Labor Concerned About Proposed Penalty Rates Changes

January 14, 2021 Updated: January 14, 2021

The opposition Labor Party is concerned that Australians will face reduced pay packets next summer if proposed changes to penalty rates are passed by the federal government.

However, the federal minister for industrial relations said Labor has “completely and dishonestly” mischaracterised one part of the proposed changes.

Opposition spokesperson for Industrial Relations Tony Burke said in a media release on Thursday that Labor estimates Australian workers could lose between $840 and $1170 from their next summer holiday pay packets if the federal government’s proposed Industrial Relations bill scraps penalty rates for Christmas Day, Boxing Day, New Year’s Day, and Australia Day.

“From cleaners to miners, aged care workers to waiters, checkout operators to nurses–all could take a massive pay cut if [Prime Minister Scott] Morrison is successful in suspending the Better Off Overall Test,” Burke said. The better off overall test (BOOT) helps employees know whether they are better off under a bargaining agreement or the relevant award.

Burke’s analysis was made using calculations based on the difference between award-based pay and public holiday pay rates of workers who work a normal eight hour day across all four public holidays.

“Pay cuts are bad for workers and bad for the economy. For Australia to recover from the recession, we need people with the money and confidence to spend,” he said.

BOOT is currently under review by the federal government due to changes to the enterprise bargaining laws introduced by Attorney-general and Minister for Industrial Relations Christian Porter in December.

The changes, which seek to reverse the decline in agreement making by simplifying the BOOT test and setting a 21-day approval deadline, are designed to help drive productivity gains and real wage growth, Porter said in December.

In particular, the changes will enable the Fair Work Commission to consider CCP (Chinese Communist Party) virus (novel coronavirus) impacts when approving agreements that fail the BOOT test.

This means that the commission can approve two-year deals that don’t guarantee all workers are better off, but the approvals are contingent on support from employers and employees. The Fair Work Commission would need to be satisfied that it is both appropriate and in the public interest.

The industrial relations minister has struck down the opposition’s concerns, saying the opposition spokesperson had “completely and dishonestly” mischaracterised one part of the proposed law changes.

“It is a simple fact that the Fair Work Commission already has the power to approve non-BOOT compliant enterprise agreements in very limited and exceptional circumstances, subject to the ultimate safeguard that no such agreement can be approved if it were not in the public interest to do so,” Porter said.

Porter noted that the mechanism to override BOOT had been introduced by a Labor government.

“Labor knows full well that the provision was only for use in emergency situations to help save businesses from collapsing and to prevent workers losing their jobs,” Porter said. “And the reality is that the power has only been used a handful of times over the past decade.

“All the government has proposed is that COVID-19 should be specifically recognised as such a circumstance so that—or a limited time—businesses at risk of failure due to the impact of the pandemic can work with their employees to find a way to keep going,” he said.

The proposed IR bill has also been slammed by the Australian Council of Trade Unions, with Sally McManus, secretary of the ACTU, saying she would sit down with Porter and fix the bill to ensure it doesn’t negatively affect working people.