Saturday, March 08, 2014

How to Rate a Penalty

Penalty rates, that vexed topic

The simple fact is people open businesses to make money.
Many if not most aim for profit but believe it or not, some are happy just not to go backwards. So not all businesses are the same however nobody takes the risk of opening a small business like a café or restaurant to lose money.

In hospitality, the weekend trade is usually the busiest. This is factored in when someone decides to take a gamble and open a hospitality business. They understand that weekday trade will not be as great as weekend trade and so staff it accordingly with more staff at the weekend to cope with demand.
The penalty rates awarded to staff working over the weekend add a considerable percentage to the businesses wage costs. This is then borne by the business and can and does often eat into any profit that the business may have gleaned over the weeks trading.

At this juncture, many people will say and not unreasonably I might add, that ‘Your business plan should have accounted for the penalty rates in your wage forecasts’.
True and I agree entirely.
It’s not as if penalty rates are a new thing is it?

The fork in the road that divides people and their opinions on penalty rates appears pretty quickly when businesses decide to raise the price of their goods and services to adjust for the loss in profit that paying penalty rates manifest.
Businesses are accused of gouging, being greedy and holding the public to a ransom of sorts.
This is the bit that I don’t get.

Would you expect other businesses to absorb the cost of doing business on the weekends and losing profit as a result? Taking it further would you as a shareholder, be prepared to reduce your dividend because the company you invested in had to account for a higher wage bill for staff who worked weekends?
No you wouldn’t. You’d expect your company’s executive to adjust by raising the cost of its product/service to keep the profits coming.
Hospitality businesses are no different.

The problem is that being in the business of Hospitality is oft confused for being in the business of service solely because of the perception from the dining public, that its operators do this because they ‘love’ it.
Sure most of us do, we’re lucky we’ve found a vocation that we enjoy.
However, like a performance on stage, our job eventually comes to an end when we pack up, clean down and ring off the till.
This is when reality bites.

The till is the leitmotif, the inescapable truth that the restorative production that you are enjoying within a cosseted and welcoming enclave is a pantomime performance for which you must eventually pay. No matter how convincing a exhibition the players make to assure you otherwise and suspend your disbelief, eventually you’ll have to depart this wonderland and retreat to your own reality, via the till.
So for some, a previously enjoyable repast spent idly imbibing, can evaporate speedily leaving one with a disconcerting feeling that they had just partaken in an illusion of generosity and their purse is all the lighter as a result.

This feeling is at odds with the perception that some people have of hospitality and is at the heart of the misgivings they then reserve for the operators who respond by putting their prices up at weekends and public holidays to make sure they are also being recompensed for opening during such times, as well as their staff.


Rita said...

Fabulous post Steve. Well phrased, with many salient points made. I especially like the bit about having to eventually return to your own normality via the till when you leave a restaurant!

Tanya Murray said...

I agree with Rita, that was a great line. Once upon a time Saturday night was the out of hours penalty time but gradually businesses have catered for increasing demand and opened for Sat lunch, weekend breakfasts and now we have all day Sunday trading AND public holidays the norm but diners have failed to be realistic about that. They want, they want but I think definitely as diners, we should expect to pay a penalty if we require that service on a weekend. The part that irks me is that people start bleating that "we are a seven day week" country now, well actually no we are NOT! It's mainly retail and hospitality (and I've worked both) who are now open slather in hours. I've also worked in the finance sector and health sector the attitude to weekends and penalties is hugely different in attitude and expectation. I usually find that the ones who like to cry that we are a 7 day week country are the Mon-Fri set and if pushed or required there is no way they would work without appropriate financial recompense on a weekend. This is starting to sound ranty I'm sure but what I originally started out to say is that I think there should be a percentage levied on menu prices for out of ordinary hours. If you want someone to look after you instead of having their own weekend then pay for it. If not there is a thing called choice, and people could always choose to stay home mow lawns, play with the kids or watch a cowboy matinee like we used to.Trust me, kids do NOT think shopping is an appropriate weekend family recreational activity.

suze2000 said...

I think a Sunday surcharge is quite common these days - when I spot it on a menu I don't bat an eyelid, I just pay up.

I work in a hospital. I try to get out of as much weekend work as I can, because after working five days a week, losing half my weekend to cover after hours service seems a little unfair, penalty rates or no. When I am actually a shift worker and working a shift roster (4-on, 4-off), I don't mind the weekends because the money's good and I get lots of days off at other times. But I'm pretty sure I'd refuse to do it if the money wasn't worth it.

What Tony Abbott and others don't realise is that there are a LOT of people in professions like mine who would refuse weekend work (or find another job) if penalty rates were abolished. It's all very well for the privileged and the political set to bemoan the cost of penalty rates but without them, I'd wonder who would staff restaurants, hospitality, HOSPITALS, POLICE, PARAMEDICS and so on. Sure we choose caring professions (for the most part), due to a desire to help people, but if the conditions are bad, we won't stay in them. And hospitality is the same. Perhaps not as critical, but it's the thin edge of the wedge, really isn't it?

steve said...

Hi Helen-thanks for reading!

g'day Tanya, ditto above. I agree that people should be recompensed for working weekends as should the operators who take the risk of opening a business.

Hiya Suze-all good points. What irks me is that the LNP are always harking back to family values and standard of living whilst at the same time eroding the rights and entitlements of working people