Save Search

Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Fair Work Amendment (Small Business—Penalty Rates Exemption) Bill 2012

Bill home page  


Download WordDownload Word


Download PDFDownload PDF

 

2010-2011-2012

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

THE SENATE

 

 

 

 

FAIR WORK AMENDMENT

(SMALL BUSINESS - PENALTY RATES EXEMPTION) BILL 2012

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

(Circulated by authority of Senator Nick Xenophon)



 

Fair Work Amendment (Small Business - Penalty Rates Exemption) Bill 2012

 

1.       Backgound

The purpose of this bill is to seek a compromise between small business operators and their employees in relation to penalty rates.

 

The original intention of penalty rates was to compensate employees for hours worked outside the standard Monday to Friday working week. This concept is now largely outdated: thanks to improvements in technology, the development of a global economy and the deregulation of trading hours, many businesses trade over all seven days. As such, many part time or casual employees consider weekends to be part of their regular hours.

 

Generally, the Fair Work Act and modern awards do not recognise this shift towards a seven day week. The intention of this bill is to allow small businesses in the hospitality and retail sector, defined as those businesses with fewer than 20 full time and full time equivalent employees, to remain true to the original intention of penalty rates while avoiding the high cost burden during specific days of the week.

 

To achieve this, the bill states that for small business in those industries, penalty rates do not apply unless an employee has worked for more than ten hours in a day, or more than 38 hours over a seven day period.

 

2.       Short title

This clause is a formal provision and specifies the short title of Bill, once enacted, may be cited as the Fair Work Amendment (Small Business - Penalty Rates Exemption) Act 2012 .

 

3.       Commencement

This clause provides for the commencement of the Act on the day on which the Act receives Royal Assent.

 

4.       Schedules

This clause states that each Act specified within a Schedule under this Bill would be amended or repealed as set out by the provisions of this Bill according to its terms.

 

5.       Schedule 1

This Schedule outlines the amendments to the Fair Work Act 2009 to provide that businesses in the restaurant and catering or retail industries with fewer than 20 full time and full time equivalent employees (‘excluded small business employers’) will only have to pay penalty rates where an employee has worked more than ten hours in a 24 hour period, or more than 38 hours in a seven day period.

 

Item 1: This item inserts a new definition for ‘excluded small business employer’ into the Act, consistent with the definition outlined in subsection 155A(2) of the bill.

 

Item 2: This item inserts a new section 155A into the Act to define the terms dealing with penalty rates payable by excluded small business employers. 155A(1) states that a modern award must not include a term that would require an excluded small business employer to pay penalty rates to an employee during a week unless the employee has worked more than 10 hours in a 24 hour period, or more than 38 hours total, in that week. 155A(2) provides the definition for an ‘excluded small business employer’ as an employer who, at that time, employs fewer than 20 employees in the restaurant and catering or retail industries. 155A(3) states that, for the purpose of calculating the number of employees employed by the employer at a particular time, all full-time and full-time equivalent employees employed by that employer in the industry at that time are counted, while any other employee is not to be counted. 155A(4) provides that, for the purpose of calculating the number of employees, associated entities within the same industry are taken to be one entity.

 

Item 3: This item states that section 155A applies from commencement to both current and future modern awards, whether the modern award was made before or after commencement.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Fair Work Amendment (Small Business - Penalty Rates Exemption) Bill 2012

 

This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

 

Overview of the Bill/Legislative Instrument

This Bill amends the Fair Work Act 2009 to state that ‘excluded small business employers’ (employers who employ fewer than 20 full-time equivalent staff in the restaurant and catering or retail industries) cannot be required by an existing or future modern award to pay penalty rates unless an employee has worked more than ten hours in a 24 hour period or more than 38 hours in a week.

 

Human rights implications

The right to work and rights in work are contained in articles 6(1), 7 and 8(1)(a) of the International Covenant on Economic, Social and Cultural Rights. These articles refer to the right of an individual to freely chosen or accepted work, and include the right not to be deprived of work unfairly. More specifically, these articles also include the right to earn a fair wage and equal remuneration for work of equal value.

 

While the Bill relates to penalty wages for employees, it does not impinge upon the right of employees to earn either fair wages or equal remuneration. It only affects the circumstances in which certain employers will be required to pay penalties above the base wage. It also does not affect remuneration for public holidays. This Bill also maintains the original intention of penalty rates, which is to financially recognise work performed above and beyond the usual hours of employment. The outcome of the Bill is also intended to support and encourage greater employment within small businesses.

 

The Bill does not affect any further human rights in relation to employment.

 

Conclusion

The Bill is compatible with human rights as it does not negatively impact on the rights to work or the rights in work. 

Senator Nick Xenophon, Independent Senator for South Australia