Fair Work Amendment (Penalty Rates Exemption for Small Businesses) Bill 2015

On 13 August 2015, Senator Leyonhjelm purported to seek leave in the Senate to present the Fair Work Amendment (Penalty Rates Exemption for Small Businesses) Bill 2015, to be commenced 12 months after the day to which the Act receives Royal Assent. The purpose of this bill, according to Leyonhjelm's second reading speech is to ‘improve the viability of small businesses operating in the Restaurant and Catering, Retail, and Hospitality industries’ thereby, amending the Fair Work Act 2009 (Fair Work Act).

Purpose of the Bill 

The proposed bill, aims to amend the Fair Work Act in order to exclude a small business employer from paying penalty rates on working hours that are traditionally seen to be outside the scope of a normal working day - this includes weekends and late night shifts. Leyonhjelm highlights that this bill is necessary in order to adjust to the changing social landscape namely; technological advancements, developments in the global economy and deregulation of trading houses, thereby recognizing the increase in tourism and the social needs of both customer and employees.

Justification for Bill 

The justification of this bill is to provide both employer and employee the flexibility to both offer and accept working hours, and comes after the previous draft report released by the Productivity Commission released on 5 August 2015. According to research done by the prominent accounting firm Deloitte, 49% of businesses reduce operating hours when penalties apply. Therefore, this bill is aiming to allow businesses to operate at a more profitable position at times where restrictive penalties would otherwise apply.

According to the Statement of Compatibility with Human Rights as presented by Senators Day and Leyonhjelm within the Explanatory Memorandum, this bill is compatible with international standards of human rights. The International Covenant on Economic, Social and Cultural Rights provides the right to work and rights in work, within Articles 6(1), 7 and 8(1)(a), referring to the right for individuals to freely choose and accept work and further, to not be deprived of work unfairly. According to the before mentioned senators, this bill does not suggest to impede on this right, but allow for more flexibility for employers to offer work, and therefore, provide employees more opportunity for work.      

It is with this, that the explanatory memorandum states that modern awards cannot require penalty rates unless one of the following three conditions, as set out in Section 155A of the Bill, can be met:

• Firstly, whether the work is in addition to ten hours of work per day;
• Secondly, whether the work is on a public holiday; and
• Finally, if the work is on a weekend and is in addition to 38 hours of work in the seven day period.

Small Business Amendments 

One must note that this bill aims to amend the scope of a small business to now include employers that hire up to 20 employees - this is a change from the pre-existing framework of 15 employees, as set out in Section 23 (1) 7 of the Fair Work Act. Further to this, for the purpose of calculating the number of employees employed at a particular time, Section 23AA (2) has been inserted to include ‘all employees employed by the employer at the time’ ‘a casual employee is not to be counted unless at the time he or she has been employed by the employer on a regular or systematic basis’. Again, as set out in the amending Section 23 AA (1), this bill specifically aims to exclude a small business employer from paying penalty rates within the labor intensive industries of Restaurant and Catering, Retail and Hospitality. 

This Bill follows from another private member's bill introduced in 2012 by Senator Xenophon proposing similar amendments, which, although referred to Committee, did not pass due to the dissolution of Parliament due to prorogument on 5 August 2013.

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Fair Work Amendment (Penalty Rates Exemption for Small Businesses) Bill 2015 and associated secondary materials, as reproduced on TimeBase LawOne