Penalty rates cuts should be grandfathered to protect existing workers: Eric Abetz

Eric Abetz has waded into the penalty rates debate.

Eric Abetz has waded into the penalty rates debate. Photo: AAP

Senator Eric Abetz has urged the Coalition to rethink the Fair Work Commission’s (FWC) decision to cut penalty rates, prompting Prime Minister Malcolm Turnbull to suggest changes to weekend renumeration could be implemented gradually.

Mr Abetz entered the penalty rates debate on Thursday, saying he wants the Fair Work Commission to grandfather wages for existing workers so the cuts only applied to new retail, hospitality, and fast food workers.

“The argument that it is an independent umpire’s decision and that Bill Shorten said he would respect the decision but has changed his mind are all interesting and valid debating points, but they are of cold comfort to our fellow Australians who face the prospect of a cut in their existing wages,” Senator Abetz wrote in Fairfax outlets on Thursday.

Mr Turnbull later indicated a cut to penalty rates would be phased in gradually, so those currently receiving them would have moved up pay scales by the time the changes came into action.

The commission would consider submissions, including one from the government about “technical issues”, on how its decision should be implemented, Mr Turnbull said.

“We’re being asked in paragraph 2019 in Chapter 11 of the report to make a submission on how take-home pay orders can be applied – again it’s a complex area,” Mr Turnbull told reporters.

The likelihood, if the commission sticks to past practice, is that it would be phased in over a period of years.

“And of course what that means is that as the rest, as the base pay goes up every year with the minimum wage, so, you know, 2.4 per cent or whatever it is – that’s what it was last year – every year the employee’s overall pay packet increases and offsets the phased-in reduction in penalty rates.”

Speaking to Sky News, Mr Morrison said he was comfortable with Mr Abetz speaking his mind, but the Coaliton would not be adopting his policy suggestion.

‘Grandfather the changes’

Senator Abetz said the FWC already has powers to order that only new employees can be affected by the ruling.

“It is not unreasonable for workers to plan and budget on their current income,” he writes.

“This approach would ensure that ‘no worker is worse off’ while allowing new opportunities for the unemployed and especially for young unemployed people.”

Senator Abetz said the Coalition needed to return to its “evolutionary not revolutionary” approach to industrial relations to stave off an anti-WorkChoices type campaign from unions and Labor.

He called on business groups to support grandfathering in their submissions to the commission.


The Productivity Commission, which reviewed workplace relations for the government in 2015, has said there should be a 12-month delay in any penalty rate cuts.

Labor Leader Bill Shorten says the opposition will fight the changes. Photo: AAP

Labor Leader Bill Shorten says the opposition will fight the changes. Photo: AAP

“The individual should know change is coming and have a chance to adjust,” chairman Peter Harris told a Senate estimates hearing.

Employers needed time to decide whether they actually want to cut wages and workers could then seek a new job, he said, noting there was high staff turnover and relatively high prospects of changing employer in the industries affected.

“It sounds dreadfully simplistic to say it, but this is the kind of market-based response that we would see in the inverse when wage rates go up,” he said.

“People get the chance to make a decision and decide whether that shift is going to benefit them or not. Twelve months seems a reasonable adjustment period to us.”

But Labor expressed doubt about the plan on Thursday, with deputy leader Tanya Plibersek saying it would not do enough to protect workers.

Ms Plibersek told the ABC’s AM program that she was concerned employees who went on to move franchises or companies would then be hit by the changes, even if they were doing the same work.

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