Officeworks is looking at ways to boost productivity to offset an estimated $10 million increase in labour costs stemming from a new enterprise agreement that will lift store staff wages by between 5 per cent and 15 per cent.
Under a new, four-year store operations agreement, eligible store staff will receive a 2 per cent wage increase in above-award base rates for the first two years and a 3 per cent increase in base rates for the last two years.
For the first time in about 10 years, Officeworks will also pay 25 per cent penalty rates on weeknights (between 6pm and 11pm) and on Saturdays and will pay higher penalty rates on Sundays – 65 per cent instead of 50 per cent.
Staff will also be able to choose their superannuation fund and be entitled to two days of paid domestic and family violence leave.
Officeworks staff have voted strongly in favour of the new agreement, with more than 80 per cent of about 6200 store staff participating in the vote and 97 per cent of those voting in favour of the agreement.
Analysts and union leaders estimate the new agreement will increase Officeworks’ labour costs by about $10 million a year.
They estimate that store staff will receive pay rises of between 5 and 15 per cent on average, depending on what hours they work. Those who work only at night or on weekends will see their pay packets rise almost 25 per cent.
The new Officeworks agreement follows similar agreements at Coles, Woolworths, Bunnings and Kmart, which will increase annual wage costs by between $10 million and $200 million a year by restoring penalty rates traded away under previous agreements.
Retail and Fast Food Workers Union spokesman Josh Cullinan said under the previous agreement Officeworks was paying no weeknight penalty rates or Saturday penalty rates and had been paying a 50 per cent penalty rate on Sunday, half the 100 per cent Sunday penalty rate under the award. The Sunday award rate has been reducing gradually in the last two years and falls to 65 per cent this year and to 50 per cent from July 2020.
“There will be substantial cost increases – every major retailer who had an agreement with the SDA (Shop Distributive and Allied Employees Association) was not paying weeknight or Saturday penalty rates and was paying reduced Sunday penalty rates and those costs will be substantial,” he said.
Officeworks managing director Sarah Hunter said the new agreement would be a “headwind” for Australia’s largest office supplies retailer but negotiating a new agreement that gave staff more certainty around pay and conditions had been a priority since she took the helm late last year.
“Like all major retailers we were paying a version of penalty rates but it was not in line with the higher penalty rates now expected – this new agreement aligns our penalty rate structures under the General Retail Industry Award,” she said.
Officeworks will attempt to offset higher wage costs by streamlining back office processes and free up staff to spend more time serving customers and driving sales growth.
“We don’t have a huge workforce so our primary focus is to drive our top line – I want my staff on the shop floor serving customers as much as possible,” she said.
Officeworks will replace a manual paper-based store rostering system with a new payroll and team management system – SAP Success Factors – making the rostering process more efficient and giving staff more visibility over their hours.
Ms Hunter ruled out reducing store opening hours to cut costs, saying many Officeworks customers shopped early in the morning and late at night. Some Officeworks stores are open from 7am until midnight.
She also ruled out changes to store replenishment, saying Officeworks restocked shelves in the morning when there were fewer customers.
Several major retailers such as Woolworths and BigW are bringing forward replenishment – restocking shelves before 6pm when customers are in stores rather than later at night – to avoid paying penalty rates.
The agreement will be lodged with the Fair Work Commission for approval but Officeworks will immediately increase the base pay rate by 2 per cent for all team members covered by the agreement.