Greater Flexibility on the Agenda for Hospitality Award

OWEN WEBB - AHA|SA WORKPLACE RELATIONS MANAGER

The Fair Work Commission (FWC) has recently signalled their intentions for greater flexibilities to be introduced into the Hospitality Award, with a Full Bench outlining their preliminary views with respect to loaded rates arrangements.

In this article we look at the Australian Hotels Association’s (AHA) recent application to introduce “loaded rates” into the Hospitality Industry (General) Award 2020 (HIGA).

BACKGROUND

On 9 December 2020, the then Minister for Industrial Relations, the Hon Christian Porter MP wrote to the President of the Fair Work Commission (FWC), Justice Ross. Minister Porter sought that the FWC commence a process of looking into creating greater flexibilities in Modern Awards for those industries such as hospitality, that had been significant impacted from the Coronavirus pandemic.

Minister Porter in particular referred to the potential of looking at simplified pay arrangements such as “loaded rates” in order to try and reduce administrative costs and complexities for small businesses interpreting awards, as well as the potential of streamlining classification structures wherever possible.

The FWC subsequently commenced the Award Flexibility – Hospitality and Retail Sectors Major Case (AM2021/73) in December 2020, calling for any interested parties to put forward any proposals for award variations by the end of January 2021. The Australian Hotels Association (AHA) filed an initial application seeking four separate variations to the HIGA, including:

• Consolidation of junior employee classification rates into one stream

• Simplification of hours of work arrangements

• Simplification of late night and early morning penalties (to be paid on a pro-rata basis)

• Introduction of loaded rates

A series of conferences were held between interested parties throughout February and March before a Full Bench of the FWC.

On 19 July 2021, the AHA filed a refined application to vary the Hospitality Industry (General) Award 2020 with the introduction of a proposed new Schedule K – Loaded Rate Arrangements and Schedule L – Loaded Rate Arrangement Form.

AHA|SA APPLICATION TO VARY HIGA

The AHA’s application introduces a new Schedule K – Loaded Rate Arrangements (Schedule K) and Schedule L – Loaded Rate Arrangement Form (Schedule L).

Schedule K seeks to introduce 6 separate loaded rate arrangements that could be utilised for full-time employees classified at Level 3 or above. The loaded rate is a percentage of the employee’s ordinary base hourly rate in satisfaction of the split shift allowance, overtime and penalty rates (except for public holiday penalty rates). The concept of the loaded rate is to simplify pay arrangements, particularly for small businesses in the hospitality sector, whilst ensuring that full-time employees are no worse off than under the current award arrangements.

LOADED RATE PARAMETERS

The Loaded Rate is subject to the following parameters:

a) The roster cycle must operate weekly commencing on a Monday

b) Monday to Friday: a maximum of 11.5 hours (excluding meal breaks) per day/shift rostered between 7:00am and 12:00am (midnight)

c) Saturday: a maximum of 10 hours (excluding meal breaks)

d) Sunday: a maximum of 10 hours (excluding meal breaks)

e) The provision of the split shift allowance, if the period between shifts is 3 hours or less; and

f) The Loaded Rate Range of Days and Loaded Rate Maximum Weekly Hours applicable to the Loaded Rate Percentage as set out in the list below:

Loaded Rate Percentage (% of ordinary hourly rate) / Loaded Rate Range of Days / Loaded Rate Maximum Weekly Hours

10.20% / Monday to Friday / 40

20.00% / Monday to Friday / 45

16.95% / Monday to Saturday / 40

23.40% / Monday to Saturday / 45

26.85% / Monday to Sunday / 40

30.80% / Monday to Sunday / 45

Where an employee works over the daily and/or shift maximum hours or the maximum hours for the week, overtime would apply.

Under the Loaded rate arrangement an employee who performs work on a public holiday would still be entitled to be paid public holiday penalty rates.

LOADED RATE ARRANGEMENT

Under the proposed variation if an employer elected to pay an employee a loaded rate, the employer would need to provide the employee with a written loaded rate arrangement in accordance with the form set out in Schedule L – Loaded Rate Arrangement.

The Loaded Rate Arrangement would be able to be terminated at any time between the employee and the employer or by the employer giving 2 weeks written notice.

A template Loaded Rate Arrangement Form that employers could use has been detailed in the proposed Schedule L.

The Loaded Rate Arrangement would not have any impact upon salary arrangements.

In support of the application the AHA has put forward the following arguments:

• That the proposed variation will provide greater certainty for employees in relation to weekly take home pay

• It will protect the needs of the low paid by ensuring employees are not worse off

• It will promote more flexible work practices

• It will reduce both the administrative and regulatory burden on employers as the processing of payroll and associated administrative tasks will be more efficient

• It will contribute to simplifying the award 1

FWC’S PRELIMINARY VIEWS

In a statement handed down on 27 July 2021, the Full bench outlined their preliminary views on the AHA’s application.

The Bench stated that “it seems to us that the quantum of loaded rates and the loaded rate parameters ensure that workers on Loaded Rates Arrangements are paid the same or more than they would have been paid if the loaded rate did not apply…” 2 .

The Bench went on to state that it is their provisional view that the Application has merit.

NEXT STEPS

In terms of next steps, the United Workers Union has been given until 20 August 2021 to file any submissions in respect of the AHA’s application and the AHA has been given until 27 August 2021 to file any submissions in reply.

The AHA|SA will keep Members informed as to any changes that may occur to the HIGA as a result of the AHA’s variation application.

1 [2021] FWCFB 4513 – Statement 27 July 2021, see para [46]

2 Ibid, see para [48]