Why penalty rates should axed in the hospitality industry

So what do you think about penalty rates in the hospitality industry? These are additional rates of pay that employers must legally pay staff for working outside so-called ‘normal’ hours. Penalty rates paid to hospitality staff include a 25 percent premium to work on a Saturday, and 50 percent premium on Sundays. Staff who work weeknight evenings are paid a 10 percent penalty between 10pm and 12am, and a 15 percent penalty between 12am and 7am. But are they are farce in today’s 24/7 society?

We are certainly shifting to an “open all hours” society. In my online editing role at The Australian Financial Review I work an evening shift, and sometimes have to work Sundays. Our readers — who once turned to newspapers — are increasingly demanding online content. In the new digital newsroom, journalists, editors and producers work around the clock, delivering news to readers’ digital devices and desktop computers.

I rarely see my partner weeknights, and he’s often left for work before i awake. During the week we pass like the proverbial ships in the night. Once a month I have to work on a Sunday, so our precious weekends together are wrenched in half. Others in my team work throughout the night, or start at the ungodly hour of 4am. Seven-day rosters are not unheard of.

We don’t get paid penalty rates, and we never will. No employer would be mad enough to retrofit penalty rates to their wage structure just because occupations have morphed to meet 21st Century needs. However, penalty rates are firmly entrenched in the hospitality sector. And they’re proving difficult to remove.

Many restaurateurs argue that this hike in labour costs, particularly on weekends, makes it increasingly difficult to make ends meet. The Financial Review points out that two major restaurants in Brisbane, Philip Johnson’s Bistro One Eleven and the award-winning Ortiga, said this week they were closing and cited penalty rates as one of the main reasons.

Now, i’m not sure I buy into this argument. After all, weekends are also the busiest time for restaurants and cafes. Alongside higher labour costs comes a surge in business. And restaurateurs are increasingly covering penalty rates by adding a surcharge to weekend menus. The diner — not the employer — often covers these additional costs.

However, i  agree with restaurateurs who argue that paying penalty rates is out of date with our modern lifestyle: where customers increasingly expect 24/7 service, or at the very least service seven days a week. Sundays are no longer sacrosanct, as they once were. And the 9am-5pm working day is no longer ‘normal’.

It can also be argued that many of the hospitality employees who are paid a penalty for working ‘unsociable’ hours actually choose to work those shifts because it suits them. It’s not a penalty to work those shifts, it’s a preference.

Defending employers, Restaurant & Catering and the NSW Business Chamber  made an application to the Fair Work Commission for a change in the penalty rate system. They proposed that workers only be paid a penalty rate if they were required to work on more than five consecutive days. Penalty rates of 25 percent would apply on the sixth consecutive day of work, and 50 percent on the seventh consecutive day of work. Yesterday, the Commission rejected the application.

Should hospitality workers be paid penalty rates? I think not. And it’s not a case of ‘if i’m not paid a penalty rate, no one else should be paid one either.’ I think our wage system should reflect the 21st Century. Evening work and weekend work is the new normal, get used to it.

Having said that, workers should be recompensed accordingly. Salaries should take into account the inconvenience of getting to work on Sundays when public transport runs less regularly, the erosion of personal safety when traveling home in the dark at night, and the stress of having less support when dealing with calamities, a high (often unseen by the day staff) workload, and a diminished number of staff.

I’m saying ditch farcical penalty rates, but pay these workers more — full stop. That way anyone who works not so family-friendly hours benefits, not just those in professions that locked in penalty rates decades ago.

Unions and employee groups argue that hospitality workers are amongst the nation’s lowest paid and are dependent on penalty rates. If this is the case, then do your job, fight for them, and ensure the workers you represent are paid more — across the board.

Higher salaries will force some employers to be better at business. Others will pass the costs onto the end user, which could, in fact, be part of running a better  business. In a seven day society, when customers want services at their fingertips, they should arguably be prepared to pay more for it.  Pay higher salaries and everyone gets what they pay for.



