The Fair Work decision to increase the Award wage for 20-year-old employees in the retail sector has angered key retail industry body Australian Retailers Association.
The ruling announced on Friday will see staff aged 20 paid the same Award rate as their 21-year-old counterparts, providing they have worked with the company for a minimum of six months.
An application for the change was first put to Fair Work in July 2013 by the Shop, Distributive and Allied Employees Association as part of the Transitional Review to vary the General Retail Industry Award 2010.
Currently, the Retail Award entitles 20 year olds to 90% of the relevant adult rate.
A range of industry groups gave evidence in the review, including the Australian Council of Trade Unions, the National Retail Association, Master Grocers Australia Limited, and the Australian Industry Group among others.
Fair Work reports that a number of factors were taken into consideration in the decision, such as the cost impact of the claim, the rates 20 year olds receive in other sectors, as well as a range of statistics, reports and government publications.
It was found by the age of 20, many retail employees have at least three years’ experience, and that there is generally little difference in duties performed by 20 and 21 year olds.
“The Full Bench considered that the Retail Award was not achieving the modern awards and minimum wages objectives, and that the discounted rate for 20-year-old retail employees did not provide a fair and relevant minimum safety net for these employees”, Fair Work reported.
Fair Work found that the cost impact would be moderate and should not impact the viability of retail businesses or employment growth. The new rates will be phased in from July 1 this year until July 1, 2015.
Australian Retailers Association executive director Russell Zimmerman says the change would “devastate” youth employment levels and “crush” retailers with increased wages bills.
He told SmartCompany the decision was “totally inconsistent” when compared to how an application by the ARA to Fair Work to reduce Sunday penalty rates was handled in 2013. In that instance the ARA was told major decisions need more evidence, he says.
Zimmerman argues decisions which favour employers are treated more harshly by Fair Work than decisions that favour employee benefits.
“It is an unfair decision … particularly for retailers in the SME sector,” he says.
“We might be retailing at 6%, but we have to understand that some retailers are not seeing that joy.”
The next step proposed by the SDA is to get 19-year-old employees onto the same wage as 20 and 21 year olds. Currently 18-year-old workers get paid 70% of the full adult rate and 19 year olds get 80%.
If wage equity happens, Zimmerman is concerned business owners will start to look to older employees if they cost the same as younger employees, increasing youth unemployment problems which are at their highest rates in 11 years.
SDA national secretary Joe de Bruyn said the Commission’s ruling is a “big boost” for younger workers.
“The Fair Work Commission has revealed it agrees with what we’ve been saying for a long time – that paying younger workers less than the full adult rate is an outdated and discriminatory act that needs to be rectified,” de Bruyn said.
“For too long employers have been getting away with paying workers less than what they deserve. It’s fantastic that the Fair Work Commission has recognised that. We can now look towards putting this into practice in the industry.
“By the time a worker reaches 20, they’ve often had several years’ experience in the industry. If you’re giving 100% at work, you deserve to be paid 100% too.”