The long awaited decision by the Fair Work Commission was handed down yesterday as part of its 4 yearly review of awards and penalty rates. The FWC decided to reduce Sunday penalty rates and public holiday penalty rates in awards covering the hospitality, retail, fast food and pharmacy sectors.

The FWC did not cut Sunday penalty rates for restaurants and clubs, ruling that employers in those industries had failed to establish a merits case for the FWC to do so. Public Holiday penalty rates for restaurant full time/part-time workers was reduced (but not for casual restaurant employees). For clubs, public holiday penalty rates will not change.

The reduced public holiday penalty rates will be effective from July 2017. The reduction in Sunday penalty rates is proposed to be phased in, likely over a minimum of 2 annual instalments.

The FWC Full Bench’s rationale for setting penalty rates was to compensate employees for working outside ‘normal hours’ (the compensatory element). It rejected the need to deter employers from scheduling work outside ‘normal hours’ (although it said that this deterrent was a
flow-on effect of compensating employees). The compensation element for employees, was for what the FWC called the “disutility” associated with working on weekends and public holidays. This “disutility” is the disruption or inability to participate in family or community occasions and was the primary consideration in setting weekend and public holiday penalty rates.

The FWC held that the “disutility” of working on Sundays was greater than the “disutility” of working on Saturday. Hence, despite employer associations urging that Sunday penalty rates be the same as Saturday rates, the FWC did not reduce Sunday penalty rates to Saturday levels. The FWC did note however, that the extent of disutility of working on a Sunday was much less now than in times past.
The decision to reduce penalty rates also took into account whether employees were entry-level employees (these workers often choose or want to work on Sundays due to other commitments such as study) or higher-level employees who the FWC identified as a likely career employees. The FWC determined that career employees experienced greater disutility working on weekends and public holidays. Hence in the Fast Food industry, the reduction in penalty rates applies only to the Level 1 entry level employees.

Interestingly, in the Hospitality industry, for which greater numbers of employees are employed on a casual basis, there is no penalty rate change for casual employees. The impact on workers in the hospitality industry may be less than it appears on its face, given the degree of casual employment in this industry sector. A more detailed summary will follow.

The information below sets out the penalty rate changes made by the FWC to the relevant industry Awards.

Hospitality Award

full-time and part-time employees: 175% -> 150%
(no change for casuals)

Fast Food Award (Level 1 employees only) 150%

Full-time and part-time employees: 150% -> 125%

Casual employees: 175% -> 150%

Retail Award

Full-time and part-time employees: 200% -> 150%

Casual employees: 200% -> 175%

Pharmacy Award (7.00 am – 9.00 pm only)

Full-time and part-time employees: 200% -> 150%

Casual employees: 200% -> 175%

Proposed public holiday penalty rates in the Hospitality and Retail awards:

Award title

Public holiday penalty rates – Full-time & part-time – Casual

Hospitality Award

Full-time & part-time: 250% -> 225%

Casual: 275% -> 250%

Restaurant Award

Full-time & part-time 250% -> 225%

Casual 250%

Clubs Award

Full-time & part-time 250%

Casual 250%

Retail Award

Full-time & part-time 250% -> 225%

Casual 275/250% -> 250%

Fast Food Award

Full-time & part-time 250% -> 225%

Casual 275% -> 250%

Pharmacy Award

Full-time & part-time 250% -> 225%

Casual 275% -> 250%

If you have any further questions, please contact us.