The Fair Work Commission has cut Sunday and public holiday penalty rates for workers in the retail and hospitality sectors. Saturday rates have been left unchanged for now.

Every four years, the Fair Work Commission (FWC) is required to conduct a review of Modern Awards to ensure they are achieving their objective of providing a fair and relevant minimum safety net. This recent review involved numerous employer bodies making applications to vary the penalty rates provisions in a number of Modern Awards.
On 23 February 27, 2017, FWC announced its decision regarding hospitality and retail awards, which included:

  • reducing Sunday penalty rates under the Retail, Pharmacy, Hospitality and Fast Food Awards by either 25% or 50% for full-time, part-time and casual employees
  • reducing public holiday penalty rates by 25% in the Retail, Pharmacy, Hospitality, Fast Food, and Restaurant Awards for full-time, part-time and casual employees (apart from the Restaurant Award for casuals, which had no change)
  • leaving Saturday penalty rates unchanged, but applications for adjusting these may be considered at a later stage of the modern awards review
  • reducing the applicable time for the 15% late night loading in the Fast Food and Restaurant Awards to midnight until 6.00am, and reducing the Fast Food Award’s 10% evening work loading time from 10.00pm until midnight
  • proposing the possibility of schedules of ‘loaded rates’ in the Retail and Fast Food Awards, which would enable employers to pay employees flat rates of pay at a higher rate than the minimum hourly rates instead of penalty rates.

Except in the Fast Food Award, Sunday wages remained higher than Saturday wages, because as the FWC noted, “For many workers Sunday work has a higher level of disutility than Saturday work, though the extent of the disutility is much less than in times past.”

The new early/late night loading times are expected to commence in late March 2017, and the public holiday penalty cuts will come into effect on 1 July 2017. The FWC acknowledges that transitional arrangements will need to be implemented for the Sunday penalty rate changes, but provisionally expects the reduction to take place over at least two instalments between 1 July 2017 and 1 July 2018.

How affected organisations need to prepare:

  • Carefully consider the implications of the changes for your organisation’s industrial relations strategy.
  • For retail and hospitality organisations that employ staff under an enterprise agreement, make sure you take the new penalty rates into account when applying the Better Off Overall Test to future enterprise agreements.
  • Consider making submissions in response to the FWC decision, including in relation to transitional arrangements for Sunday penalty rate reductions, potential Saturday rate changes, and the proposal for loaded rates to be included in Awards.

Relevant courses:

Fair Work Act – The Fair Work Act is the main legislation that governs the employee/employer relationship in Australia.  It provides a safety net of minimum entitlements and dictates employment rights, to ensure fairness at work.  Understanding the Fair Work Act and the rights it affords employees is critical.  In particular, a manager’s understanding of the Fair Work Act will help to ensure that workplace relations matters can be handled in a fair, effective and efficient manner on a day-to-day basis.