Pandemic driven changes to Restaurant Award, Retail Award and Hospitality Award

The Fair Work Commission (FWC) recently approved a proposal to make changes to the Restaurant Industry Award 2020 (Restaurant Award) from 11 August 2021.

The changes include a more simplified classification structure, the introduction of a new all-purposes “substitute” allowance in substitution for certain work and expense related allowances, and an “exemption rate” to be paid to senior or specialised roles (instead of them receiving overtime and penalty rates) to be paid for all work for the first 57 hours per week.

The objective of the changes is to simplify the process of paying restaurant staff, and to provide greater flexibility, in view of the many highly publicised and widespread wage underpayments that have been seen across the industry in recent years.

The changes came into effect on 11 August 2021 for an initial period of 12 months, until 10 August 2022. There will be a review of the operation of the Restaurant Award changes after 9 months.

Prior to initiating any of the changes referred to below, employers will be obliged to consult with their employees affected by the proposed changes and their representatives (if any).

A summary of the changes is set out below.

1. Simplified classification structure

The Restaurant Award now includes a simplified classification structure, which can be used instead of the existing classification structure. There are now three general purpose Restaurant/Café Worker grades and three Chef grades. The duties for an introductory level employee remain unchanged. An employer can elect to apply all relevant employees in the workplace to the new simplified classification structure.

2. Substitute allowance

A “Substitute Allowance” has been introduced for certain work and expense related allowances.

The Substitute Allowance will displace otherwise applicable allowances relating to meal breaks (if a break is not taken), meal, split shift, tool and equipment, special clothing and distance work allowances. The Substitute Allowance ranges between $0.90 and $1.60 per hour depending on the employee’s classification.

An agreement to pay the substitute allowance can be made between an employer and an individual employee, or 75% of employees (if for a workplace). The agreement can be terminated on written notice on certain conditions.

3. ‘Exemption rates’

The changes include “Exemption Rates” which apply to full time employees at levels 5 and 6 of the Restaurant Award. It enables the employer and employee to reach agreement in writing to be paid for each hour worked at the rate of 170% of their ordinary hourly rate. This rate is paid for the first 57 hours each week and overtime rates beyond that.

The Exemption Rate agreement can be entered into with individual employees and is instead of an employee receiving certain entitlements such as penalty rates, overtime rates (except where there is less than an 8 hour break between shifts), meal breaks (specifically, penalties if breaks are not taken) and allowances.

Exemption Rate agreements do not apply to employees at levels 1 to 4, nor to part-time employees. The agreements also do not apply to the administrative or general stream under the Restaurant Award.

The General Retail Industry Award 2020 (Retail Award) has been amended to enable increased flexibility in rostering and managing part-time workers, effective from 1 July 2021.

The changes were designed to create additional flexibility for part-time employees to work ‘additional hours’ beyond what is currently permitted in the Retail Award and include:

1. Changes to part-time employees’ pattern of work by agreement

The Retail Award introduces the definition of “Guaranteed Hours”, which is the number of hours to be worked on each particular day of the week by a part-time employee, that must be agreed in writing (including by email, text or other electronic means) by the employer and employee on commencement of employment.

An employer and a part-time employee can now vary an employee’s Guaranteed Hours on a temporary or a continuing basis, including before the end of a shift. This means that additional hours on top of Guaranteed Hours would not attract overtime rates provided that the agreement occurs prior to the variation taking effect and the employee does not otherwise work more than 38 hours in the week (after which overtime rates will apply).

This arrangement can only be made with the employee’s written agreement, which can be via email, text message or other electronic means.

Employers can otherwise change a part time employee’s regular pattern of work (i.e. the times the employee works, but not the Guaranteed Hours or the days the employee works) on 7 days’ written notice (or on 48 hours’ notice, in an emergency) only after consulting with the employee about the proposed change.

Overtime still applies in certain circumstances, including for work done in excess of the Guaranteed Hours or outside the agreed varied regular pattern of work or in excess of the maximum ordinary hours that can be worked on any day.

2. Increase to Guaranteed Hours

A part-time employee can ask their employer to increase their Guaranteed Hours because they have worked in excess of their Guaranteed Hours over the previous 12 months to reflect the ordinary hours regularly being worked.

The employer must respond to the request in writing within 21 days and can only refuse the request on reasonable grounds after discussing the request with the individual employee. The request can be made once every 12 months. Employees may also dispute a refusal of such a request in accordance with the dispute resolution procedure within the Retail Award, including by making an application to the FWC.

The Hospitality Industry (General) Award 2020 (Hospitality Award) has been updated to allow the option for certain employees to be paid “Loaded Rates” instead of overtime (but not for rostered days off), penalty rates (except in relation to public holidays) and split shift rates, effective from 3 September 2021. This only applies to full-time adult employees classified at Level 3 and above.

It is optional for employers to pay these employees Loaded Rates (for example, an employer may choose to do so where it reduces their administrative burden). Unlike the changes to the Restaurant Award, these changes are not time limited or specifically subject to a review.

The Loaded Rates arrangement provides for six different Loaded Rate percentages which must result in the employee being paid the same or more than if they had been paid strictly in accordance with the Award. In addition, there are a number of “Loaded Rate Parameters” involving rostering requirements under the Hospitality Award that need to be met and overtime still applies in certain circumstances, including for work which exceeds the daily and/or shift maximum hours, the Loaded Rate range of days or the Loaded Rate maximum weekly hours.

Where an employer chooses to pay an employee a Loaded Rate, the employer must provide the employee with a written Loaded Rate arrangement in accordance with the prescribed form set out at Schedule L of the Hospitality Award. The employer must keep a copy of the Loaded Rate Arrangement and any document terminating that arrangement as a time and wages record.

The Hospitality Award contains a specific settlement process to arbitration for dealing with disputes about Loaded Rates arrangements. Employers need to consult with employees at 7 days before introducing a Loaded Rates arrangement.