Fast Food Industry: How the 2017 Penalty Rates Decision Will Affect Your Business

Penalty Rates

On 23 February 2017, the Fair Work Commission handed down its historic decision to reduce Sunday penalty rates and public holiday rates in some of the retail and hospitality related modern awards. The Fast Food Industry Award 2010 will be affected by the change.

In its decision, the Fair Work Commission said it would consider “appropriate transitional arrangements to mitigate hardship.” Last week, the Fair Work Commission put into place the transitional arrangements to phase in the reduction in Sunday penalty rates in the fast food industry.

Sunday Penalty Rates

Sunday penalty rates will be phased in as follows:

Full-time and part-time employees – Level 1 only

Casual employees (including casual loading) – Level 1 only

There is no change to Sunday penalty rates for Level 2 and Level 3 employees.

Public Holiday Penalty Rates

While the Sunday penalty rates will be gradually reduced over 3 years, the public holiday rates will be reduced in full on 1 July 2017, with no phasing or other transitional arrangements. The public holiday penalty rates in the Fast Food Award will be reduced as follows:

Full-time and part-time employees

Casual employees (including casual loading)

Late Night / Early Morning Penalty Rates

The Fair Work Commission has also made changes to evening work and after midnight penalties which also start from 1 July 2017. The changes include:

• The 10% loading for evening work loading will apply to work between 10pm (rather than 9pm) and midnight to be consistent with the Restaurant Industry Award; and
• The span of hours which attracts the 15% loading will apply to work performed between midnight and 6am (the Award does not presently prescribe the span of hours during which the loading is paid)

Minimum Wages

In addition to setting the transitional arrangements for penalty rates last week, the Fair Work Commission also announced its decision to increase the national minimum wage and minimum award wages by 3.3%. The increases will take effect from the first full pay period after 1 July 2017 to coincide with the reduction in penalty rates so that affected employees will receive an increase in their base hourly rate of pay at the same time as they are affected by a reduction in weekend penalty rates.

While the Commission is yet to release updated minimum wage rates for affected modern awards, we expect that the new minimum wages in the Fast Food Award from 1 July 2017 will be as follows:

If you have any questions regarding your minimum pay obligations or penalty rates, do not hesitate to contact HR Legal.

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This article was produced by HR Legal. It is intended to provide general information only in summary format on legal issues. It does not constitute legal advice, and should not be relied on as such.