Sarah Henderson (Victoria, Liberal Party) Share this | Link to this | Hansard source

It's my pleasure to rise and speak on the Fair Work Amendment (Protecting Penalty and Overtime Rates) Bill 2025. I do join with my colleagues in raising serious concerns about this bill. In doing so, I just want to commend the excellent dissenting report handed down by coalition senators Kovacic and Sharma in the bill inquiry by the Senate Education and Employment Legislation Committee. The coalition supports penalty and overtime rates; that is not in question in any respect. But, on this side of the chamber, we are concerned about the long-term impact of this bill on employee choice, flexibility, business viability—particularly the viability of many small and family businesses—as well as national productivity.

As this excellent dissenting report makes clear, this bill hits small businesses extremely hard. It risks retrospective application. It does give rise to all sorts of uncertainty. It impacts on employee choice. And it also imposes a risk to work-from-home arrangements.

From my perspective, the biggest concern with this bill is the risk to small and family businesses. Small businesses are being hit with new compliance burdens almost every month under the Albanese government. Evidence shows that owners spent 15 hours a week on compliance, which is time taken away from running their businesses. The very big difference between a small business and a large corporation is that small operators cannot absorb the extra costs of meeting regulatory burdens. Of course, that does lead to real pressures on so many small businesses and business quotas. At a time in our country when so many families and so many small businesses are under pressure, they do not need anything to make their job more difficult. I really don't think the government cares very much about small business. If it did care about small business, there is a very good case for an amendment to exclude small business, which will be put forward in this debate to be agreed to by the Senate.

I do want to make this very important point. The Fair Work Commission already has adequate powers to safeguard penalty rates through the better off overall test. This bill is a solution looking for a problem. The bill has arisen as a result of the retail industry wanting to pay their workers 35 per cent more. Labor has introduced this bill to kneecap this attempt to pay workers more, because it would undermine the influence and power of the unions. So here we have a sector in our economy wanting to reward workers, and the government—because, as we know, every Labor senator in this place is a representative of the union—come in here and they undertake and fulfil their union business and agenda. But, of course, the unions don't care about small business. This government doesn't care about small business. This bill is further evidence of this. The bill would enable unions to bring applications to vary existing awards, placing an unfair burden on employers trying to maintain stability for their businesses and their employees. This adds considerable red tape to small business, which already faces 35 major Fair Work Act changes under Labor, 34 of which disproportionately affect small business.

The other really important point I would make is that, by constraining the commission, the bill undermines independents and risks unintended consequences in award variation. As coalition senators Sharma and Kovacic have so competently reiterated in their dissenting report, this bill could operate retrospectively. The committee in its majority report denied that, but the evidence to that effect was absolutely clear. Of course, this creates a greater burden for businesses, particularly small businesses, and greater uncertainty for them. It exposes employers to union-driven variations of existing awards.

As I said, this bill poses a particular concern for small business. One of the amendments that's been put forward is that small businesses should be exempt from the bill's operation. If Labor cared about small business, it would agree to this amendment.

COSBOA is one of the key stakeholder groups which has warned that this bill will discourage employment and drag down productivity. The minister, in fact, has no idea how many small businesses will be impacted by this bill. What we really need from this government is a clear, focused plan to address the needs of small business in the economy. We need policies that make it easier for businesses to expand, hire young Australians and provide opportunities for them to get a foothold in the workforce.

I have to say, as a Victorian senator, that the situation is particularly dire in Victoria everywhere I go because of the regressive policies of the Allan Labor government in Victoria and the massive debt and deficit at a state level, combined with the massive debt and deficit of this government. Businesses are saying, 'We don't want to trade anymore in Victoria.' Businesses are actually saying, 'We are looking to go to other states.' I know of multiple businesses which either have packed up shop or are planning to move interstate because they do not get a fair go in Victoria.

Small businesses make up 97 per cent of all Australian businesses, employing millions of Australians and driving innovation, diversity and resilience across every community. They embody the liberal value of enterprise where hard work, risk-taking and initiative are rewarded with success and opportunity. Small businesses are not just economic units; they are often family owned and community based businesses supporting local jobs and community organisations. However, under this government, small businesses face record insolvencies, higher compliance obligations and rising operational costs. Unlike those opposite, we will always back small businesses, not burden them, so they can create jobs, build prosperity and keep communities strong. That is exactly what we are trying to do with this amendment. I don't have a high degree of confidence, but Labor can try and restore the faith of small business by supporting this amendment.

