Businesses refusing to pass on penalty rate cuts

This article by Alexandra Spring (The Guardian Australia 4 July 2017) shows that not all employers welcome the penalty rate cuts and that some are actively joining in the opposition to them. They realise that employees are also customers and that fairness is important in a humane society.

On Sunday the Fair Work Commission’s controversial cuts to penalty rates took effect across the country, affecting thousands of workers in the retail, pharmacy, fast-food and hospitality industries.

But there were some companies, across those sectors, that stood firm and decided not to pass on the penalty rate cuts.

For Peta Granger, director of national cosmetics chain Lush, the decision not to pass on the penalty rates cuts was “easy and immediate”.

And she got an almost immediate reaction from the public: “We saw a huge rise in footfall into our stores,” says Granger. “Customers into our stores after the announcement were up 65% on the same time last year, so that’s clearly had a huge impact on sales.”

The cosmetic company, which employees around 450 full-time and casual staff across 32 retail stores, has been through tough times recently: in 2011 when Granger came on board it was losing $5m a year and in danger of being closed by its British parent company.

Granger says it was the hard work and dedication of the staff that turned the business around and she couldn’t countenance the idea of cutting the rates once it returned to profit. “To reward them now with falling wages would have been a total betrayal of that relationship.”

She’s happy to speak up on the issue: “We want to encourage other employers to carefully consider the implications on their staff before making this choice and I think for us to cut people’s wages and to expect continued growth and engagement in this climate would have just been a silly business decision.”

The company is committed to retaining the penalty rates in the long term. “I cannot imagine a situation where we would consider cutting anyone’s wages,” says Granger.

Instead, she is implementing what she describes as “a business model that shares the wealth and the profit with the people who generate them”, with generous profit-share bonus schemes.

There are also tentative plans to introduce an overhauled HR system that celebrates the achievements of employees through anniversary programs that acknowledge the service of an employee after an established period of time as well as some other exciting reward schemes.

You can learn more about the benefits of launching anniversary programs on the Blueboard website.

“It’s only those models where everyone has an opportunity to thrive, that’s what creates what I think guarantees long-term growth and prosperity for the business, by making sure that everyone can thrive and is engaged and driven to make the business a success.”

For Tony Fenlon, chief executive of Queensland’s Rockhampton Jockey Club, it was “a no-brainer” not to pass on the cuts to penalty rates.

“We’ve got staff here who give up their weekends so we can conduct race meetings, so the racegoers and the general public alike can enjoy an afternoon out, so … it would be unrealistic to expect [staff] to give their weekends up without receiving some sort of benefit for doing that.”

The club operates alongside Callaghan Park racecourse and Fenlon says all employees, 12 full-time employees, and more than 40 casual employees, will continue on the same rates as before.

He doesn’t believe this will have an impact on the business. “If you don’t pay the penalty rates, that’s not going to encourage one extra person to come over to the racetrack.

“If anything, if people don’t pay the penalty rates, then it’s going to have a negative impact in the sense [that] it’s less disposable income to spend around town.”

Stuart Armstrong, the general manager of bike store Velo Cycles, saw it as a matter of principle. “I didn’t think it was right morally to say to someone one week, ‘Oh thanks for doing the job, this is how much we are going to pay you and then the next week we pay them less for doing exactly the same job.'”

The Carlton North store has 12 employees, on a mix of full-time and casual contracts, and Armstrong says he’d like to keep them all. “I value the staff, I would find it difficult to replace any of them and that’s why we’ve taken the stance because we want to keep the workers that we’ve got.”

Financially the costs were “much of a muchness”, but Armstrong says it’s a decision he and store owner Harry Fishman are committed to in the long term. “People keep banging on about equal pay for equal work, so I would feel wrong if I was to [say] ‘Oh you’re a new starter, you’re going to be paid less because you didn’t have your foot in the door at the time.’ That’s not right.”

One of the reasons why Amit Tewari, owner of Sydney’s Soul Burgers’ three plant-based burger restaurants, decided not to pass on the rate cuts was because he believes fair pay is essential to a good working culture. “The better you treat your people, the more they care about your company essentially.”

But ideologically he believes there’s more to it. Hospitality workers are among the lowest-paid workers, with the least leverage when negotiating with employers, and he says they should be protected. “If you got rid of penalty rates, they may end up in a situation where it might be a choice between working a really poorly paid job versus having a roof over your head. Because we live in that reality, we need to be pretty firm with award rates [and] we shouldn’t be setting the precedent of changing the award rates, especially for the people who are the most vulnerable.”

Ideology aside, Tewari saw it as a sound business decision and one that would attract top workers. “They are more likely to come to you because the rewards are greater for them, and you are more likely to get a better working environment altogether. That obviously translates to a better customer experience, so even purely from a fiscal sense, it’s a better thing to do.”

He says those companies that do pass on the rate cuts shouldn’t be surprised if they lose staff. “I think they are going to disappoint their employees [and] disappointed employees probably won’t be as loyal to their companies and to the brand they represent. They probably shouldn’t be surprised if those employees aren’t happy about it and decide to move on.”

The ACTU is compiling a list of companies which have decided not to pass on cuts to penalty rates.

You can visit the website here.


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