The three large Australian banks - ANZ, Commonwealth Bank of Australia (CBA) and Westpac - are no longer pursuing their application with Fair Work Australia (FWA) to remove weekend penalty rates.

With this development, an FWA directions hearing slated for Wednesday may be cancelled given the notification by a partner of law firm Ashurst Australia, which represents the three banks, that the lenders have no intention of extending working hours to improve flexibility of manpower at branches and call centres on weekend.

In March, the three banks applied with FWA to amend the award that covered the banking sector to consider weekend work as part of ordinary working week. The aim of the banks were to do away with paying penalty rates for weekend work which was 1.5 times hourly rate for employees who work on Saturday afternoons and twice for those who work on Sunday.

Last week, a similar call was made by the New South Wales Business Chamber to place a limit on weekend penalties for employees, particularly those in the hospitality industry, because of the financial ruin the practice causes on small companies. Bankers, such as Westpac Chief Executive Gail Kelly, and other captains of industries, have supported the business chamber's call.

A Westpac spokesman, who confirmed the three banks had withdrawn their application, said the move was made because the award covered only a small proportion of Westpac workers and they would rather stick with the penalty rates.

However, the banks will still pursue other changes to annual leaves, including seeking a draw down on excessive leave balances.

ANZ said the bank was not affected by the withdrawal of the application since its agreement with employees permits the lender to extend weekend work as ordinary hours. U.S. firm GE Money was initially part of the action to extend the working hours, but immediately withdrew its application after the application with FWA was filed.

In their initial application with FWA, the banks insisted that they share the same situation with retailers and service providers such as telecommunications companies and call centre businesses in which Saturday afternoon and Sunday were considered ordinary hours.

The NSW Business Chamber pointed out that the weekend penalty caused many cafes and restaurants in Sydney to close on weekends since they could not afford the 25 per cent higher rate for Saturday work and 50 to 100 per cent more wage cost for Sunday work.

NSW Business Chamber Chief Executive Stephen Cartwright even argued that the concept of higher wages for weekend work is outdated because of the 24/7 globalised society.

Similarly, ANZ Chief Executive Mike Smith had hinted last week that labour must be flexible for the Australian economy to be competitive, although he did not directly touch on the topic of doing away with weekend penalty.

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