New retail trading hours regime goes live in Queensland
|Services:||Real Estate & Construction|
|Industry Focus:||Real Estate & Construction|
|Date:||27 September 2017|
|Author:||Mahoney Smith, Partner & Liam McIllhatton, Lawyer|
What you need to know
- A new trading hours regime for retailers has been implemented in Queensland, largely expanding the hours during which retail shops can trade across the state.
- The new trading hours regime will impact each specific retailer differently – it divides shops into categories for which the criteria have shifted, stipulates different trading hours depending on the location of certain shops, and introduces a moratorium applicable to one particular group of shops.
- Both landlords and tenants of retail premises in Queensland should consider what, if any, changes should be made to their leases in light of the new permissible trading hours applicable to each particular retail premise, enabling them to enjoy the benefit of any expanded hours.
Landlords and tenants of retail premises take note – there has been significant change to the regulation of trading hours for retail shops in Queensland, with the Trading (Allowable Hours) Act (Qld) 1990 (Act) having had its first major overhaul in more than 20 years. The changes to the Act, which commenced on 31 August 2017, provide less regulation and more certainty around the hours that retail shops can trade in Queensland.
The reforms have not gone as far as to create one position applicable to every retail shop across the state. Instead, the Act sets different permissible trading hours based on the type of shop (classified as ‘exempt’, ‘non-exempt’ or ‘independent retail shops’) and the region in which a shop is located (for example, a city in South East Queensland, regional centre or a tourist area, as opposed to smaller regional areas).
Most retail leases usually contain provisions setting out ‘required trading hours’ during which the tenant must trade. As the changes to the Act are now effective, both landlords and tenants should review their leases and consider whether amendments should be made in light of the new permissible trading hours for the area where the shop is located, having regard to the shop’s classification.
Below we recap some of the key changes to the Act which retail landlords and tenants in Queensland should ensure they understand.
Summary of major changes
1. More retailers to enjoy ‘exempt shop’ status
The definition of ‘exempt shop’ has become much broader. An exempt shop is now:
- a shop described in Schedule 1AA (this long list already included antique shops, art galleries, bakers, newsagents, fruit and vegetable shops, florists, chemists, hairdressers and service stations among others, but with the latest reforms it also now includes butchers, shops at trade shows and exhibitions, and shops at the international airport or in cruise terminals, casinos and tourist resorts on an off-shore island)
- an independent retail shop
- a shop operated for an event that is unique or infrequent of local, state or national significance or as declared by the Industrial Relations Commission (IRC) to be a special event, such as the 2018 Commonwealth Games.
So why is this definitional change so important? It’s because exempt shops, except for independent retail shops, have unrestricted trading hours. The broader definition means more shops can take advantage of this flexibility.
In the case of independent retail shops, they can open any time including most public holidays, but must remain closed on Good Friday, Christmas Day and until 1pm on Anzac Day. These restrictions do not apply to an independent retail shop which is predominantly a food and/or grocery shop.
2. More independent retail shops to benefit from reduced regulation
The employment thresholds at which independent retail shops become subject to the same trading restrictions as larger non-exempt shops have been increased; a change that will be welcomed by tenants. Specifically, the thresholds have been lifted from:
- 20 to 30 employees on the floor in any one shop
- 60 to 100 employees where a number of related shops are operated.
3. Non-exempt shops to have longer trading hours
Non-exempt shops (which include supermarkets, department stores, hardware stores and shops selling motor vehicles and caravans) now have longer core trading hours.
The location of a non-exempt shop will dictate the extent to which that shop’s core trading hours have been expanded. For example:
- Those in South East Queensland can now trade from 7am to 9pm on Monday through Saturday, and 9am to 6pm on Sundays and public holidays (excluding closed days).
- Longer core trading hours apply to shops in tourist areas, but not all tourist spots are treated identically – a non-exempt shop in one tourist area may be able to trade for slightly longer than a non-exempt shop in another, and those in the Mossman and Port Douglas Tourist area in particular are effectively being treated as exempt for the next five years.
- Different core trading hours again apply to shops in areas outside South East Queensland or tourist areas, depending on whether they did or did not have Sunday and public holiday trading in place before 31 August 2017.
More detail on the specific core trading hours applicable to different areas is available here.
Christmas trading hours for non-exempt shops have also been extended.
Importantly, the IRC can make an order applying alternative trading hours for some non-exempt shops, but this is subject to a crucial moratorium explained in point 4 below.
4. Five year moratorium for certain non-exempt shops
A five year moratorium has been imposed stopping any organisation or council applying for, and the IRC from making, an order in relation to the trading hours of non-exempt shops that are in areas outside South East Queensland and are not defined as tourist areas or larger regional centres.
