Last week's Federal Court of Australia judgement regarding historical underpayment of salaried workers under the General Retail Industry Award (GRIA) is likely to increase the cost and compliance burden on retail businesses of all sizes, undermine productivity outcomes and curtail career opportunities in the sector, the Australian Retailers Association (ARA) said today.
ARA CEO Chris Rodwell said while legal teams continue to review the complex 200-page judgement, the emerging impacts for the broader sector are alarming.
"This judgement is likely to impact the future distinction between hourly paid and senior salaried employees. For example, salaried team members who are paid above $90,000 per year must be treated in the same way as a more junior worker who is paid hourly," he said. "This will likely push retailers of all sizes to stop preferencing salaried arrangements, which undermines secure employment and career choices for retail workers.
"In an era where the government and unions seek more secure work, unfortunately the opposite will be achieved if salaried arrangements are made to be practically unworkable.
"These outcomes move in the opposite direction to Australia's recent efforts to lift productivity, creating a heavier regulatory burden for businesses already drowning in red-tape.
"Requiring senior employees to clock on and clock off, measure breaks and be given no discretion or autonomy to decide when they need to work extra hours is not only a significant compliance burden, it further restricts flexibility in a way many will not welcome," he said.
Further examples of the compliance burden created by the judgement:
- Senior salaries cannot be offset on an annual basis, as is allowed under many industry awards currently. The judgement determines salaried team members need to be paid in a similar manner to waged team members instead of allowing for the smoothing of entitlement across the year.
- If a team member takes 7 days leave and the employer rosters them back at work on the 8th day, the leave days will now be treated as worked time. This means overtime will be payable on the 8th day (as it would be 8 consecutive days of work, which isn't permitted under the GRIA).
- The span of ordinary hours needs to be assessed on a store-by-store basis for every retailer around the country. This is despite the Fair Work Commission previously providing clarity that the span of ordinary hours can be determined by reference to the retailer as a whole.
"This case demonstrates the challenges businesses across the retail sector face in complying with the profoundly complex General Retail Industry Award. It highlights just how compelling the case for award simplification is. Both employees and employers should be better able to understand the award to avoid compliance issues.
"With 994 different pay rates across almost 100 pages, the GRIA is incredibly difficult for employers to understand. It is clearly not fit-for-purpose for larger employers. The expectation that smaller mum-and-dad operated businesses, who lack legal and HR resources, can use the award appropriately is entirely unreasonable.
"This complexity has been the driver for our case in the Fair Work Commission to clarify, simplify and modernise the GRIA.
"If it requires teams of lawyers and HR experts to interpret the GRIA, it's clear the system is broken, and it is setting up businesses to fail.
"It's important to stress this isn't simply about retailers. Employees deserve clarity, too. Workers have the right to understand their pay and conditions clearly and simply.
"The ARA and NRA will continue to advocate for solutions that will make the retail award easy to understand while delivering choice and flexibility to employees," said Mr Rodwell.
"There are significant implications for many employers navigating complex industrial awards, particularly as it relates to salaried arrangements, including but not exclusively within the retail sector," he said.
The ARA was not a party to the FWO case.
