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Fair Work Commission | Penalty Rates

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Fair Work Commission Reduces Penalty Rates

FEBRUARY 2017

  • The Fair Work Commission has handed down its long awaited decision in regards to penalty rates.
  • The decision will see reductions made to Sunday penalty rates, public holiday rates and the span of hours that attract late night penalties.
  • The changes will affect private sector employers in hospitality, retail, fast food and pharmacies.

Key Changes

The changes largely relate to two different entitlements: Sunday rates and public holiday rates.

Sunday Penalty Rates

Employers and employees covered by the following awards will see changes to Sunday penalty rates:

  • Hospitality Industry (General) Award;
  • Fast Food Industry Award;
  • General Retail Industry Award; and
  • Pharmacy Industry Award.

Full time and part time employees covered by the Hospitality Award will have their Sunday rates reduced from 175% to 150%. There will be no change for casual employees.

For those covered by the Fast Food Award, only employees classified as "level 1" will see a reduction in Sunday rates. Full time and part time level 1 employees will have their Sunday rates reduced from 150% to 125% and for casuals, rates will be reduced from 175% to 150%. The Commission has determined that there will be no change to level 2 or 3 employees as these employees generally experience a "higher level of disutility" with Sunday work and are more likely to be "career" workers than their level 1 colleagues.

In the retail sector, full time, part time and casual employees will have their Sunday rates reduced. For full time and part time employees, Sunday penalty rates will be reduced from 200% to 150% and for casuals, rates will be reduced from 200% to 175%.

For those covered by the Pharmacy Award, only those working between 7.00am and 9.00pm will be affected. Full time employees and part time employees will see a reduction from 200% to 150% and casuals will see a reduction from 200% to 175%.

Other Changes – Public Holidays and Late Night Penalties

The Commission has made changes to public holiday rates.

For full time and part time employees, public holiday penalty rates will be reduced from 250% to 225% for those covered by the following awards:

  • Hospitality Industry (General) Award;
  • Restaurant Industry Award
  • Fast Food Industry Award;
  • General Retail Industry Award; and
  • Pharmacy Industry Award.

There will also be minor variations to the span of hours that attract late night penalties for employees covered by the Fast Food Industry Award and the Restaurant Industry Award.

When will the changes take effect?

The Commission has said that the immediate implementation of the changes to Sunday penalty rates would "inevitably lead to some hardship" and that "appropriate transitional arrangements" will need to be to be put in place.

The Commission has indicated that reductions could take place by a series of annual adjustments made on 1 July each year. However, it has not reached a final view as to the exact timing for the changes. The Commission has invited further submissions on this issue.

However, the Commission has determined the operative dates for the changes to late night penalties and public holiday rates.

After finding that the changes to late night penalties and public holidays will have a lesser affect on workers than the changes to Sunday penalty rates, the Commission has determined that changes to late night penalties, following a period of consultation, are anticipated to take effect from 27 March 2017 and that changes to public holiday rates will be effective from 1 July 2017.

If you have any questions or concerns as to how the changes will affect your business, particularly how these changes may interact with existing contracts of employment or industrial instruments, please contact one of our specialist workplace relations, employment and safety practitioners below.

Disclaimer

The content of this newsletter is for general information purposes only and should in no way be treated as formal legal advice.