The bill also removes choice for workers who may prefer higher base salaries, stability in income or flexible arrangements over fluctuating penalty rates. The bill could limit work-from-home flexibility, with employers first forced into intrusive monitoring to meet recordkeeping rules. Many workers prefer the stability of a higher, more consistent base salary. This helps with budgeting, growing superannuation, borrowing capacity and avoiding income volatility. Women, in particular, highlighted problems where fluctuating penalty earnings make Centrelink and child support estimates very unreliable.

Employers should have the freedom to choose pay structures which best suit their circumstances. By forcing a one-size-fits-all framework, the bill locks employees out of arrangements which might better support them. Even if the majority of employees want a particular arrangement, the commission—and this is particularly egregious—is prevented from approving it if any hypothetical worker might at some point be worse off. This denies employees the ability to strike a balance between financial security and workplace flexibility, and this goes to the heart of denying employees proper choice in the workplace. It also undermines debates on remote work and flexible hours—issues that matter deeply to today's modern workforce. Instead of empowering employees, the bill strips them of genuine choice. True reform should expand workplace options. True reform should drive the will to invest. True reform should excite young small businesses to grow and to hire more employees, not hamper their growth, not hamper investment and, in many cases, not shut them down. Of course we've heard a lot about productivity in the last few weeks. The productivity roundtable was nothing more than a cover, after Labor spent three years telling Australians that there was nothing wrong with the economy—everything was going just fine. We got through the election. Now the government, at least the Treasurer, is admitting that reform is required, and much more needs to be done to address rapidly declining productivity, rapidly skyrocketing costs of doing business and a very depressed investment framework for so many businesses.

Australia and Australian businesses need policies which boost output not entrench, rigid one-size-fits-all arrangements. Business groups warned that the bill would make rostering more rigid and complex, diverting resources into compliance instead of productive work, and that existing above award arrangements that deliver higher pay and stability could be invalidated, leaving some workers worse off. Again, that goes to the lack of flexibility in employee choice. We know, in the climate where Australia's productivity has gone backwards under Labor in just three years, it has fallen by more than five per cent. This is the last thing that so many businesses need.

Since the coalition left office, living standards have plummeted by around six per cent. Australians are working harder, but they are getting less in return. The government needs to understand that it's not the government that creates jobs; it's businesses—large, medium, small and family businesses. In this depressed climate that we are currently in, where our economy is whimpering along, businesses need every possible opportunity and encouragement to invest. As I say, in Victoria, so many businesses are struggling just to keep the doors open, while looking further afield to states like South Australia and New South Wales where they see a much more investment friendly climate.

This is a disappointing bill before this parliament. As the Senate committee inquiry heard, this government did not want to have confirmed the Fair Work Commissioner has both the power and proven track record to safeguard penalty and overtime rates.

The important point to also make is that the commission is not only empowered but required, under section 134 of the Fair Work Act, to maintain a fair and relevant safety net for employees. The Fair Work Act is several thousand pages. It is an enormous burden particularly on small businesses. This is going to make things so much tougher, and, frankly, small and family businesses deserve better.

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I'd like to thank senators for their contributions to the debate on the Fair Work Amendment (Protecting Penalty and Overtime Rates) Bill 2025. This bill is a clear, simple and practical amendment to protect penalty and overtime rates as fundamental entitlements relied on by millions of award reliant Australian workers.

The Albanese government is committed to delivering workplace relations reforms with a clear goal insight: to get wages moving for Australian workers. We've heard strong support for this bill and the fundamental importance of penalty and overtime rates for employees, particularly from some of the lowest-paid workers in our country—those who keep Australia running on weekends, public holidays, early mornings and late nights.

We prioritised this bill as one of the first legislative acts of this government because we will always act to protect the pay and conditions of Australian workers. Currently, penalty and overtime rates in modern awards can be rolled up into a single rate of pay, leaving some employees worse off. And, in fact, we're actually seeing attempts by some employer groups to do that at this very moment in time, particularly in the retail, banking and clerical industries. This should not be possible to do. Award reliant employees, who rely on their penalty and overtime rates deserve steadfast protection of those entitlements in the minimum safety net.

This bill introduces a new principle into the Fair Work Act to protect penalty and overtime rates in modern awards. It specifically ensures that these rates cannot be reduced or substituted in ways that do not fairly compensate employees for the penalty and overtime rates that they would otherwise receive. This bill enshrines protections for penalty and overtime rates in modern awards while not affecting individual flexibility arrangements, the bargaining framework or the Fair Work Commission's ability to correct errors or clarify award terms.

