Tuesday, 13 June 2017

Hospitality 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 Hospitality Industry (General) 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 hospitality industry.

Sunday penalty rates

The Sunday penalty rates for full time and part time employees will be phased in as follows:

Full-time and part-time employees

1 July 2017 175% to 170%
1 July 2018 170% to 160%
1 July 2019 160% to 150%

There is no change to Sunday penalty rates for casual employees, which remains at 175% (including casual loading).

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 Hospitality Award will be reduced as follows:

Full-time and part-time employees

1 July 2017 250% to 225%

Casual employees (including casual loading)

1 July 2017 275% to 250%

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 Hospitality Award from 1 July 2017 will be as follows:

Classification Weekly Wage
Introductory $694.90
Level 1 $714.90
Level 2 $742.30
Level 3 $767.80
Level 4 $809.10
Level 5 $859.80
Level 6 $882.80

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


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.

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