PN1

JUSTICE ROSS: Hello, can you hear me, Mr Friend?

PN2

MR W FRIEND: I can.

PN3

JUSTICE ROSS: I think you were just about to announce your appearance on behalf of the SDA; is that right?

PN4

MR FRIEND: That's correct, your Honour. Mr Macken is on the line (indistinct) and, of course, I seek permission to appear.

PN5

JUSTICE ROSS: You don't need permission under subrule 2.

PN6

MR FRIEND: Thank you.

PN7

JUSTICE ROSS: For the National Retail Association?

PN8

MR S MACKIE: May it please the Commission, my name is Mackie, initials SA, of counsel, instructed by NRA Legal, and Alex Millman is my instructor today.

PN9

JUSTICE ROSS: All right, thank you. And the Australian Retailers Association?

PN10

MR N TINDLEY: Thank you, your Honour, Tindley, initial N, of FCB Workplace Law, appearing on behalf of the ARA.

PN11

JUSTICE ROSS: Thank you. Ai Group?

AUDIO MALFUNCTION - ONE MINUTE [10.47 AM]

PN12

JUSTICE ROSS: MGA Retailers?

PN13

MR M ISKANDAR: Yes, your Honour, Iskandar, M, appearing on behalf of the MGA Independent Retailers National, but we are based in Victoria.

PN14

JUSTICE ROSS: Thank you. And the Retail and Fast Food Workers Union?

PN15

MR M CORNTHWAITE: Cornthwaite, initial M.

PN16

JUSTICE ROSS: Thank you. Are there any other appearances that I have missed? No? I should advise you that there's a journalist from the Financial Review on the line who is monitoring the proceedings.

PN17

We have received your application and the grounds in support, Mr Friend, and also your written submission filed in support. I should also note that we published the Information Note on Retail Trade and the COVID-19 Pandemic on 26 June and parties may wish to comment on that during the course of their oral submissions.

PN18

Mr Friend, can I just go to your written submission and test my understanding of what you are putting.

PN19

MR FRIEND: Yes, your Honour.

PN20

JUSTICE ROSS: It can be distilled into, I suppose, four broad lines of argument. The first is in the transitional decision, the Full Bench operated on the basis that the timing of the reductions in penalty rates to coincide with the increase from the annual wage review was, to quote you, "an amelioratory factor in favour of that choice of date".

PN21

The second proposition is that the recent annual wage review decision determined there should be an increase of 1.75 per cent for the minimum wage rates in the Retail Award but that that increase should operate from 1 February.

PN22

Your third proposition is the effect of the delay in the annual wage increase is, and I quote:

PN23

The basis upon which the Commission was earlier satisfied that its phased reduction met the modern awards objective, namely, the stated coincidence in timing between the reduction and any increase arising from the annual wage review decision is now demonstrated to be falsely premised in circumstances where the increase, as determined, will now not take effect until 1 February 2021.

PN24

And the final limb to your argument is that since the annual wage review decision, you say that more recent information reveals a more encouraging picture insofar as the retail trade industry is concerned.

PN25

So, the essential point is what you submit is the linkage between the timing of the reductions and the likely increase arising from an annual wage review, you say that in the transitional decision, the Full Bench decided implicitly that it was necessary to have the final reduction (audio malfunction), which was in all likelihood to occur on 1 July 2020.

PN26

Can I just ask you two things: one, whether you feel my summary was accurate and, secondly, which part of the transitional decision do you rely on to support the proposition that the Full Bench implicitly decided that it was necessary to align the final reduction in penalty rates with the wage increase which was in all likelihood to occur from 1 July 2020?

PN27

MR FRIEND: Yes. Subject to what I'm about to say, your Honours, I accept your summary. We don't put it so highly as to say that there was an absolute linkage between a wage increase and the final reduction in penalty rates, but really it's the passage we have quoted from the transitional decision in paragraph 13 of our submissions.

PN28

JUSTICE ROSS: That is paragraph 43 of that passage?

PN29

MR FRIEND: Yes, 43:

PN30

Those reductions that we intend to make will be implemented at the same time as the implementation of any increases.

