Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
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outdated: thanks to improvements in technology, the development of a global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amended or repealed as set out by the provisions of this Bill according to its terms.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.
2
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.
3
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
4