A proposal by major Australian retailers to allow some employees to forgo penalty rates and other entitlements in exchange for a 25% pay rise has drawn strong opposition from the federal government.
The plan, backed by supermarkets such as Coles, Woolworths, Kmart, and Costco, would apply to retail workers in assistant managerial roles and above. However, the government argues it could leave tens of thousands of employees worse off.
In a submission to the Fair Work Commission, the Australian Retailers Association (ARA) contended that the current award system lacks flexibility and restricts productivity. The government, alongside the Shop, Distributive and Allied Employees’ Association (SDA), has rejected the move, warning that it could set a dangerous precedent for other industries.
Retailers Push for Flexibility, Government Warns of Risks
The ARA’s proposal is part of a broader review of the General Retail Industry Award, following a high volume of submissions to the modern awards review initiated under former minister Tony Burke.
The suggested changes would allow level four to six retail workers, earning between $53,670 and $61,958, to opt out of penalty rates, overtime, some allowances, and rostering protections in favour of a higher base salary.
Retailers argue that this would provide greater flexibility for staff and businesses. According to ARA’s chief industry officer Fleur Brown, unions have misrepresented the proposal.
She stated, “There is no proposal to remove penalty rates, overtime or paid breaks from the award. What the ARA has proposed is that managers can opt in to a pay increase if they select the voluntary salary absorption option. This will only apply to employees that agree to it.”
However, the government has strongly opposed the plan, with Employment Minister Murray Watt stating that penalty rates exist to protect low-paid workers and should not be traded away under award provisions. He warned that the proposal could weaken workplace protections for more than 353,000 retail employees.
Union Backlash and Concerns Over Long-Term Impact
The SDA has also criticised the proposal, calling it an “attack” on retail workers’ rights. The union’s national secretary, Gerard Dwyer, dismissed the 25% pay increase as inadequate compensation for the loss of entitlements.
“A 25 per cent buyout might buy administrative ease, but it doesn’t provide fairness and it doesn’t provide adequate compensation for the hours that people would do,” he said.
If implemented, the proposal would allow affected workers to waive rights such as consecutive days off, meal breaks, and the right to disconnect from work. The government argues that while individual agreements can be made under the enterprise bargaining system, they should not undermine the award system, which serves as a safety net.
Senator Watt warned that accepting the ARA’s submission could open the door for other industries to reduce penalty rates. “Weekends matter… The people who feed us and clothe us on weekends deserve to be rewarded for that,” he said. The Fair Work Commission is set to review the matter in hearings next month.