Filed under Food Issues, Reflections

10 responses to “Why penalty rates should axed in the hospitality industry

  1. So relevant, this topic. You make some great points, and I
    wonder if the hospitality industry would consider such a


  2. “Evening work and weekend work is the new normal, get used to it.”

    This is so dumb. News cycle is a bad analogy as news breaks 24/7 and has ever been thus. Generally, people don’t go out for dinner at 3am so the argument is a total straw man.

    If employers get to dangle the carrot of “work-life balance” then they’d better be prepared to compensate people if they can’t deliver it?

    8 hours work. 8 hours rest. 8 hours leisure. Unions suffered and laboured to deliver EVERYONE this *basic* structure for working life, not private capital. Yet all have benefitted from it.

    I couldn’t care less about the profit margins of a small business that doesn’t want to treat its workers like human beings who have lives of their own, rather than just some resource/cost to be minimised. Calombaris springs to mind – couldn’t care how good a chef he is, his attitude has stopped me from patronising all of his establishments.


    • Hi Reuben & thanks for dropping by. You can’t ignore the fact that weekend and evening work is the new normal. More and more professions work are operating longer hours of the day/week. Late night restaurants and retail, 24-hour call centres, services such as banks, doctors, dentists, hairdressers increasingly provide late night operations – they have to because the public demands it. What i’m saying is that anyone who works outside of so-called normal hours should be recompensed adequately for the inconvenience, etc, of doing so. Penalty rates for some professions, and a pat on the back (if you’re lucky) in others isn’t a fair work system.

      Any yes, news breaks 24/7 and always has. But not until the rise of digital platforms have newspapers – the industry i work in and that i’m commenting on – had local teams operating pretty much 24/7. Newspapers have had stringers and correspondents based overseas following the news in those time zones. But at the end of the day most journalists/editors in a local newsroom would go home, the paper would be sent to print. And everyone came in and did it again the next day. Now with websites, news is expected to be updated throughout the evening, someone has to be rostered on to do that. It’s a whole new way of newsrooms working.

      I don’t want penalty rates to be ditched and hospitality workers to be paid less – i want them to be better recompensed across the board. And i want other professions to be fairly recompensed, too. If that means the end user has to pay more for services, so be it. If we want services on demand, we should be prepared to fork out for it.


  3. Coming from the states where hospitality workers get next to nothing in wages and hope that tips will cover, I think every worker deserves decent wages – all the time. If it costs more, then we’ll have to pay it. It might mean eating out less but when we do, we’ll know that the workers can survive.


    • Good points, Maureen. In Australia we have a pretty good deal on the eating out front, and generally take it a lot for granted. I like your philosophy of being prepared to pay more, even if it means eating out less.


  4. two engaging goldens

    Up where I live in Northern NSW many stores still close at 12 noon on Saturday. Our local town is all shut on a Sunday apart from the cafes and the pubs – the bakery and newsagent are closed by midday Sunday. So, only the hospitality workers are working whilst the rest of the town enjoys time off. A bit different to the cities. It was quite a culture shock when we first moved up here from Sydney. Joy


  5. Y

    I suppose by hospitality workers you mean FOH, because I don’t know any chefs who get paid any more regardless of how many hours they work or when they work those hours. And to be honest it makes me a little grumpy when people keep going on about hospitality staff being paid too much because from my experience, BOH have always been underpaid (people are always shocked when I tell them what my salary was, when working in really well regarded establishments). And to add insult to injury, it’s incredibly difficult to use public transport outside of regular 9-5 hours. In fact, the upcoming ‘radical’ changes to the rail timetable that’s meant to provide more services where/when they’re needed most, will mean that I’m 45 mins late to work every day because there aren’t any trains that run early enough.


    • Now, who on earth said hospitality workers are paid too much? Certainly not me, but possibly those who think journalists are also paid too much, (we’re a poorly paid profession, too). I share your out of hours public transport grievances, too.


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