PN31

We accept that it says "any increases" and that obviously contemplates the fact that there may not be an increase:

PN32

This would usually mean -

PN33

and again "usually", we accept that it's not in every case -

PN34

that the affected employees will receive an increase in their base hourly rate at the same time. As such, the take home pay of the employees concerned may not reduce to the same extent as it otherwise would, but it is also important to acknowledge that they will receive a reduction in the earnings that they would have received.

PN35

It is obviously a factor in the Full Bench's consideration of the matter of timing that there was likely to be an increase in the base rate at the same time as the reduction. If that is not going to occur, and we now know that that's not going to occur on 1 July of this year, it throws a new issue into the mix as a result of the COVID-19 pandemic and the position we put is that given some more encouraging data and some of the material in what was published by the Commission on Friday that I want to refer to in due course, there's a strong case for shifting the reduction, the final reduction in penalty rates, which applies only to full-time and part-time employees and it doesn't apply to casual employees, who have had all their reductions, to the same date as the increase in the base rate. I hope that answers your questions, Mr President.

PN36

JUSTICE ROSS: Thank you. In terms of - if we go to the transitional decision for a moment, and I'm looking at - there's a proposition at paragraph 43.

PN37

MR FRIEND: Yes.

PN38

JUSTICE ROSS: Then there's a summary of the relevant considerations at paragraphs 141 to 155.

PN39

MR FRIEND: Just bear with me a moment. Yes.

PN40

JUSTICE ROSS: Then the Retail Industry Award issues and the matters taken into account are set out at paragraph 207.

PN41

MR FRIEND: Yes.

PN42

JUSTICE ROSS: I have taken your submission to be that you don't cavil with the matters that are relevant and set out at paragraph 207, but you say that in addition to those matters there's been a new issue in the mix, as you put it, which is the delay in the annual wage review increase, and that viewed in the context of the other matters presents a strong case for shifting the last phase-in date until 1 February next year. Is that the proposition?

PN43

MR FRIEND: That's the proposition, your Honour. That's the way we put it.

PN44

JUSTICE ROSS: All right. Can I just go to paragraphs - are you content for me just to ask you some questions for the moment, Mr Friend, and then you can - - -

PN45

MR FRIEND: Of course, of course, your Honour.

PN46

JUSTICE ROSS: - - - have the opportunity to come back, obviously. At 19 to 25 of your submission, you set out what is said in the recent annual wage review decision regarding the SDA's supplementary submission in reply.

PN47

MR FRIEND: Yes.

PN48

JUSTICE ROSS: You foreshadow the deferral of any further reduction in Sunday penalty rates. That was put on the basis that if there was (audio malfunction) increase awarded. You then comment on that passage from the annual wage review decision and I want to take you to the comment directed at the last observation at para 125 in the annual wage review decision.

PN49

MR FRIEND: Yes.

PN50

JUSTICE ROSS: That is where the majority observed that there had been other changes in modern awards that have increased employment costs and note in particular the increase in the penalty rates for casuals, for Saturday work and for evening work Monday to Friday in the Retail Award.

PN51

MR FRIEND: Yes.

PN52

JUSTICE ROSS: And that's a reference to the decision of 27 September 2018. You make three points about that that I just want to understand a bit better. The first is, at paragraph 22, you say it is just an observation and not the result of any forensic analysis of the situation. I'm not sure what you mean by that.

PN53

MR FRIEND: Well, it's really that the Full Bench or the Panel in the wage review had started by saying it had no jurisdiction to consider that type of application and then it made what, in another context, one might call an obiter observation that, in any event, there's been some other increases in the GRIA in penalty rates for casuals. That's as far as that goes, your Honour.

PN54

JUSTICE ROSS: Okay. The second point at para 23, I'm not sure what you mean by the first sentence where you say the fact there'd been penalty rates for some casuals, penalty rate increases for some casuals, can't be seen as a general offset to the reduction in Sunday penalty rates for all employees. I suppose what we - yes - so the point - - -

PN55

MR FRIEND: I think what we haven't made clear enough and I (indistinct) come back to this, but it sort of slipped through - - -

PN56

JUSTICE ROSS: No, okay.

