Since the Penalty Rate changes were first announced on the 23rd February, employers and employees have been left in limbo as to when and by what percentage Penalty Rates would be in decline. This week Australia’s workplace umpire, the Fair Work Commission (FWC), has handed down a decision on how Sunday Penalty Rate changes will be implemented, deciding that the process will be phased in over a 3 to 4-year process, depending on the award and employment type.
As you would expect, reaction to this has been varied. Small business groups, such as the Australian Retailers Association, had been hoping for a swifter conclusion to the saga so that they “can get on with the job of employing more people” without the “incredible amount of extra work for retailers”. However, the union for workers in the Hospitality sector, United Voice, believe that “the system has completely failed […] hundreds of thousands of Australians”.
Who do the Penalty Rate changes affect?
The following awards are affected by the Penalty Rate changes;
- General Retail Industry Award 2010 [MA000004] (the Retail Award)
- Fast Food Industry Award 2010 [MA000003] (the Fast Food Award)
- Restaurant Industry Award 2010 [MA000119] (the Restaurant Award)
- Pharmacy Industry Award 2010 [MA000012] (the Pharmacy Award)
- Hospitality Industry (General) Award 2010 [MA000009] (the Hospitality Award)
If you are unsure if you, or any of your employee’s, fall under these awards, you can find your award here.
When do the changes come into effect?
Public holiday changes will come into effect from July 1, 2017. Full & Part-Time employees in all 5 affected awards (see above) will see their rate drop from 250% to 225%. Casuals in Hospitality, Fast Food, Retail & Pharmacy will see a drop from 275% to 250%. However, Casuals in the Restaurant award remain unchanged at 250%.
Sunday Penalty Rate changes will also come into effect from July 1, 2017, however, these will be rolled out in gradual decreases over the next 3 or 4 years. There will be no changes to the Sunday Penalty Rate in the Restaurant Award.
How do the Sunday Penalty Rate changes affect me, and when?
Depending on the award you belong to, the changes will either be phased in over 3 years, or 4, or perhaps not at all, as is the case for Casuals under the Hospitality Award. See below for a full breakdown of the proposed changes.
Retail
The retail sector will see changes spread out over 4 years for Full & Part time, and 3 years for Casual workers, as below.
Full & Part Time Casual
1 July 2017 200% → 195% 1 July 2017 200% → 195%
1 July 2018 195% → 180% 1 July 2018 195% → 185%
1 July 2019 180% → 165% 1 July 2019 185% → 175%
1 July 2020 165% → 150%
Hospitality
The Hospitality Award will see changes phased in over 3 years for Full & Part-time employees. There will be no changes for Casual employees.
Full & Part Time
1 July 2017 175% → 170%
1 July 2018 170% → 160%
1 July 2019 160% → 150%
Pharmacy
Changes are scheduled to take place over 4 years for both Casuals & Full & Part Time employees as below.
Full & Part Time Casual
1 July 2017 200% → 195% 1 July 2017 225% → 220%
1 July 2018 195% → 180% 1 July 2018 220% → 205%
1 July 2019 180% → 165% 1 July 2019 205% → 190%
1 July 2020 165% → 150% 1 July 2020 190% → 175%
Fast Food
The Fast Food award will see changes happen over a 3 year period. It is important to note that these changes will only affect Level 1 employees. The 10% evening work penalty will apply from 10 pm (previously 9 pm). The 15% after midnight penalty will apply to hours worked between midnight & 6 am.
Full & Part Time Casual
1 July 2017 150% → 145% 1 July 2017 175% → 170%
1 July 2018 145% → 135% 1 July 2018 170% → 160%
1 July 2019 135% → 125% 1 July 2019 160% → 160%
What’s next?
Business owners now have a choice to make – do you implement the new Sunday & Public Holiday rates immediately or continue to pay staff on their existing loadings? If you choose the latter it is up to you whether you place new starters under the upcoming rates or keep them aligned with the existing penalty rates. Of course, this may place some employers in circumstances which see identical roles being paid different wages, but this is nothing new in business and just needs to be managed correctly.
It is also important to take into consideration rostering of employees on different rates. Take care not to favour one employee on a cheaper rate other another in a systematic way as this could lead to further complications down the line.
