Key changes to penalty rates for Sunday, public holiday and early/late night trading

From 1 July 2017, changes to penalty rates in some awards for the hospitality, fast food, restaurant, pharmacy and retail industries will take effect reducing wage payments for some permanent and casual employees.

As part of a review of modern awards undertaken by the Fair Work Commission pursuant to the Fair Work Act 2009 (Cth), the decision was announced on 23 February 2017 to vary certain penalty rate provisions for employees working on Sundays, public holidays, evenings or after midnight in particular industries.

The changes to the public holiday and evening and after midnight penalty rates will be implemented in full from 1 July 2017.

The Fair Work Commission has not yet announced the dates of when the changes to Sunday penalty rates will be implemented but the Commission has indicated that for these changes, a transitional period is likely to come into action and that the dates may vary from award to award. While the Fair Work Commission is seeking submissions from any interested parties on how to implement the transitional period, the Commission has indicated that annual adjustments over a 2-5 year period is likely.

The Fair Work Commission has justified the decision to reduce Sunday penalty rates on the basis that the rates were introduced when working on a Sunday was considered to be outside of normal hours. However, with most major retailers and restaurants now operating on a Sunday, the social norm of Sunday being a rest day is no longer the case.

Furthermore, the Commission stated that the benefits to the economy of the reduced penalty rates outweigh any possible negatives. This is due to the fact that the lower penalty rates will enable employers to hire more staff, extend trading hours and make opening on a Sunday more efficient than before.

From an employee’s perspective, the Commission has recognised that the reductions in the rates would have a negative effect financially but decided that implementing the reductions over a transitional period would offset the burden.

The awards are on average reducing by 25% although this varies between the awards. It will also vary based on the employee’s employment status.

What are the changes?

The Fair Work Commission changes to be implemented are:

General Retail Industry Award 2010 [MA000004]

Sunday Penalty rates will change from:

  • 200% to 150% for permanent full- time & part- time employees
  • 200% to 175% for casuals

Public holiday penalty rates will change from:

  • 250% to 225% for permanent full- time & part- time employees
  • 275% to 250% for casuals

Evening and after midnight penalty rates:

  • No changes at present

Fast Food Award Industry Award 2010 [MA000003]

Sunday Penalty rates will change for Level 1 employees from:

  • 150% to 125% for permanent full- time & part time employees
  • 175% to 150% for casuals

Public holiday penalty rates will change from:

  • 250% to 225% for permanent full- time & part- time employees
  • 275% to 250% for casuals

Evening and after midnight penalty rate changes:

  • The 10% evening work penalty rates will now apply from 10pm (rather than 9pm) until 12am
  • The 15% after midnight penalty rate will apply from 12am- 6am

Restaurant Industry Award 2010 [MA000119]

Sunday Penalty rate changes:

  • No changes at present

Public holiday penalty rate changes:

  • From 250% to 225% for permanent full- time & part- time employees
  • 250% rate for casuals will remain the same

Evening and after midnight penalty rate changes:

  • The 15% after midnight rate will apply from 12am- 6am (no longer 7am)

Pharmacy Industry Award 2010 [MA000012]

Sunday Penalty rates will change from:

  • 200% to 150% for permanent full- time & part- time employees working between 7am- 9pm
  • 225% to 175% for casuals working between 7am- 9pm

Public holiday penalty rates will change from:

  • 250% to 225% for permanent full time and part time employees
  • 275% to 250% for casuals

Hospitality Industry (General) Award 2010 [MA000009]

Sunday Penalty rate changes:

  • From 175% to 150% for permanent full- time & part- time employees
  • 175% current rate for casuals will remain

Public holiday penalty rates will change from:

  • 250% to 225% for permanent full- time & part- time employees
  • 275% to 250% for casuals

There has yet to be any changes to the Registered and Licensed Clubs Award but this is under review from the Fair Work Counsel.

What employers need to do

The Fair Work Commission’s changes to penalty rates set the minimum requirements for wage rates for employees covered by the relevant awards in the specified industries. However, it does not preclude employers from maintaining current rates above the minimum requirements should they wish to do so.

If you employ people in the aforementioned industries under either the modern awards or an enterprise agreement, it is important that you review your affected employees’ employment contracts before the changes come into effect to ensure they are up-to-date and that they reference the relevant penalty rate changes if you intend to apply them.

If you are unsure whether the changes affect your business, contact the team at DSS Law and we can advise you on whether your workplace is affected and how you can best implement the changes with consideration both to the impact of the changes on affected employees as well as to improving business operations.

Robert Carter Robert Carter & Kaye Griffiths Kaye Griffiths 10/05/2017

Disclaimer

DSS Law insight articles are intended to provide commentary and general information. They should not be relied upon as formal legal advice. If you would like specific advice relating to this topic, please contact DSS Law on epost@dsslaw.com.au.