The Fair Pay Agreements Bill, which passed in October 2022, is set to introduce considerable changes to our workforce relationships, proposing a new framework for collective bargaining of Fair Pay Agreements (FPAs) that will set a range of minimum employment conditions across specific industries or occupations.
What are Fair Pay Agreements?
An FPA is a legally-binding agreement that sets out minimum pay and conditions between employers and employees across an entire sector. There are certain things that are mandatory inclusions in an FPA, such as:
- when the FPA comes into force and expires (an FPA must apply for no less than three years, but no more than five years)
- its coverage
- the normal hours of work
- minimum base wage rates
- overtime penalty rates and
- any superannuation entitlements.
Some other topics must be discussed but don’t have to be agreed, like redundancy, leave, and health and safety. Other employment terms can be included if the bargaining sides agree. At the Association we support fair pay and working conditions, however we don’t support the Bill. The one-size-fits-all approach to addressing disparities in wages and working conditions that this Bill employs fails to recognise the needs of a diverse range of businesses and employees and it will not achieve what it sets out to do.
That’s not to say pay isn’t important. Despite the pandemic, as a sector our wages increased by an average of 8.2 per cent in the year to June 2022, with salaries increasing by almost 12 per cent over the previous year. That means our average wage rate now sits well above both the minimum wage and the living wage. So, we’re proof that, outside of a global pandemic, taking industry-led action to improve both pay and working conditions can be done well if we are given the space to move in a way that we know works. Unfortunately, this Bill will draw our ever-scarce resources and energy away from those facets other than pay which speak directly to elevating hospitality as a career.
The inflexibility that Fair Pay Agreements introduce is of particular concern. Given what the country has been through over the past two years, such rigid agreements remove the adaptability that working relationships need in order to respond to our ever-changing working conditions. Employers are increasingly looking at the other things that make our workplaces attractive to employees, including flexible arrangements, additional training, staff meals and discounts and more – these are some of the key additional incentives prevalent in our member workplaces. Employers and employees are in many cases negotiating unique agreements that promote flexibility and terms that are of mutual benefit, something that we are concerned the Fair Pay Agreement framework will stymie.
The prospect of Fair Pay Agreements has been in discussion since before the pandemic, yet workplaces and working relationships have changed significantly since then. This Bill was designed for a different time and a different economy, one that we know we are not returning to.
Our belief is that Fair Pay Agreements will only increase the costs and resources required of small business owners in the hospitality sector. Change needs to be implemented when we have reached a more stable environment and in our view the best thing the Government can do now to support those industries like ours still grappling with the long-term impacts of the pandemic is to give us some space to breathe and rebuild, before we then turn our attention to implementing the huge suite of changes the Government is introducing.
The Restaurant Association absolutely supports fair pay and working conditions and we are leading work in our sector to provide support to our members in achieving this, without the introduction of Fair Pay Agreements. Our aim is to transform the perception of hospitality to one that provides meaningful and fulfilling, life-long careers, and to achieve this we need to be able to address working conditions, professional development and workforce supply, as well as pay. However, this Bill fails to recognise the importance of employers and employees working together to develop individualised employment relationships tailored to meet the needs of both parties.
We will keep you up to date as the Fair Pay Agreement Bill passes through the next stages of the legislative process. The Select Committee is due to report back to Parliament in early October 2022.
You can view a copy of the Association’s submission on Fair Pay Agreements here.