Varun Ghosh (WA, Australian Labor Party) Share this | Hansard source

The Fair Work Amendment (Protecting Penalty and Overtime Rates) Bill 2025 protects penalty rates and overtime rates for 2.6 million Australians who rely on modern awards to set their pay and conditions. Importantly, the bill protects many Australian workers who rely on these overtime and penalty rates for their financial survival. We're talking about low-paid workers here, and compensation for those who work those hours on evenings, weekends and public holidays, away from their families, their friends, their interests and their lives. This bill protects those workers and enshrines penalty rates and overtime rates, which have been in place in Australia since the early 20th century. This has been a part of the Australian industrial relations framework for more than 100 years, and all this bill seeks to do is protect those workers into the future.

But it's not surprising that those who regularly oppose working Australians being paid fairly oppose these safeguards too. The arguments of those who are opposed to this bill are always cloaked in language around the need for flexibility, simplicity or certainty and are always accompanied by hollow professions of support for penalty rates. But the real impact of the abolition of these wage rates is that low-paid Australians will be left worse off.

This bill inserts section 135A into the Fair Work Act, and it requires the Fair Work Commission, when exercising its jurisdiction to make, vary or revoke modern awards, to ensure that penalty and overtime rates that employees are entitled to receive are not reduced and that modern awards do not substitute entitlements to penalty rates or overtime rates where that substitution would have the effect of reducing the additional remuneration that any employee would otherwise receive.

The philosophy that underpins this protection and much of the industrial legislation of this government is simple—labour in this country is not and should never be treated like a commodity, and the lives and time of Australian workers should not be treated as interchangeable units within a labour market to be bartered down to the lowest price. Put simply, the government is committed to helping those who are struggling to make their way to protect and support Australian families and to support fairness, equity and equality of opportunity in our workplaces.

Modern awards are about minimum safety nets in the industrial relations system. They set the baseline, and what should be alarming to everyone in this place and around the country is that the number of workers who rely on these awards has been growing. The proportion of workers who rely on awards to set the base rate of pay rose from 16.1 per cent in 2012 to 23.2 per cent in 2023. That's the context we're working in. More Australians rely on the minimum safety net in industrial relations. These awards protect low-paid workers. More than one-third of modern-award-reliant employees would be considered low paid, and, for some particular awards, that number is even bigger. For instance, on some estimates, two-thirds of modern-award-reliant employees on the Pharmacy Industry Award 2020 would be considered low paid. Across all modern awards, what does that mean in dollars and cents? It means, on average, someone who relies on a modern award receives around $864 a week or around $45,000 a year.

We've heard that these workers are disproportionately female, and that's somewhere around 60 per cent. For the General Retail Industry Award 2020, nearly two out of three workers are women. They rely on awards far more. We know that award workers are younger; it's the younger part of the workforce. But it's also important to note that many are on more precarious or vulnerable forms of work. Returning to the General Retail Industry Award 2020 for a moment, two in three people employed under that award are employed on a casual basis, and almost four in five work part-time hours. So that's our starting point when we're trying to introduce provisions that ensure penalty and overtime rates cannot be removed from awards. We're dealing with the people who are already on the downside of advantage, who already have factors in their industrial position that make them vulnerable.

One of the interesting arguments in that context is what we hear from those opposite when they come in and talk about flexibility. What we know from the history of the Liberal Party in Australia is that 'flexibility' is a code for cutting wages and conditions of lower paid workers. Taking penalty rates and overtime rates protections out of awards puts holes in the safety net. It's the flexibility to fall further for those who are already financially disadvantaged in our society, and it gives employers greater power over their employees. The objective is always the same. It's always to lower wages. The reason you know that is that, with enterprise bargaining provisions and individual employment contracts, you can pay employees more if you want to. This is about taking things out of the safety net that leave ordinary Australians worse off.

What is the value of penalty and overtime rates to Australian workers? For those who work overtime hours, around one in eight or 12.5 per cent of their hours are overtime hours. The significance of this proposition becomes clearer when you delve into the accounts of workers who rely on these protections and additional pay rates. Somewhere between one-third and one-half of those who receive weekend or evening penalty rates rely on the extra money those rates provide to meet basic household expenses. If they disappear, they go without essentials. Evidence collected by the Shop, Distributive and Allied Employees Association from around the country bears out that reality. Receiving weeknight and Sunday penalty rates has become an economic necessity for many retail workers, essential to the financial survival of their families. It is with pride that we propose this bill to protect those families and to make sure that they keep their heads above water.

