CHAPTER 1


CHAPTER 1

Introduction

Reference

1.1        On 23 August 2012, the Senate referred the provisions of the Fair Work Amendment (Small Business—Penalty Rates Exemption) Bill 2012 (the bill) to the Senate Education, Employment and Workplace Relations Legislation Committee (the committee) for inquiry and report by 29 November 2012. The reporting date was subsequently extended to 12 March 2013.[1]

Conduct of inquiry

1.2        The committee advertised in The Australian on 29 August 2012, calling for submissions by 20 September 2012. Details of the inquiry were made available on the committee's website.[2]

1.3        The committee also contacted a number of organisations inviting submissions to the inquiry. Submissions were received from approximately 1800 individuals and organisations, as detailed in Appendix 1.

1.4        A public hearing was held in Melbourne on 7 December 2012. The witness list for the hearing is at Appendix 2.

Background and purpose of the bill

1.5        The bill was introduced in the Senate by Senator Nick Xenophon, independent Senator for South Australia, on 16 August 2012. It seeks to implement measures relating to modern awards, penalty rates and the definition of an excluded small business employer.[3]

1.6        The bill has four objectives presented under Schedule 1. Broadly, the bill proposes to:

  • Amend the Fair Work Act 2009 to exclude small business employers from paying penalty rates (Schedule 1);
  • Amend the definition of 'excluded small business employer' in the Fair Work Act 2009  (Schedule 1);
  • Amend the Fair Work Act 2009 to calculate the number of employees employed by an in employer at a particular time; and
  • Amend the Fair Work Act 2009 to state that all associated entities within the same industry are taken to be one entity.[4]

1.7        The bill purports to strike a compromise between small business employers and their employees in relation to penalty rates, on the rationale that a global economy, technological progressions and deregulation of trading hours have made it common for businesses to trade every day of the week. As a result, some employees routinely work on weekends and during public holidays. The bill works on the premise that, for these employees at least, weekend and public holiday hours comprise part of their standard working hours.[5]

1.8        The Fair Work Act (the Act), the bill's Explanatory Memorandum states, generally does not recognise this shift towards a seven day week. The intention of the bill is to rectify this perceived shortcoming of the Act. It would achieve this by recognition of the shift towards a seven day working week by permitting certain small businesses to exclude selected aspects of penalty rates for employees to ease the financial burden the rates can create.[6]

1.9        The businesses covered by the bill are limited to small businesses (those with fewer than 20 full time and full time equivalent employees) in the hospitality and retail sector. If the bill is passed these businesses will, the Explanatory Memorandum states, be able to 'remain true to the original intention of penalty rates while avoiding the high cost burden during specific days of the week.'[7]

Key provisions of the bill

Exclusion of small business from penalty rates

1.10      Schedule 1 of the bill proposes to amend the Fair Work Act 2009 to define the terms concerning penalty rates payable by small business employers.  The bill states that an existing or future modern award should not necessitate a term that requires an employer that is considered as a small business employer, to pay penalty rates to an employee unless the work undertaken consists of more than thirty eight hours a week; or ten hours of work in a day.[8]

Definition of 'excluded small business employer'

1.11      Clause 155A(2) of the bill seeks to insert the definition of 'excluded small business employer' such that an excluded small business employer would consist of an employer that, at a particular time, employs less than twenty employees in either the restaurant and catering industry or the retail industry.[9]

Calculating the number of employees

1.12      Schedule 1 of the bill proposes that the number of employees engaged by an employer should be calculated by considering all full-time and full-time equivalent employees engaged at a particular time, while any other employee in the business at that time should not be taken into account. Any connected businesses or associations within the industry should be considered as a single entity.[10]

Compatibility with human rights

1.13      The explanatory memorandum contains a Statement of Compatibility with Human Rights (the Statement), which acknowledges the implications of the bill on the right of an individual to freely chose or accept work and the right not to be deprived of work unfairly under articles 6, 7 and 8 of the International Covenant on Economic, Social and Cultural Rights. The Statement concludes that the bill is compatible with human rights and would not have any effect on the rights to work or the rights in work.[11]

Acknowledgment

1.14      As mentioned earlier, the committee received approximately 1800 passionately-argued submissions to this inquiry, and wishes to thank those individuals and organisations who contributed to the inquiry by preparing written submissions and giving evidence at the hearing.

Notes on references

1.15      References in this report to the Hansard for the public hearing are to the Proof Hansard. Page numbers may vary between the proof and the official transcripts.

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