PN57

MR FRIEND: This application has no bearing on casuals at all.

PN58

JUSTICE ROSS: No, I know, yes.

PN59

MR FRIEND: The rate reductions for casuals is done and gone and so we're only concerned with full-time and part‑time employees, and so increases for casuals, from the point of view of the employee, make no difference. Obviously, increases for casuals makes a difference to the employer, I accept that.

PN60

JUSTICE ROSS: Yes, okay. Just that last sentence in para 23:

PN61

The Full Bench which varied the award to reflect these increases considered that any overlap was likely to be small.

PN62

What overlap are we talking about here?

PN63

MR FRIEND: I don't think overlap is right, I'm sorry. I think any effect is likely to be small. If I go to those referred paragraphs - - -

PN64

JUSTICE ROSS: Yes.

PN65

MR FRIEND: It's the extent of the increase in costs to the employer was likely to be small - those paragraphs. I'm sorry about that.

PN66

JUSTICE ROSS: No, that's all right. The last point you make, at para 24, is that the increase in the more recent variation, they were made as a means to redress an anomaly. Well, I'm not sure, one, necessarily whether that's correct because when you review the decision, the Full Bench in that matter, at [2018] FWCFB 587, at 227, say that the current casual rates lack logic and merit. At 244, it says there's an anomalous treatment of casual employees (indistinct) full time, but, at 261, it is made clear that the central issue in the proceedings is whether the existing penalty rates provide a fair and relevant minimum safety net, and the Bench goes on to conclude that they don't. So, I'm not sure what the redressing of an anomaly - it doesn't really matter. Ultimately, the Full Bench was satisfied that the current provisions did not constitute a fair and relevant minimum safety net and varied them.

PN67

MR FRIEND: Yes, well, that was, of course, the only question that was properly before the Full Bench, we accept that, but one had the odd circumstance that applied where casuals got a penalty rate between certain hours and then at 6 pm, it stopped, I think is my recollection, and that's what I think has led to the comments that you referred to, your Honour, about anomalous effect and lacking in logic, and that's what we are referring to. We would submit that that has come into the thinking of the Full Bench in determining whether or not the rates provide a fair and relevant minimum safety net.

PN68

JUSTICE ROSS: Okay. If I go to your submissions about the modern awards objective, you say that the considerations in 134(1)(b), (c) and (d) are neutral considerations, but, as you have agreed, if you look at the matrix of matters we are having regard to, including those at para 207 of the transitional decision, which refers to the findings in relation to the section 134 considerations relative to the Retail Award, well, in the penalty rate case, the Full Bench found that section 134(1)(b) did not weigh in favour of a reduction, it wasn't - it couldn't be said to encourage collective or enterprise bargaining and, for myself, I put the same observation to you in relation to your application. How is it said that it would encourage enterprise bargaining and what is the basis?

PN69

MR FRIEND: We don't put that. We say it doesn't encourage it or discourage it. We say it's a neutral consideration.

PN70

JUSTICE ROSS: All right, except that the term talks about the need to encourage enterprise bargaining. So, if it doesn't encourage it - - -

PN71

MR FRIEND: I see what your Honour is saying, yes, we accept that, I accept that.

PN72

JUSTICE ROSS: As for the need to promote social inclusion for an increased workforce (indistinct), you say it's a neutral consideration, but in the penalty rate case, the Full Bench's observations about increased employment from the reductions in penalty rates were, as is mentioned in the transitional decision, somewhat cautious and muted, but, nevertheless, said that that was a factor which they thought weighed in favour of the reduction, and similarly with section 134(1)(d), the promotion of flexible work practices, that also was regarded as a factor which weighed in favour of a reduction in Sunday penalty rates for full‑time and part‑time employees down to 150 per cent.

PN73

MR FRIEND: Yes. We accept that, of course, your Honour. The point we make is that all we are seeking here is a delay in that reduction in the peculiar circumstances of this case, and that's the way in which we put those as being neutral considerations, as it were, because it's only a delay.

