Enterprise contracts proposed by the Productivity Commission are worse than WorkChoices-era workplace agreements, the Australian Council of Trade Unions has said.

On Tuesday the commission released a draft blueprint for changes to the workplace relations system, including a new type of statutory contract that would allow businesses to offer jobs with alterations to award conditions on a “take it or leave it” basis.

It also recommended cutting Sunday penalty rates for workers in the hospitality, entertainment, retail, restaurant and cafe industries to bring them into line with Saturday levels.



The ACTU said the WorkChoices-era Australian Workplace Agreements (AWAs) “saw workers given no choice but to sign unfair agreements that removed their rights and conditions”, and the new proposed agreements were even worse.



The ACTU secretary, Dave Oliver, said: “This is about going after the most vulnerable people in our society. If the government wants to pick up these recommendations, the Australian trade union movement is going to rise up and take them on head on and will fight them in the marginal electorates and ultimately at the ballot box.”

Labor’s workplace relations spokesman, Brendan O’Connor, said allowing bosses to hire people to work alongside colleagues on better conditions would “corrode” the workplace relations system.

The Labor leader, Bill Shorten, accused Tony Abbott of resorting to “his old sneaky tricks of going after workers’ conditions” and taking “another trip back to WorkChoices”.

“The idea somehow that in some industries working weekends is not the same as working in other industries really sells Australians short,” Shorten said.



Abbott said the government wanted to “maximise well-paid jobs” and he emphasised that the recommendations were only a draft.



The idea that in some industries working weekends is not the same as in other industries really sells Australians short Bill Shorten

“It is a report to government, not a report from government,” the prime minister said.



“The one thing I want to make crystal clear is that this government will make no changes to workplace relations in this term of parliament that are inconsistent with the commitments we took to the election,” he said.

The Greens MP Adam Bandt said any cuts to penalty rates would be “a body blow for young people across the country” and a key issue at the next election.

The Shop, Distributive and Allied Employees’ Association (SDA) said penalty rates in lower paid industries were a critical part of people’s take-home pay, so any cuts “would have a devastating impact on hundreds of thousands of workers”.



“By adopting the recommendation to create a two-tiered penalty rate structure, the prime minister would be creating a second-class workforce,” said the SDA’s national secretary Gerard Dwyer. The assistant secretary of the United Voice union, David McElrea, said the two-tier penalty rates proposal was “outrageous” and akin to “economic apartheid”.

But the National Retail Association – one of the bodies representing businesses in the industry – strongly backed the commission’s “sensible, measured and well-considered” recommendations. The association’s chief executive, Trevor Evans, said retail businesses frequently raised the issue of labour costs on Sundays and public holidays.

“We can say with certainty there are many thousands of businesses across Australia whose customers want them to open and but whose owners simply can’t afford to pay staff on those days,” he said.

Martin Ferguson, a former ACTU president and Labor minister who now chairs the industry group Tourism Accommodation Australia, said penalty rates in current awards were “unrealistic and a dampener on employment”.



“Tourism and other service sectors need an industrial system suited to the 21st century, not to society as it was 50 years ago, when weekends were sacrosanct and Sunday was a day of rest, when most shops and restaurants were shut,” he said.

The chief executive of the Business Council of Australia, Jennifer Westacott, said it was “imperative that our politicians avoid the temptation to rule recommendations in or out before the commission has a chance to consider the reactions of all parties and the broader community in the development of its final report”.

Tourism and other service sectors need an industrial system suited to the 21st century, not society 50 years ago Martin Ferguson

The Australian Industry Group’s chief executive, Innes Willox, agreed that the existing system was “not delivering the adaptability that employers and employees need”.

The commission chairman, Peter Harris, said the enterprise contract was designed to address “a gap in employment contract arrangements”.

The employer would have to lodge the contract with the FWC, but would not have to gain its approval. An employee would later be able to lodge a complaint if the agreement breached the no-disadvantage test.

Employees could opt to exit the enterprise contract after one year and return to the standard award conditions without jeopardising their employment, the commission said.

Harris said he was “pretty confident” the proposed changes to penalty rates would increase overall employment.



He said the commission would consider public feedback before publishing a final report later this year, and urged political leaders not to rule out particular measures before that stage.