The Australian Retailers Association (ARA) and the National Retail Association (NRA) have voiced strong opposition to the Federal Government’s new penalty rates legislation, warning it strips away genuine wage flexibility and limits employee choice.

ARA CEO Chris Rodwell said the bill prevents businesses and workers from negotiating to include penalty rates within base salaries, undermining flexibility in retail workplaces.

“The premise on which this bill is based is a fiction,” Rodwell said. “There has been no effort to abolish penalty rates. The focus has been on giving employees a choice around their salary, allowing them to opt for a higher base salary in lieu of penalty rates, and to improve job security,”

Rodwell criticised the bill as further evidence that Australia’s industrial relations system is outdated and unable to boost labour productivity.

He said the government’s heavy-handed regulation burdens especially small retailers with compliance costs, hindering productivity and living standards growth.

Rodwell echoed former Minister Tony Burke’s call for a system that is “easy to understand, stable and sustainable,” noting the legislation moves away from this goal.

The ARA boss also dismissed the idea that enterprise bargaining agreements or multi-employer bargaining should be the primary route for workplace changes as “impractical.”

ARA has proposed additional workplace flexibility options, including allowing some employees to lock in a four-day workweek.

Rodwell emphasised retailers’ commitment to modern, flexible work arrangements that balance employee and business needs.

He expressed concern the bill eliminates the mutual ability of employers and employees to agree on pay arrangements, noting that salary absorption could increase retail managers’ pay by over $5,800 on average.

If passed, the bill’s effects on the General Retail Industry Award will ultimately be determined by the Fair Work Commission.