Changing the Restaurant Award

Ever since day one on the job in my role at the Restaurant & Catering Industry Association , wage underpayment and award complexity was one of the biggest issues facing the sector.

For the overwhelming majority of hospitality businesses owners I have met (and I have met thousands) - their staff are like their family. Errors in pay are never calculated or purposeful, but inadvertent.

However, there are enough bad actors out there to warrant significant action from regulators like the Fair Work Ombudsman. The problem for all involved was sorting the good from the bad, which was becoming increasingly difficult. We had an award that was overly complex leaving thousands of businesses owners spending too much time tearing their hair out trying to comply instead of getting on with running their venues. Larger businesses were also paying big money to comply with an award with no real certainty that they were actually getting it right.

An example was this, if an employee was instructed to take their break at 2pm, but ended up staying back to say help turn a table over and took it at 2.15pm, they would be oweed 150% of whatever their current rate of pay was for that 15mins. No amount of compliance focus or technology could solve for something like that in the event of an error.

The public policy problem was this: design a series of reforms that made it easier for businesses who were serious about getting it right to comply with the award, meaning businesses who refused to engage with the changes and belligerently got it wrong became easier to identify.

Essentially - sort the wheat from the chaff, all while ensuring employees were not worse off.

Almost from the beginning, we started working on proposals that would make it easier for restaurant & cafe businesses across the country to pay their staff correctly. We tossed around plenty of ideas and drafts, tested countless models with businesses big and small, comparing real world rosters with various rates of pay and proposals to see if employees ended up better off, worse off, or with limited or minimal change.

There were alot of drafts, and while we had some good ideas we had a lot of really bad ideas that didn't work. We were looking for really simple solutions that, while they hit the mark of making it easier to comply, they ended up being too simple and too blunt to work.

Some employees would ended up 30% worse off where others had their pay increased by 30%. These blunt instruments were not working, we needed a better, more refined model.

We were also cautious of constructing a new model that would end up being more complex that the one we had.?

Then COVID came along and made a high-stakes situation even worse. Businesses were shut and the industry as whole went through the most disastrous period in a century. We knew that industrial relations and the award had to play an important part of getting through the pandemic and in the recovery on the other side. We were able to secure some sensible flexibilities to help get the industry through the worst of 2020 but it didnt deal with the complexity problem that we needed to solve now more than ever.

In mid-2020, R&CA was lucky to be provided an opportunity to contribute to a series of well publicised working groups that the then Attorney General put together, and tested more proposals and models.?

As R&CA’s representative on that committee, I often felt way out of place, an ex-staffer policy guy surrounded by career IR lawyers and award reform experts. While our ideas were getting better, they were still not good enough. We were determined to get them right, so we stuck at it and continued working on them.

Then in December last year, the outcomes from one of those working groups were referred to the FWC, who was tasked with overseeing reform efforts to a number of awards who had borne the brunt of the virus economically, the Restaurant Industry Award was identified as one of four.

So we continued working away on our ideas and improving them as we went, constructive feedback continued to pour in and make our ideas better and better. We would get the idea, test it, then adopt it if it didn't impact our core goal. We ended up with three key changes which R&CA proposed to the FWC:

• A new ‘exemption rate’, similar to other hospitality awards, which removes onerous administrative requirements for senior staff and provides greater simplicity and certainty for employers. Basically, you pay 170% of the award rate and get a simpler contractual arrangement for senior staff who shouldn't be worrying about minutiae detail in the award.
• A simplified classification structure for food and beverage and kitchen stream employees that better reflects the practical way employees often work, especially in smaller businesses covered by the RIA. Rolling up 13 classifications into 6, making getting at right as simple as asking 'Are you a qualified chef or not?'.
• A simpler mechanism for calculating a series of allowances by using a set hourly rate rather than relying on each instance they are accrued. This change will provide greater business certainty and simplicity when predicting wage costs into the future. Turning what ended up being the payroll equivalent of advanced mathematics and making it instead a matter of simple addition and subtraction.

We also had a few new ways of implementing these changes, that were really innovative and largely unseen in our modern award system in australia:

• We proposed that each of of these changes would be voluntary to adopt, using different consultation methods (employers can choose one, two, all or none of the above depending of their business needs); and
• Power to adopt and implement these changes does not rest solely in the hands of employers. Employees will need to agree, either individually or as a cohort, whether or not to accept the changes. This is an important protection that also doubles as a mechanism to encourage greater literacy of and interaction with the award by both employers and employees.

Finally, we firmly believed and submitted to the FWC that no employee is worse off under the changes.

Even if there may have been one or two who may have ended up worse off, we put in place sensible remedies in the event adoption led to a drop in wages for anyone.

This might sound like a weird thing for an employer representative to concern themselves with.?

The reality is though we weren't focused on cutting anyone's pay, we were interested in offering businesses greater productivity gains leading to decreases in overall wage costs and less need to spend on ensuring compliance.

We made sure we did not get stuck on an ideological crusade for dropping employee's rates of pay or penalty rates.

Today, the FWC gave final approval for a suite of changes after some further sensible protections were proposed by the United Workers Union (who represents employees in our space). It was a fantastic win for R&CA after more than 12 months of hard work.

Importantly, the FWC agreed that no employee was expected to be worse off under the changes.

These changes are genuinely revolutionary. They offer a genuinely 'new' way of achieving industrial relations reform - putting aside historical arguments and positions and coming up with new ways of solving problems.

It is now up to tens of thousands of restaurant and cafe businesses across the country to adopt these changes and see them in action. I know that these changes will help solve some of the seminal issues facing the restaurant and cafe industry.?

It is going to make it easier for good businesses to comply, while providing them with new employment models that will help lower business costs at a time when so many are struggling to make ends meet. It is also going to make it easier for customers, staff and regulators businesses who are purposefully getting it wrong.?

After a very long spiel like this, I want to say some genuine thankyous to some of the people who were involved:

To Nigel & Tamsin , thankyou for your expertise, guidance and counsel.

To Victor & Brendon , thankyou for doing the heavy lifting and laying the groundwork.

To Wes & Belinda , thankyou for indulging my many failed proposals and models and for putting your faith in me to deliver these changes on behalf of the association and our wider industry. The industry is well served by your passion, dedication and leadership.

Most importantly, to every member I ever spoke to, sought information from, tested theories with, and chased for further information, thank you. Without you we would never have been successful in achieving these amazing changes.?

This process was a really important one for me, after leaving politics over two years ago I worried I would never get the chance to participate real & relevant public policy changes that benefited people's lives again (I think a lot of government types feel this when they leave politics).

I was worried that my time designing and achieving positive, innovative and sensible reform was over.

The good news is I was wrong.

You can read more about the award changes here .