PN74

JUSTICE ROSS: I am not clear what you are putting in respect of section 134(1)(d). Would you mind elaborating on that?

PN75

MR FRIEND: Yes. Simply this, your Honour, that we accept again what the penalty rates decision said about the operation of that factor or the relevance of that factor to the reduction in penalty rates is what must operate and must be accepted in these circumstances, but we are putting that in the peculiar circumstances of this case, the delay is something that is appropriate because of the delay in the annual wage increase.

PN76

JUSTICE ROSS: Okay. That's all I had for you, Mr Friend. Unless my colleagues have any questions for you, was there anything you wished to add to your written submission?

PN77

MR FRIEND: If I can just - in the way you have raised the questions with me, your Honour, it has virtually covered everything I wanted to say. It is a fairly short and simple point that we want to put, which is that because of what was perceived to be the likelihood of an increase at the same time as the reduction, there is a good argument for delaying the reduction. (Audio malfunction) the Bench.

PN78

JUSTICE ROSS: I'm sorry, you just dropped out, Mr Friend.

PN79

MR FRIEND: I'm sorry.

PN80

JUSTICE ROSS: That's all right. You were about to take us (audio malfunction).

PN81

MR FRIEND: (Audio malfunction.)

PN82

JUSTICE ROSS: I'm sorry, Mr Friend, you might not be speaking into the microphone.

PN83

MR FRIEND: I am, I'm sorry. Paragraph 10.

PN84

JUSTICE ROSS: Paragraph 10? Right, thank you.

PN85

MR FRIEND: Half the employees in retail work full time, then we also note there that there are a large number of casuals. Paragraph 13 tells us the number of employees on a Sunday, which is 240,800.

PN86

JUSTICE ROSS: Yes.

PN87

MR FRIEND: And we know from paragraph 14 that 48 per cent of these are casuals.

PN88

JUSTICE ROSS: Yes.

PN89

MR FRIEND: So the application before the Full Bench today only seeks a delay in respect of the non-casual employees, so that's 50 per cent, about 120,000 employees.

PN90

JUSTICE ROSS: Yes.

PN91

MR FRIEND: If we then go to table 6, which is just after paragraph 21, we can see that in the retail trade, only 12 per cent of retailers are operating as normal and the other 88 per cent are operating under modified conditions.

PN92

JUSTICE ROSS: Yes.

PN93

MR FRIEND: Then, in table 7, there's some interesting information about changes in revenue. Seventy per cent are decreased, which is around the same as all industries, 68.8 per cent, but 21 per cent of retailers have an increase in revenue, which is much higher than all other industries. We also see from the bottom of the document or the last matters, consumer spending appears to be trending back to normal levels or almost at normal levels. There is also some interesting information in the ABS data which we attached to our submission which shows a huge spike, increase in activity in the sector. I won't take you to that but it's referred to on the second page.

PN94

JUSTICE ROSS: Yes, I think that's the retail turnover.

PN95

MR FRIEND: Yes.

PN96

JUSTICE ROSS: At paragraph 23 of the Information Note.

PN97

MR FRIEND: Okay, good. So we would be submitting that there is at least reasonable grounds for cautious optimism. Obviously this is a rapidly changing area and a lot of this information has only come out even since the annual wage review decision. If we turn to that decision, at 162 - this is the - - -

PN98

JUSTICE ROSS: Yes.

PN99

MR FRIEND: I will give you the - if you have it, it makes life easier.

PN100

JUSTICE ROSS: I have got it.

PN101

MR FRIEND: The modern awards in group 1 cover industries which have been less affected by the pandemic than those covered in groups 2 and 3 and includes modern awards applying to frontline health workers, teachers and childcare workers and employees engaged in other essential services who have continued working through the pandemic to keep the community safe, to protect the vulnerable and those at risk and to keep the economy functioning. The variation determinations with respect to those awards will come into operation on 1 July.