Retail workers who work unsociable hours—late nights, weekends and public holidays—almost universally lament the inability to spend time with family, children and friends or play sport or pursue hobbies or play a full part in the communities that make Australia a great nation. They should be compensated in addition for making that sacrifice. What we also know, thanks to research from Judith Brown and Lyn Craig published in the Journal of Industrial Relations, is that workers who give up that time don't get it back at other times. Workers who work on weekends don't get to catch up with their friends or with their hobbies or with the parts of their lives that matter to them during subsequent weeks. That's gone forever. So it's important that they're properly compensated for that sacrifice.

What are the broader and systemic risks of leaving penalty rates and overtime rates without protection, without the legislative protection proposed in this bill? Across our history, employers and industry groups have spent considerable time trying to water down and remove altogether penalty rates, overtime rates and other minimum conditions afforded to workers under the award system. The best example of that, relevant to this debate, was in 2017, when the Fair Work Commission agreed with the employer group submissions in the hospitality and retail sectors in an argument that weekend penalty rates were too high and were a handbrake on the economy. The result was that they supported reducing penalty rates in order for businesses to stay open longer and to create more jobs. The reality is that that didn't flow through. Businesses didn't stay open longer. There weren't more jobs created. But what did occur was that the take-home pay of working Australians in these industries, who relied on that additional wage, was reduced. The McKell Institute simulated the impact of penalty rate cuts in the retail and hospitality sector at around this time and found that reducing or removing those rates would result in a drop in disposable income across the country. There are a number of flow-on effects in terms of the consumption power of our lowest paid workers.

They also found that the effect would be more acute in regional and rural areas, where a larger proportion of workers were employed in the retail sector. So there are other sections of our community that are disproportionately affected. In 2019, after the reduction in penalty rates had been in effect for nearly two years, researchers at the University of Wollongong and Macquarie University surveyed more than 1,800 employees and 200 owner-managers in retail and hospitality. What they found was that, using a variety of statistical analyses, they were unable to establish any evidence of a relative increase in the prevalence of Sunday, public holiday or weekly employment for modern award employees or employers or a decrease in the number of hours that owner-managers worked on Sundays and public holidays, something else that the Fair Work Commission also relied on. That was even confirmed by the Council of Small Business Organisations Australia Chief Executive Officer Peter Strong in 2019, who said, 'There just haven't been extra jobs on Sundays,' and that there were 'no extra hours'. And he didn't know anyone who'd given workers extra hours. So the economic rationale for some of these concepts just doesn't bear out in the evidence, and it just doesn't bear out in our experience. But what is always clear is that it's the price paid by lower paid workers as a reduction in their take-home pay.

Dr Jim Stanford made a prescient warning as well in relation to the ongoing attempts of employer groups to reduce weekend penalty rates. It was this:

Moreover, as lower penalty rates spread through other sectors, it is my judgment that the negative impact on incomes will be experienced not only by those employed directly under the terms of a Modern Award, but will also be experienced by those working under enterprise agreements or individual contracts.

Let's be under no illusions. This is a beachhead that's trying to be set up to take away penalty rates and overtime rates from large swathes of the Australian population, and it has been done for the same reason that these efforts are always being done. It is to cut wages. When you think about whose wages would be cut—whose take-home pay is reduced because of all this—it's the people on the downside of advantage. In that sense it's unconscionable, and this bill puts in place a safeguard to prevent it.

So what is this bill unlikely to do, in spite of the concerns raised by those who say that they oppose it? This law will not worsen complexity in the Fair Work Act. The Fair Work Act is a complex piece of legislation, and its longer term reform to simplify it is another question for another day. But this piece of legislation is simple. It'll be simple for the Fair Work Commission to apply. In one sense it actually reduces the number of criteria they need to consider when facing an application to vary or approve a modern award. We know, as I've said, that this legislation will not cause a problem for employment. It won't reduce the number of people employed.

So what is it? It's a bill that is an important safeguard for millions of award-reliant Australian workers—some of the lowest paid in our country. Penalty and overtime rates are a result of the longstanding principle that workers deserve fair compensation for the sacrifices they make in working these emotionally and physically demanding hours—compensations that those who are working evenings, on weekends and on public holidays particularly deserve. This bill does not block employer-employee flexibility outright. If you're in the enterprise system—if you're in a system where you're getting a higher wage—you can still negotiate your arrangements and achieve the necessary flexibility. What this does is put in place, in black-and-white legislation, that the safety net—the minimum conditions Australian workers can receive—must preserve and protect overtime rates and penalty rates.

The failure to stop the erosion of this fundamental entitlement and these minimal conditions for our lowest paid workers will likely see more employer groups pursue similar arrangements. It'll extrapolate. But one thing I can tell you to near certainty—to the extent that predictions can be certain—is that the result will be that lower paid workers will be paid even less. That's always what sits underneath these attempts to strip away protections. Workers on the downside of advantage do not bargain with their employers from a position of equality. And it's that inequality that people who strip away basic conditions seek to exploit. It's why we need to pass this bill.