This amendment sets out the important principle that penalty and overtime rates cannot be reduced. It does this by adding a new section to the Fair Work Act which says that, when exercising its powers, the Fair Work Commission must ensure that, firstly, the specified penalty rate or overtime rate in modern awards is not reduced and, secondly, modern awards do not include terms that allow employers to roll up penalty or overtime rates into a single pay rate that does not fairly compensate employees for the penalty and overtime rates they would otherwise receive. This bill introduces a simple amendment to ensure that penalty and overtime rates in the modern awards safety net are protected.

I'd like to thank the Senate Education and Employment Legislation Committee for their report on the bill. I know that recommendation 1—the only recommendation of the committee—is that the bill be passed. The committee process provided stakeholders with an opportunity to share their views publicly and it clearly demonstrated the importance of the bill and the strong support it has received.

I thank the Australian Greens for the support of the chair's report, the intent of the bill and the recommendation from the committee to pass the legislation. I note the Australian Greens' additional recommendation 1, which was that the Australian government consider amending regulation 3.34 of the Fair Work Regulations 2009 to make it an explicit requirement of employers to keep time and wage records, even if exemption rates or an equivalent is in effect. The government's view is that an amendment of this nature is not necessary. The new principle requires the commission to ensure that any rolled-up pay arrangement must fairly compensate employees for the penalty and overtime rates they would otherwise receive. It will be a matter for the independent commission to satisfy itself that this new standard is met.

In contemporary considerations of terms that substitute penalty and overtime rates, the commission has required recordkeeping as a means of assessing whether an employee is left worse off. Annualised wage arrangements, for example, contain a recordkeeping requirement to ensure an employee receives their full entitlements for their actual hours worked. If an employer does not meet their recordkeeping obligations under the Fair Work Act or applicable modern-award term, the Fair Work Ombudsman is there to take enforcement action.

In relation to the coalition's dissenting recommendations, recommendation 1 from the coalition mentioned that the Australian government should be required to prepare a comprehensive regulatory impact statement assessing the costs, benefits and productivity effects of the bill before its passage. Let me be clear—the government is firmly committed to evidence based policy development and decision-making. This reform, as is the case with all reforms, was assessed to determine the appropriate level of impact analysis required. The Office of Impact Analysis determined that an impact analysis was not required for this reform, because it does not impose new obligations on employers, nor does it introduce any new regulation or processes for them to comply with. It's actually about sticking with things as they currently stand rather than imposing new obligations.

To address concerns about the bill's impact on productivity, it has never been and never will be the solution—at least for this government—to make workers do more for less. This government is committed to improving productivity and enhancing economic resilience, but we do not accept that sending hardworking award-covered workers backwards through reductions to their penalty and overtime rates is the way to do this. The path to achieving flexibility and productivity gains can be found in cooperative and good-faith enterprise bargaining rather than by undermining award entitlements.

Our bargaining reforms increased access for workers and employers, including small business, to negotiate agreements with their employees and unions. This includes greater access to multi-employer bargaining, reducing the cost and effort of the bargaining, and changes to improve clarity and certainty for agreement approval. We're now seeing record enterprise agreement coverage with significantly improved wages outcomes for workers. A number of points have been made about the role of the Fair Work Commission. We respect the commission's role as the independent industrial tribunal. The commission will continue to interpret and apply the Fair Work Act, including the new principle introduced by this bill. This process will be guided by its usual consultative approach, ensuring all interested parties have the opportunity to present their views.

This bill also preserves the commission's existing powers to remove an ambiguity or uncertainty or to correct an error in a modern award. We've listened to concerns raised following its introduction that this bill could require the commission to review all modern awards for compliance with the new principle or to review penalty and overtime rates even beyond the scope of a specific application. This has never been the intent of this bill. We are confident the bill as introduced would not have operated in this way; however, this government is committed to genuine consultation, including with employer representatives and unions, and we amended the bill in the House for the avoidance of doubt and to further provide certainty to stakeholders. The bill is unequivocally clear. It will not require the commission to undertake a review of all modern awards, initiate a review of any award terms outside the scope of an application before the commission or exercise its powers under parts 2 to 3 of the Fair Work Act to make, vary or revoke modern awards.

In conclusion, for many award-reliant employees, penalty and overtime rates are a critical part of their take-home pay. As we know, it's low-paid workers, women and young people—as well as those working in retail and hospitality, who often work unsociable and irregular hours—who are more likely to be reliant on awards. This bill is about fairness. It's about respecting the millions of Australians who work public holidays, weekends, late nights and early mornings. If you get your penalty rates, you deserve them. This bill is about making sure the safety net does what it's meant to do—protect those who need it most. On that basis, I commend the bill to the Senate.

Raff Ciccone (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

The question before the chair is that the second reading amendment that was moved by Senator Kovacic be agreed to. It being after 6.30, we'll have to defer this division until the next day of sitting.