AUSTRALIA'S outdated penalty rates system is expected to hurt thousands of small businesses this long weekend, according to an employment law expert.

Employsure managing director Edward Mallett says calls to reduce public holiday wages remain unanswered.

Employers face additional costs during the Queen's Birthday on Monday, having to choose between shutting up shop and absorbing the inflated pay.

Mallett says the system is skewed against small businesses and employees also suffer as a result.

"Many small businesses are faced with this catch-22 over public holidays," Mallett says.

"Compulsory penalty rates have fallen away in the UK, New Zealand and the rest of the developed world, yet Australia still clings to a system which fails to reflect current market conditions."

He says employees can also be left without work for the day, despite being willing to work at ordinary rates.

A survey by the Australian Chamber of Commerce and Industry shows that small business conditions struggled in the March 2015 quarter, with many employers expecting the economy to deteriorate over the next 12 months.

During this period, small business profits declined for the second consecutive quarter.

Mallett says the added pressure of penalty rates will further dampen confidence and profitability of small business owners.

"These factors collectively have a significant impact on the economy," he says.

"Public holidays also give consumers an extra day when they can spend money, yet their options are narrowed because of unreasonable wage expectations.

"Many of our clients aren't sure which penalty rates apply to their businesses, and how to implement them.

"If an employer fails to pay penalty rates, or forces employees to work on public holidays unnecessarily, they could justifiably have a claim brought against them.

"The system is mind-bogglingly complex and just adds to the burden of red tape in running a business."

Edward Mallett's top five tips for employers during public holidays:

1. Know your industry: Make sure you know which award applies to your staff.  Treatment of public holidays can vary from industry to industry and it's important to know what your options are.


2. Understand your obligations: Even if you don't know what your obligations are, there's a good chance your staff will. It's important that you know which penalties apply and from when, and whether the applicable award allows for substitution of public holidays. 


3. What are your options?  Does your business have a mix of casual, permanent and part-time employees? Rostering options can help you can determine who would be most beneficial to have working on a public holiday.


4. To open or not to open? Compare the costs of staying open versus staying shut before deciding to close, and remember your customers' expectations. Not all public holidays are national if it's business as usual in WA, you risk losing business if you decide to close. 


5. The public-holiday sickie: Have a process for addressing unexplained absenteeism, and communicate clearly any expectations your business will have for employees to work on the public holiday.

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