Recent IPA research shows that penalty rates were introduced in order to deter weekend work. Overtime, the justification of penalty rates has shifted to being a compensatory measure. As preferences and circumstances have changed over time, the need for additional compensation for weekend and public holiday work has also changed. On this basis, the recent decision of the Fair Work Commission to reduce prohibitive penalty rates in some industries reflects this wider trend.
The IPA considers that centralised mandated penalty rates are an outdated penalty on jobs. The IPA’s submission is that the Committee should recommend changes that would empower employers and employees to directly negotiate their own penalty rates. Additionally, the IPA submits that the various legislative proposals before the parliament are misguided because the bills seek to make the system more centralised and less flexible – moves that will have a negative impact employment and the economy.
Below is an extract of Aaron Lane’s appearance at the Senate Inquiry into Penalty Rates.