The Countdown Is On. Are You Prepared To Comply With Changing Penalty Rates?

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Sunday and Public Holiday Penalty Rates Are Changing—Get Ready

You’re not alone. Despite what the name suggests, a penalty rate isn’t actually a penalty at all! At least, not for the employee. So, what is a penalty rate? A penalty rate is a minimum rate of pay which is higher than the mandated minimum wage. Penalty rates are paid to employees working outside of normal working hours—on weekends, public holidays or evening/night/early morning shifts.

On 23 February 2017, the Fair Work Commission cut weekend, evening, and public holiday pay rates (known as penalty rates) for some employees in the hospitality, pharmacy, restaurant and retail industries.

What does this mean for employees?

The change is expected to hurt some of the country’s lowest-paid workers, and they’re not happy about it. “Now I will have to work more for less money,” said Helena Doherty, chemistry student by day, bartender by nights and weekends. Doherty’s is a sentiment shared by many students and low-wage workers who rely on weekend pay to make ends meet.

But business owners disagree.

According to research conducted by Restaurant and Catering Australia, scrapping Sunday penalty rates could create up to 40,000 jobs nationally and up to 2,800 in South Australia alone—and weekend workers will likely benefit from the change.

“Those people who are currently working on a Sunday are more likely to get more hours out of this,” said John Hart, CEO of Restaurant and Catering Australia. “It won’t mean they’ll take home less pay—they might just have to work an extra hour.”

Either way, change is coming.

And soon. The new public holiday pay rates take effect on 1 July 2017. The Fair Work Commission is pushing for the new Sunday rates to kick in around the same time, but they’ve yet to make a final decision.

However, the evening/night shift penalties will start in just ten days, on 27 March. In other words, the countdown is on. So, are you ready to turn and face the ch-ch-changes?

Here’s what you can expect:

We’ve broken it down by award and type of employee to help you determine how your employee pay rates are going to change.

 

Retail Penalty Rate Changes:
General Retail Industry Award 2010 [MA000004]

Sundays Public holidays
Full and part-time employees 200% to 150%
(Equivalent to a 25% pay cut)
250% to 225%
(Equivalent to a 12.5% pay cut)
Casual employees 200% to 175%
(Equivalent to a 12.5% pay cut)
275/250% to 250%
(Equivalent to a 12.5% pay cut for some)

 

Fast Food Penalty Rate Changes:
Fast Food Industry Award 2010 [MA000003]

Sundays Public holidays Late shifts
Full and part-time employees (Level 1) 150% to 125%
(Equivalent to a 12.5% pay cut)
250% to 225%
(Equivalent to a 12.5% pay cut)
10% penalty now applies from 10pm—one hour later
Casual employees 175% to 150%
(Equivalent to a 12.5% pay cut)
275 to 250%
(Equivalent to a 12.5% pay cut)
10% penalty now applies from 10pm—one hour later

 

Restaurant Penalty Rate Changes:
Restaurant Industry Award 2010 [MA000119]

Sundays Public holidays Night shifts
Full and part-time employee NO CHANGE 250% to 225%
(Equivalent to a 12.5% pay cut)
The 15% night-shift penalty now applies from 12–6am, not 7am—cut by 1 hour
Casual employees NO CHANGE NO CHANGE The 15% night-shift penalty now applies from 12–6am, not 7am— cut by 1 hour

 

Pharmacy Penalty Rate Changes:
Pharmacy Industry Award 2010 [MA000012]

Sundays (7am to 9pm) Public holidays
Full and part-time employees 200% to 150%
(Equivalent to a 25% pay cut)
250% to 225%
(Equivalent to a 12.5% pay cut)
Casual employees 200% to 175%
(Equivalent to a 12.5% pay cut)
275% to 250%
(Equivalent to a 12.5% pay cut)

 

Hospitality Penalty Rate Changes:
Hospitality Industry (General) Award 2010 [MA000009]

Sundays Public holidays
Full and part-time employees 175% to 150%
(Equivalent to a 12.5% pay cut)
250% to 225%
(Equivalent to a 12.5% pay cut)
Casual employees NO CHANGE 275% to 250%
(Equivalent to a 12.5% pay cut)

 

Remember, these changes are coming soon. It’s crucial that you have the right tools and processes in place right now to update your employees’ pay rates correctly and comply with the Fair Work Commission.

Try TSheets for FREE for 14 days to track accurate-to-the-second employee time, manage changing labour costs and capitalise on upcoming penalty rate reductions.