PN102

We submit that most of those matters, which were obviously considered to be of relevance in respect to group 1, also apply to many retail employees. You will have seen the sort of circumstances of retail employees who have had to work under it, the signs that have cropped up recently about people not - sorry, requesting that customers not abuse employees. It has been a tough time, but people have had to keep working and they have continued to work to supply the essential services.

PN103

That was not a sufficient consideration to outweigh the decrease in retail trade which the annual wage review panel saw, but we propose really here a third option between complete delay and giving the increase at the same time as other important workers on 1 July, which is to delay the decrease in penalty rates for those that work on a Sunday. It's 120,000 employees, it's a decrease for them of about 10 per cent for the Sunday hours and the employers will, of course, not have to pay an increase which would relate to the annual wage review until February.

PN104

Given that there was thought by the Full Bench in the transitional decision to be a nexus between the annual wage increase and the decrease in penalty rates, there is, we submit, a strong argument for keeping that nexus in these circumstances. These are very strange times and very difficult times, but, in our submission, there needs to be a balance and a fairness about the way this is done and that would be an appropriate way to achieve it at this time. If the Commission pleases.

PN105

JUSTICE ROSS: Thank you, Mr Friend. I should indicate that we have received a submission from the AWU supporting your position or your client's position. I might go to the Retail and Fast Food Workers Union and then go to the employer organisations. Mr Cornthwaite?

PN106

MR CORNTHWAITE: Thank you, your Honour. We don't have a huge amount to say on this. I understand that Mr Cullinan may have sent an email late last week with a brief overview of our position of the SDA's application to the extent that the SDA are proposing the deletion of the clause giving effect to penalty rate reduction on 1 July. We support that move, but I guess our general position would be that if the Commission is minded to make that variation, the result should not merely be a delay but restoration of penalty rates, but that is all we have to say on the matter.

PN107

JUSTICE ROSS: You haven't made any application, have you?

PN108

MR CORNTHWAITE: No, we haven't made an application, just expressed a view.

PN109

JUSTICE ROSS: All right, thank you. Is there an agreement amongst the employers as to who will go first? No? Well, let's start with the National Retail Association. Mr Mackie, I note that you have filed an outline of your submission this morning. Is there anything you wish to say in addition to that?

PN110

MR MACKIE: Very briefly, I wish to respond to the comments of Mr Friend regarding paragraph 162 of the annual wage case and my comment is simply this. As far as paragraph 162 of the annual wage decision refers to essential services, as Mr Friend observed, that was not considered a sufficient factor in that decision in relation to the retail sector and we, of course, submit that it is also not a sufficient consideration to support the application here.

PN111

We say that the submission focuses only upon the increase in revenue that is referred to at table 7 of the Commission's Information Note and not the 70 per cent of employers who are suffering a decrease in revenue.

PN112

Apart from that, essentially our position is as stated in our written submissions, which is, in summary, really two points. First, we state that the transitional decision did not state that the timing of the decrease on 1 July was an ameliorative factor, it was, in fact, a phased implementation and, secondly, we submit that, in any event, the proposed variation is not necessary within the meaning of section 157.

PN113

Unless the Bench has any questions for me, we are content to rely upon the written submissions.

PN114

JUSTICE ROSS: All right, thank you, Mr Mackie. Can I go to the Australian Retailers Association Mr Tindley, you also have filed a written submission. Is there anything you wish to say in addition to what you have set out there?

PN115

MR TINDLEY: Your Honour, we are content to rely on our written submissions.

PN116

JUSTICE ROSS: All right, thank you. Ai Group, Mr Gotting, similarly you have filed written submissions. Was there anything you wished to say in addition to that?

PN117

MR GOTTING: Yes, there's just two matters that I wish to emphasise orally in light of the matters that have been discussed with Mr Friend this morning.

PN118

The first is to emphasise that the impact of the coronavirus has not been uniform across all sectors of the retail industry and the members of the Full Bench would be aware that in the annual wage review, particularly at paragraphs 73 and 184, there was recognition by the Full Bench that there had been a lack of uniform impact. In particular, there are some sectors, such as specialised food retailing, supermarkets and groceries, liquor retailing and pharmaceutical retailing, that have benefitted, but there's been many sectors where there have been significant declines in turnover, especially clothing retailing and footwear and accessory retailing, and it seems to the Australian Industry Group that that lack of uniform impact ought to be recognised by this Full Bench.

