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Message from the CEO: 3 October 2016

September 30, 2016

Last week I mentioned the ongoing review of the General Retail Industry Award, and specifically the issue of penalty rates for Sundays.  This week I attended a talk on the issue by the President of the Fair Work Commission, Justice Iain Ross.  While he didn’t comment on the likely decision, he did make reference to “loaded rates” – a term commonly used in the hospitality industry to refer to a base pay rate that encompasses all pay and entitlements, including time penalties, in a single hourly figure.

There’s a large degree of crystal-ball gazing in assuming this will be the outcome of the Sunday rates case.  However, it is the strongest pointer we’ve had so far about the possible thinking of the Commission, so it is worth considering the likely implications.

The NRA supports any effort by the Fair Work Commission to streamline and simplify the process of creating jobs in the retail and hospitality sectors.  And while rolling allowances and entitlements into a single ‘loaded’ rate would not reduce the cost of employment, it would certainly cut the administration and red tape that goes along with hiring additional workers.

If this were to proceed, it would give smaller businesses the same access to simpler and easier employment arrangements that are currently available only to firms big enough to negotiate Enterprise Bargaining Agreements.

The point of the retail industry’s argument around the Sunday penalty rate is that lowering costs will kick start job creation.  However, simplifying the employment process would also be a useful outcome.  We’ll keep you informed if and when we hear more from the Commission.

Justice Ross was speaking at a retail industry conference staged by The Australian Financial Review in Melbourne.  The other guest speakers included the Federal Small Business Minister Michael McCormack, who placed significant emphasis on the new credit charge surcharging arrangements and their possible impact on the industry.

You may be aware that rules are already in place for large businesses (those with 50 or more employees, gross revenue of $25 million or more, or assets totalling $12.5 million or more).  They will be extended to all retailers from 1 September next year, along with strict powers for the ACCC to investigate and punish breaches.

Merchants can be deemed to be acting illegally if the surcharge applied to a transaction exceeds the cost of accepting the payment.  According to the ACCC:

For most businesses, calculating your permitted surcharge will be quite simple. All of the standard card acceptance services which are supplied to you by your acquirer or payment facilitator will be set out in the monthly statements you will receive from 1 June 2017. The statements will outline your cost of acceptance for each applicable payment type expressed as a percentage of the value of a transaction.

If you are charged additional fees (such as for terminal rental or fraud prevention) you may pass these costs on to consumers by calculating your own surcharge.  The ACCC says you will need to calculate the proportion of these costs applying to particular systems, allocating costs based on total transaction values for each system over the previous year.  Click here for some information from the Reserve Bank on how to do this.

The clear message from the Minister was that the Federal Government is serious about eliminating excessive card charges.  September 1, 2017 will come around faster than you think.  You need to start working on your business systems straight away to ensure you are compliant when the time arrives.

Have a great week.

Dominique Lamb, CEO

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