Penalty Rates and the Independence of the Fair Work Commission

With the 2019 Federal Election looming and the timely Easter public holidays break now passed, Opposition Leader Bill Shorten has reiterated his pledge to overrule the independent Fair Work Commission’s by reversing its penalty rates decision. This decision came into effect in 2018 and the current ALP policy proposes to interfere with the decision of the independent umpire by undermining the purpose of this statutory body. This has since seen significant pushback from small businesses and doubts have been raised about whether it would even pass the Senate crossbench.

In the past 100 years, statutory bodies such as the Fair Work Commission and the Australian Industrial Relations Commission have been tasked with an independent and non-partisan approach to determining the minimum wage, award conditions and penalty rates.

The establishment of a statutory body and the delegation to an independent umpire reduces the potential to use wages as a political football. Mr Shorten’s proposal would be akin to the government of the day overruling the Reserve Bank of Australia’s independent and economic analysis on setting the cash rate by legislating for lower interest rates. Regardless of one’s belief on the quantitative figure for penalty rates or political views, this sets a precedent on undermining the independence of the Fair Work Commission. If the government decide to ignore the decisions of the independent umpire which was based on extensive economic research, will the Fair Work Commission’s authority and expertise to determine penalty rates be made redundant? Is the Fair Work Commission only allowed to be an independent umpire until it disagrees with the government of the day, at which time it will have its legislative mandate altered?

Visit our article to further explore how overruling the independent umpire is a dangerous precedent.

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Brendon Zhu is currently a paralegal with experience in industrial relations, workplace investigations and policy development. Brendon’s interest in employment law stems from a belief that all organisations and its employees, whether they are a private enterprise, a not-for-profit charity or a public-sector government department are delivering a good or service that seeks to improve the livelihood of society. Having experienced prior work in small business and not-for-profit organisations, Brendon enjoys developing workplace solutions that is appropriate to the commercial needs and context of the client and their industry. Outside of his legal work, Brendon is a Ward Councillor at Willoughby City Council and is identifying areas to reduce red tape within the inside machinery of local government. The ideas of policy reform and appreciating the realities of running a business in Australia are common themes in his writing.

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