The practical consequences of this moratorium are most significant for shops in areas where Sunday and public holiday trading was not already in place before the reforms commenced. For example, large supermarkets in Mount Isa, Proserpine and Ayr will not be able to trade on Sundays for the next five years.
5. New offence affecting non-exempt shops
It is now an offence for a non-exempt shop to be open outside core trading hours unless alternative trading hours are set by an IRC order. Under section 16B of the Act, the maximum penalty that can be imposed based on current penalty units is approximately $5,000 for an individual and approximately $25,000 for a body corporate.
Have the reforms gone far enough?
The reforms have triggered mixed reactions, with the most contentious amendment being the five year moratorium preventing certain non-exempt shops from seeking longer trading hours. This change has pleased some stakeholders who think the moratorium will better enable smaller businesses to compete against larger ones, but frustrated others who say Queensland remains in the ‘dark ages’ with parts of the state missing out on Sunday trading.
Some will certainly argue that in going to the trouble of implementing major reform to the trading hours regime for the first time in over 20 years, Queensland should have gone further by adopting a simpler and even more liberal regime similar to that in Victoria. There, the Shop Trading Reform Act 1996 (Vic) only requires shops to close on Good Friday, Christmas Day and until 1pm on Anzac Day (excluding exempt shops), and the Victorian allowable trading hours are applied across Victoria regardless of whether the area is a metropolitan or regional area. This regime creates a neat consistency across the state, and the flexibility that all retailers can enjoy in Victoria may better enable them to remain competitive at a time when the retail sector is under increased pressure, particularly in light of the rise of online shopping (which can of course happen any time of day or night).
The amendments to the Queensland regime have in fact created a position more like that in New South Wales, provided under the Retail Trading Act 2008 (NSW). Interestingly, last week New South Wales also extended trading days pursuant to the Retail Trading Amendment (Boxing Day) Bill 2017, which introduced amendments allowing:
- shops and banks to continue opening on Boxing Day
- banks to open on bank holidays and also on certain public holidays
if they are staffed by persons who have freely elected to work on those days.
While falling well short of the relatively deregulated position in Victoria (and even short of the regime in New South Wales, particularly with last week’s changes), Queensland has arguably still achieved an appropriate balance bearing in mind the vast differences between various parts of the state. The differing trading hours achieve the goal of reducing restrictions on economic centres, such as South East Queensland, while protecting retailers in quieter regional areas without the population to sustain longer trading hours. It is also logical that the longest core trading hours for non-exempt shops apply to those located in tourist areas, which will certainly help retailers service the needs of the growing number of visitors to Queensland – the state saw a 6.2% increase in domestic tourists and a 5.6% increase in international tourists during FY17 compared with the previous financial year.
On any view, the reforms constitute a vast improvement compared with Queensland’s previous regime, which included 99 specific trading hour provisions contained in over 40 pages of orders from the IRC. Surely all retailers will welcome the reduction in the sheer complexity of the regime.
What should retail landlords and tenants in Queensland do now?
Retail landlords and tenants in Queensland should ensure they understand the new trading hours that apply to their shops by:
- determining the area in which their premises are located, with reference to the IRC 2017 trading hours order for specific details on area boundaries
- ascertaining whether the shop falls into the exempt shop, independent retail shop or non-exempt shop category
- checking any other restrictions with respect to trading hours – for example, licensed premises must comply with the Liquor Act 1992 and the Wine Industry Act 1994.
Landlords in particular should:
- review the trading hours provisions in their existing leases and their suite of retail leasing precedent documents and consider whether, and if so how, they might wish to make updates accounting for the changes (for example, landlords may seek to amend provisions dealing with ‘required trading hours’)
- exercise caution before attempting to compel a tenant to trade during certain hours, as complexities can arise for landlords when seeking to enforce a covenant to trade – this is an issue we have previously explored in depth in this article.
Tenants should also check the required trading hours in their leases against the changes to the Act, so they can take advantage of any longer trading hours available to them. Most tenants’ best interests would be served by a lease clearly allowing trade for the maximum allowable trading hours, but not mandating the trading hours that their shop must open.
If you would like further information or a more comprehensive list of the changes and how they will affect you, please contact:
1. For example, see ABC News article Queensland trading hours laws keep state in ‘dark ages’, National Retail Association says accessible at http://www.abc.net.au/news/2017-08-23/new-trading-hours-laws-queensland-parliament/8832524.
2. See Tourism & Events Queensland’s Domestic Tourism Snapshot Year ending June 2017 (accessible at https://teq.queensland.com/research-and-insights/domestic-research/queensland-research) and International Tourism Snapshot Year ending June 2017 (accessible at https://teq.queensland.com/research-and-insights/international-research/international-summary).