Just in: FWC cuts Sunday and Public Holiday penalty rates

Workplace Directions

As part of its review of Modern Awards, the Fair Work Commission (FWC) has today reduced Sunday and Public Holiday penalty rates in several Modern Awards covering the hospitality and retail industries. A list of the Modern Awards affected and the applicable rate changes is set out below.

The penalty rate reduction varied across those Modern Awards concerned and between casual and full time / part time employment, but was generally a reduction of between 15% to 50%. For example, Sunday penalty rates under the General Retail Industry Award 2010 have been reduced from 200% to 150% for full time and part time employees.

In varying the Modern Awards, the FWC considered whether the changes were necessary to achieve Modern Award objectives for each such Award, which is to provide workers with a fair and relevant minimum safety net of terms and conditions. The penalty rates decision has been two years in the making, with the FWC’s review commencing in early 2015, and follows on from recommendations by the Productivity Commission.

Arguments for and against penalty rates have been polarising:

  • Employer groups argued that penalty rates are outdated and do not reflect societal changes, in which it has become an expectation that businesses in the hospitality and retail industries remain open on weekends and public holidays. Penalty rates of up to 250% on certain dates significantly affect profitability and – at times – force organisations to reduce trading hours.
  • Unions argued that penalty rates are a part of the minimum safety net entitlements of workers in the hospitality and retail industry. A reduction of their penalty rate entitlements would reduce the income and standard of living for some of the lowest paid workers in Australia, many of whom currently rely on penalty rates to bolster their wages.

In its decision today, the FWC recognised the competing arguments raised and noted that Sunday work creates a greater level of disutility for workers than Saturday work, although much less than in times past. Crucially, the FWC decision applies only to awards in the hospitality and retail industries. Awards covering clubs and restaurants were specifically excluded, as the FWC held that rate cuts in those industries were not required to achieve Modern Award objectives.

The Public Holiday penalty rate reductions will take effect from 1 July 2017. Changes to late night loadings will take effect on 27 March 2017. There are still issues to be resolved around how the Sunday penalty rate reductions will be implemented, including in relation to transitional arrangements, and potentially the use of ‘loaded rates’.

You can read more about the penalty rates decision here

List of the Modern Awards affected

  • Hospitality Industry (General) Award 2010
    • Sunday penalty rate: Full time and part time employees – 175% down to 150%; Casual employees – no change
    • Public holiday penalty rate: Full time and part time employees – 250% down to 225%; Casual employees – 275% down to 250%
  • Fast Food Industry Award 2010
    • Sunday penalty rate (Level 1 employees only): Full time and part time employees – 150% down to 125%; Casual employees – 175% down to 150%
    • Public holiday penalty rate: Full time and part time employees – 250% down to 225%; Casual employees – 275% down to 250%
    • Late night loading applies from midnight to 6 AM (previously 7 AM)
    • Evening loading applies from 10 PM to midnight (previously 9 PM)
  • General Retail Industry Award 2010
    • Sunday penalty rate: Full time and part time employees – 200% down to 150%; Casual employees – 200% down to 175%
    • Public holiday penalty rate: Full time and part time employees – 250% down to 225%; Casual employees – 275% down to 250%
  • Pharmacy Industry Award 2010
    • Sunday penalty rate (7:00 AM to 9:00 PM only): Full time and part time employees – 200% down to 150%; Casual employees – 200% down to 175%
    • Public holiday penalty rate: Full time and part time employees – 250% down to 225%; Casual employees – 275% down to 250%
  • Restaurant Industry Award 2010
    • Sunday penalty rate – no change
    • Public holiday penalty rate: Full time and part time employees – 250% down to 225%; Casual employees – no change
    • Late night loading applies from midnight to 6 AM (previously 7 AM)
  • Registered and Licenced Clubs Award 2010
    • No changes at this stage.

 

Authored by Tim McDonald, Partner, and Conor McNair, Associate Sydney.


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