their availability. However, the fact that availability, or any other factor, is a consideration or a ‘fetter’ in exercising the choice to work on a weekend, does not alter the fact that employees are exercising a choice, albeit one that is constrained by other considerations.

[540] Ai Group made a number of submissions about the limitations of the Muurlink Report. These included that the information in the Muurlink Report:

• is not related to employees in an industry, particularly the fast food industry;


• focuses on association and does not establish causation between weekend work and adverse health consequences;


• assumes that weekend workers undertake long hours and work during abnormal hours;


• is premised on weekend workers being overworked or overloaded; and


• is premised on weekend workers being subject to night work. 389

[541] The Hospitality Employers submit that the Muurlink Report is general in nature and does not address the claims proposed. 390

[542] ABI submit that it is the six characteristics examined in the Muurlink Report that cause adverse health consequences, not Saturday or Sunday work, as these characteristics would affect all of their days of work and not only weekends. 391

[543] The issues canvassed by the papers in the Muurlink report do not focus on the effects of weekend work in the relevant industries. As conceded by Dr Muurlink:

“… to be quite clear weekends and public holidays do not magically cause negative effects. The body does not somehow sniff that it's Saturday.” 392

[544] We therefore agree with the critique from ABI that all that we can take from the report is that it is the six characteristics examined that cause adverse health consequences, rather than Saturday or Sunday work of itself. 393 The report’s relevance to the matters before us is limited as it does not focus on weekend work in the relevant industries.

6.2.2 Rose Report

[545] In essence the Rose Report seeks to:

‘… examine the importance and value employees covered by the Restaurant Industry Award 2010 and the General Retail Industry Award 2010, place on time. Of particular interest is the importance and value employees covered by these two awards have for working ‘unsocial hours’, with particular emphasis on working on a public holiday.’ 394

[546] ABI, the Retail Employers and others rely on the Rose Report to support their claims for a reduction in the Sunday and public holiday penalty rates under, in particular, the Pharmacy, Retail and Restaurants Awards. In this section we focus on those aspects of the Rose Report relevant to Sunday penalty rates. In Chapter 9 we deal with those parts of the Rose Report which deal with public holidays.

[547] On the basis of the conclusions in the Rose Report, the various employer interests contend that employees do wish to be paid a premium to work Sundays, however the premiums sought by employees are lower than the premiums presently imposed by the Retail Award and that the disability associated with working on Saturdays is the same or substantially similar to the disability associated with working on Sundays.

[548] These contentions primarily rest on the following conclusion from the Rose Report:

‘The results of this modelling exercise suggest that the average threshold value of hourly pay at which they would elect to work is actually the average level of pay currently being paid to the sample. This suggests that the employees value their time at precisely their current wage rate. Also based on the model results, it was found that on average, respondents value working on Saturdays as being somewhere between 106 to 135 per cent of their current normal hourly pay, and for working on Sundays somewhere between 126 and 165 per cent of the average current normal hourly pay rate. The hourly rate for working on a public holiday was valued as being between 124 and 224 per cent of the average current normal hourly pay rate, with the later higher value being for working on a Public holiday that falls on a Sunday.’ 395

[549] The above conclusion is based on survey data from 443 respondents. The ‘centrepiece’ 396 of the survey data upon which the Rose Report conclusions rest consisted of two discrete choice experiments designed to recover the hourly pay rate for which employees were willing to work during both a normal work week and during a week in which one or more public holidays fall.397

[550] The Rose Report attempts to estimate, through a set of questions put to a sample of employees covered by the Restaurants and Retail Awards, the lowest wage that an individual is willing to accept for a job and the value that an individual attaches to the labour she or he supplies. The Rose Report assumes that the willingness to accept (WTA) is identical to the value that an individual places on work time.

[551] As noted above the average threshold value of hourly pay at which the respondents would be willing to work on Saturdays is ‘somewhere between 106 per cent to 135 per cent of the average current normal hourly pay rate’, and for working on Sundays, ‘somewhere between 126 and 165 per cent of the average current normal hourly pay rate’. The various employer interests latch onto this finding to support their contention that the existing Sunday penalty rates in the Restaurants and Retail Awards are too high. As ABI puts it:

‘The inference that arises from the above analysis is that employees do wish to be paid a premium for working on Sundays as compared to their weekday pay. However, the value of the premium sought by employees is substantially less than the premium presently applicable under the Retail Award, where the penalty for Sunday work amounts to 200 per cent of the normal weekly rate of pay. 398

[552] We note that ABI focuses on a comparison between the Rose Report results and the current Sunday penalty rate in the Retail Award. The same comparison in respect of the Restaurants Award does not yield the same conclusion. In fact, for Restaurant employees the value of the premium sought by the Rose Report sample closely equates to the current Sunday penalty rate in the Restaurants Award for most employees (that is, 150 per cent). 399 Indeed if one were to mechanistically apply the Rose Report results to the fixation of Sunday penalty rates then the Sunday rates for level 1 and 2 casuals in the Restaurants Award would need to increase.