PN119

The second matter to emphasise orally is that the recovery from this pandemic is uncertain. There has obviously been no recovery yet and, as the Full Bench recognised in the annual wage review, the speed and timing of the recovery is not yet known. There is, of course, a risk of a second wave occurring, which was equally recognised by the Full Bench in the annual wage review, particularly in paragraph 101.

PN120

Otherwise, your Honour, I rely on the written submissions that were filed this morning.

PN121

JUSTICE ROSS: Thank you, Mr Gotting. Mr Izzo?

PN122

MR IZZO: Yes, your Honour, I just have some brief oral submissions. There are two primary points that we wish to raise.

PN123

The first is to respond to the suggestion in the SDA's submission that an underlying imperative behind the transitional decision with respect to penalty rates was to ensure that the annual wage review decisions that were handed down each year would ameliorate the impact of the reduction in penalty rates and that is a matter you have already had an exchange with Mr Friend about.

PN124

Our position, particularly having regard to the transitional provisions decision that I will take you to in a moment, our position is that the reduction in penalty rates, ameliorative factors were sought but it wasn't necessarily the annual wage review that was at the essence of that. If we go to the transitional decision and paragraph 43, which has already been traversed in some detail with Mr Friend, at paragraph 43, the Full Bench made the point towards the end of that paragraph that any annual wage review increase cannot be said to ameliorate the impact of the decision and the Bench went on to say:

PN125

It is the same implementation of the Sunday penalty rate cut which provides a degree of amelioration.

PN126

What we say is that clearly the Full Bench in that decision was aware that by making the decision to reduce penalty rates, there would obviously be an impact on the low paid and a reduction in their take home pay potentially, and the Full Bench decided that there was a measure available to ameliorate that and that was the phased introduction of the reductions, and that has been playing out over the last number of years. That is the key factor which the Bench relied upon to mitigate against the impact of the reductions, and the notion of a phased reduction remains as relevant today as it did before the annual wage review. The reduction to penalty rates has been phased in year after year and we are now due for the next instalment of that reduction and there is nothing in the annual wage review which changes the way in which this mitigating mechanism works.

PN127

What we say is when you look at what the essence of the transitional decision was about in terms of ameliorating the impact of these reductions, the phasing will continue to apply undisturbed in that sense.

PN128

The only thing I would say to add to that point is when you look at the impact of the minimum wage versus the reduction in the Sunday penalty rates, they don't offset each other. For a full-time retail worker who is at level 1, the minimum wage increase for the full weekly wage amounts to approximately $14 a week on the maths I performed this morning, but an eight-hour Sunday shift for the same worker is going to reduce by about $25.69 for each full eight-hour Sunday shift.

PN129

The reason I raise that is to just demonstrate that it's quite clear that the annual wage review cannot on its own be said to offset these types of reductions and certainly could not offset the full reduction of the penalty rates across the last few years. Again that reinforces that the real factor here that ameliorates against the impact on the low paid is the phasing that has been done over the last four years. We think the effect of all that is the year's delay of the annual wage review this year is not a significant matter or anywhere near a significant matter in terms of trying to dent the impact on the original penalty rates decision on the low paid.

PN130

The only other point that I would like to make is that one of the modern awards objectives is to ensure the importance of the simple, easy to understand, stable and sustainable modern awards system. The SDA has identified that that factor is actually a neutral one or is not impacted by the current application. We don't agree with that at all. Employers and employees have known for years now about how penalty rates will be reduced in this industry and an application at the last minute, although I accept that obviously the outcome of the annual wage review was only recently known, but, nevertheless, an application at the last minute before the reductions are due to take place actually travels in a completely opposite direction of a simple and easy to understand and stable modern awards system. The planning that has taken place for employers and employees alike would be disturbed if the Commission was to intervene at this late point to change the way the reductions are phased in.

