Penalty Rates Cuts: Great News for Australian Businesses

The Fair Work Commission has handed down the historic decision to reduce Sunday penalty rates and Public Holiday rates in some of the Retail and Hospitality related modern awards. Specifically, the following modern awards will be affected:

Hospitality group

• Hospitality Industry (General) Award 2010
• Registered and Licensed Clubs Award 2010
• Restaurant Industry Award 2010

Retail group

• Fast Food Industry Award 2010
• General Retail Industry Award 2010
• Hair and Beauty Industry Award 2010
• Pharmacy Industry Award 2010

Although there are some industries that have a retail component within their Awards, due to the unique circumstances in the Hospitality and Retail industries, Justice Ross indicated that this decision cannot be relied upon to alter additional awards.

Sunday Penalty Rates

• In the Hospitality Award, full-time and part-time Sunday penalty rates will reduce from 175% to 150%. There will be no changes to the casual rate.
• In the Fast Food Award, for level 1 employees only, full-time and part-time Sunday penalty rates will reduce from 150% to 125%. Casual rates for level 1 employees will reduce from 175% to 150%.
• In the Retail Award, full-time and part-time Sunday penalty rates will reduce from 200% to 150% and casual Sunday penalty rates will reduce from 200% to 175%.
• In the Pharmacy Award, from 7.00 am until 9.00 pm only, full-time and part-time Sunday penalty rates will reduce from 200% to 150% and casual Sunday penalty rates will reduce from 200% to 175%

The Commission elected not to cut Sunday penalty rates in the Restaurant Award and Clubs Award, as employer organisations did not establish a sufficient case.

The Commission is yet to decide on the transitional arrangements for implementing these changes.

Public Holidays

The Commission has also decided to make the following reductions in Public Holiday rates:

• In the Hospitality, Restaurant, Retail, Fast Food and Pharmacy Awards, full-time and part-time Public Holiday rates will reduce from 250% to 225%.
• In the Hospitality, Retail, Fast Food and Pharmacy Awards, casual Public Holiday rates will reduce from 275% to 250%

There will be no changes to the Public Holiday rates in the Clubs Award or to the casual Public Holiday rate in the Restaurant Award.

The changes to Public Holiday penalty rates will take effect on 1 July 2017.

Great News for Australian Businesses and the Economy

The milestone event is one of the few penalty rate reductions handed down over more than 100 years of industrial relations history in Australia. This decision will likely stimulate retail growth and reduce unemployment as employers utilise the cut to their payroll to increase job opportunities.

Typically increasing employment rates stimulates spending and ultimately positively affects economic growth.

Although the decision is subject to appeal, HR Legal recommends that employers prepare for the amendments to their penalty rates and communicate the changes to affected staff.

If you would like to understand the impact of these changes on your business, or require any assistance in implementing these changes, please 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.