Penalty Rate Reductions: What You Need to Know

28 February 2017
Siobhan Mulcahy, Partner, Melbourne

In a long awaited and much publicised decision issued last week, the Fair Work Commission reduced Sunday and Public Holiday penalty rates by between 25% and 50% in a number of modern awards in the retail and hospitality sectors.
A brief overview of these reductions is described below.

Sunday Penalty Rates
Award Type of Employee Existing
Rate
New Rate
Hospitality Industry (General) Award 2010

 

Full-Time and Part-Time Employees

(no change for casuals)

175% 150%
Fast Food Industry Award 2010

Level 1 Full-Time and Part-Time Employees

 

150% 125%
Level 1 Casual Employees

 

175% 150%
General Retail Industry Award 2010

Full-Time and Part-Time Employees

 

200% 150%
Casual Employees

 

200% 175%
Pharmacy Industry Award 2010

 

7.00am – 9.00pm

Full-Time and Part-Time Employees

 

200% 150%
7.00am – 9.00pm

Casual Employees

 

200% 175%

The reduction to Sunday penalty rates will be phased in by annual instalments, with the Commission to hear submissions on transitional arrangements over the coming months. The first transitional reduction in Sunday penalty rates is likely to occur from 1 July 2017.

The Full Bench did not reduce the Sunday penalty rates in the Restaurant Industry Award 2010 or the Registered and Licensed Clubs Award 2010, finding that a sufficient merits based case had not been established. However, the Full Bench has invited interested parties to provide further submissions.

Public Holiday Penalty Rates
Award Type of Employee Existing Rate New Rate
Hospitality Industry (General) Award 2010

 

Full-Time and Part-Time Employees

 

250% 225%
Casual Employees 275% 250%
Fast Food Industry Award 2010

Full-Time and Part-Time Employees

 

250% 225%
Casual Employees 275% 250%
General Retail Industry Award 2010

Full-Time and Part-Time Employees

 

250% 225%
Casual Employees 275%/250% 250%
Pharmacy Industry Award 2010

 

Full-Time and Part-Time Employees

 

250% 225%
Casual Employees 275% 250%
Restaurant Industry Award 2010 Full-Time and Part-Time Employees 250% 225%

 

Casual Employees 250% 250% (rate maintained)
Registered and Licensed Clubs Award 2010 Full-Time and Part-Time Employees

 

250% 250%
Casual Employees

 

250% 250%

There will be no phasing in of public holiday penalty rates, with the new rates to take full effect from 1 July 2017.

Early / Late Work
Award Existing Entitlement New Entitlement
Fast Food Industry Award 2010

10% loading for work performed between 9.00pm and midnight

 

10% loading for work performed between 10.00pm and midnight
Restaurant Industry Award 2010

15% loading for work performed between midnight and 7.00am 15% loading for work performed between midnight and 6.00am

Variation to the early/late night loadings will take effect in late March 2017.

Employers who pay in accordance with the modern awards should consider how these changes may impact their operations and update their payroll systems accordingly.

Employers who employ staff under rates of pay governed by contracts, enterprise agreements or transitional instruments should obtain advice about the implications of these penalty rate reductions on arrangements with staff.

The decision has been met with significant opposition from the union movement and Labor and may be the subject of challenge in future.

Gadens’ Employment Advisory Team can assist employers with more detailed advice about the impact of these reductions on their business and staff.

This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.

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