PN131

Finally, the only other thing that I wish to raise is that when we talk about a stable system, this decision to reduce penalty rates was not one that was arrived at lightly. The Bench issued its substantive decision about the reduction of penalty rates in February of 2017. It wasn't until June that the transitional decision was made - it was on 5 June - and that was after the Full Bench had taken into consideration over 80 sets of written submissions, which included submissions from the unions, from employer parties, from the Commonwealth Government and the Queensland and Victorian Governments and from the Fair Work Ombudsman. It was clearly a decision that was arrived at after considerable deliberations and an oral hearing as well, and so the Commission should be reluctant to lightly depart from that decision, particularly having regard to the matters I have already raised this morning about the phasing in impact of the transitional decision.

PN132

They are, in short form, your Honour, the primary reasons why we oppose the application and that opposition remains today.

PN133

JUSTICE ROSS: Thanks, Mr Izzo. Can I go to Mr Booth on behalf of the Australian Newsagents Federation. Was there anything you wished to add to the submissions that have been put by the other employer organisations?

PN134

MR BOOTH: Thank you very much, your Honour. We wish to add weight to the comment in relation to paragraph 37 of the SDA's submissions where they say that any prejudice is offset because there will be no countervailing increase in employment costs arising from the annual wage review and it is likely - I am paraphrasing - it is likely a delay in the increase will far exceed the financial burden by not reducing penalty rates. The immediately previous submission took the Full Bench to some rough calculations as to the daily cost differences. We would seek to reinforce those, that whilst the increase arising from the annual wage review was 1.75 per cent, resulting, as an example, in an increase of approximately $14.40 for a level 1 retail employee, the net detriment to an employer arising from the standard eight-hour shift on a Sunday would be approximately $10 per employee per Sunday. So, we certainly did not agree to the SDA's submission that the prejudice is offset. It is nowhere near offset, in my submission.

PN135

JUSTICE ROSS: Mr Booth, I'm not sure that's what - that wasn't how I understood the SDA's submission. I had taken it that, well, the impact of a 1.75 per cent increase, that would apply to all employees for any hours worked Monday to Friday or on the weekend, and they are comparing that to the impact of the reduction or a delay in the reduction of the penalty rate. I had rather taken them to be that if you weighed them up - correct me if I'm wrong, Mr Friend, but I thought you had been putting that if you weigh up the delay of the 1.75 against the delay of the Sunday penalty rate, well, the employers were saving more by virtue of the delay in the annual wage review because it applied to more people.

PN136

MR FRIEND: That's what we were putting, your Honour.

PN137

JUSTICE ROSS: All right.

PN138

MR BOOTH: I would submit, your Honour, that the particular circumstances in relation to any employer will depend upon those circumstances. The types of - - -

PN139

JUSTICE ROSS: I agree with that, it depends on - - -

PN140

MR BOOTH: Yes, sorry, your Honour.

PN141

JUSTICE ROSS: No, no, that's all right. It depends on a number of unknown factors, whether you trade on Sunday, how long you trade for, how many employees you engage and at what level on a Sunday, et cetera, it will all affect the extent of the impact of what the SDA is proposing.

PN142

MR BOOTH: Yes, I accept that, your Honour. The only other point I would like to make is that, in our view, should the award be varied in line with the SDA's submission in respect of clause 29.4, that is likely to cause confusion, particularly to small business employers, since there are other penalty rates which are due to reduce by 15 per cent also from 1 July 2020 and those reductions are not subject to the application by the SDA. Now, we are not suggesting they should also be delayed, but we are suggesting that if the decrease in the penalty rates covered by clause 29.4(e)(iv) are delayed, there will be confusion because there are other penalty rates which are also due to reduce from 1 July and they are covered by clause 30.3(c) and that's for shift work performed on a Sunday and that's in respect to all types of employees, also part-time and casual.

PN143

JUSTICE ROSS: Yes, all right, thank you.

PN144

MR BOOTH: Other than supporting the submissions made by the other employer representatives, that's all we have to say at this point, your Honour.

