Penalty rates under review

Published 27 January 2015

Under the Fair Work Act, the Fair Work Commission must review all modern awards every 4 years. As part of the review, unions and industry bodies have the opportunity to make submissions on the changes they wish to be made to an award.

As part of the first four yearly reviews since modern awards were introduced in 2010, employer groups have called for a decrease in penalty rates, arguing that a reduction will ensure greater flexibility and lower costs in the face of tough trading conditions.

Likely to be most affected is the hospitality industry, which traditionally requires employees to work late nights, weekends and public holidays. In its submission, the Restaurant & Catering Association said:

“We are not arguing there shouldn’t be penalty rates, because the legislation says there has to be. It is now about arguing the quantum.”

Approximately one third of restaurant and catering businesses do not trade on Sundays due to high wages. Employers argue that a reduction in penalty rates will mean that businesses can be open longer hours, hire more staff and improve service. Industry groups and unions are due to produce evidence to the Fair Work Commission in over 100 hearing dates later this year. The Fair Work Commission will then issue a decision as to whether penalty rates should be changed and if so, by how much.

The content of this publication is general in nature and provides a summary of the issues covered. It is not intended to be, nor should it be relied upon, as legal or professional advice for specific employment situations. PCC Employment Lawyers recommend that specialist legal advice should be sought about specific legal issues.