PN145

JUSTICE ROSS: Thank you, Mr Booth. Mr Iskandar, is there anything the MGA Independent Retailers wish to add to what the other employers have put?

PN146

MR ISKANDAR: Yes, thank you, your Honour. We would share the views mostly of the other employer groups and I would just like to make just a few additional submissions orally.

PN147

We say that the retail industry, particularly independent retail, is struggling at the moment due to the pandemic and this decrease in Sunday penalty rates was a welcome and definitely planned for respite from the ever increasing costs of wages. That enables the industry to at least partially cope with the hardship that it is now facing.

PN148

The SDA states that the award objectives are frustrated if the coupling, so to speak, between the increase in the minimum wage and the decrease in the Sunday penalty rate is removed. We say that it was not intended to be an offsetting benefit in the sense that the SDA is contending here, as some of my colleagues have also mentioned.

PN149

The reasons given by the Full Bench in the annual wage review decision we would say are similar to the reasons actually that we are opposing this application. I am just quoting here, your Honour, the majority decision did describe the shock to the labour market as "unprecedented". The unemployment rate has increased significantly and the number of hours worked has fallen and the under employment rate has increased substantially.

PN150

The General Retail Industry Award falls into the upper cluster that the majority described there, part of the group 3 award where total jobs did fall by more than 29 per cent. Now, if the priority here is to keep Australians in jobs, then we would say that the decrease in the Sunday penalty rate at the date that it was scheduled to come into place would certainly assist our sector in doing that and it does certainly assist the sector to maintain the viability of their businesses in a time where the pandemic has had a significantly adverse effect on businesses, particularly small businesses.

PN151

I will just finish by saying, your Honour, that the adverse effect of the decrease on employees is minimal because wages are in fact continuing to grow, albeit with a slight decrease in the rate of growth, so, in other words, this will do little to no damage to workers and, further to that, delaying the decrease is actually likely to discourage employment by employers and delay their recovery to pre-pandemic levels, which would in turn, we say, adversely affect workers because they will be more likely to become either unemployed or under employed. Thank you, your Honour.

PN152

JUSTICE ROSS: Thank you, Mr Iskandar. Mr Friend, anything you wish to say in reply?

PN153

MR FRIEND: Thank you, your Honour. Just a couple of things. Mr Gotting made the point that retail is not affected uniformly and we accept that and I think I went to table 6 in the Commission's information paper showing that only 12 per cent are operating as normal, but that doesn't mean that - I'm sorry, that means that people are not operating to the same number of hours as they used to. Those that are more affected are no doubt not opening as much.

PN154

Secondly, the suggestion that we might have a second wave of the pandemic would bring us back to the position where the only retailers that are open are those that are providing essential services and they are the ones that are no doubt in the group that are receiving an increase to turnover during this period, and so both of those factors don't tell against making the change to the award which the SDA seeks.

PN155

The final point that I should make is that at paragraph 18 of our submissions, we made a reference to weekly spending figures and, of course, the information paper gives us more up to date information. At the time we prepared our submissions, it looked like the spending was at 97 per cent of what it was previously, but, as the information paper tells us at the end, it is between 100 and 103 per cent depending upon the type of spending it is, discretionary or essential. That also suggests a continuing trend upwards.

PN156

Those are the reply submissions, if the Commission pleases.

PN157

JUSTICE ROSS: Thank you, Mr Friend. Can I just check with my colleagues, Vice President Catanzariti and Deputy President Asbury, as to whether they have any questions of any of the parties. Vice President?

PN158

VICE PRESIDENT CATANZARITI: No questions, your Honour.

PN159

JUSTICE ROSS: Deputy President?

PN160

DEPUTY PRESIDENT ASBURY: No questions.

PN161

JUSTICE ROSS: All right. Is there anything further from any party? No? Thank you for your submissions. We will adjourn and reserve our decision. We understand the need to deal with the matter quickly and we will endeavour to do so. Thank you very much, we will adjourn.

ADJOURNED INDEFINITELY [11.39 AM]