Changes to Penalty Rates from 1 July 2017

Did you know that there are a number of important changes for Australian businesses and employees that are being implemented as of 1st July 2017? The most important change, made and handed down by the Fair Work Ombudsman on 23rd February 2017, which will affect a large chunk of workers and small businesses is the reduction in penalty rates. As of 1st July 2017, penalty rates will be cut down which can mean less income for full time, part time and casual employees working in a number of different industries including hospitality and retail. This cut on the other hand means less expenses for business owners who resent the fact that so much of their expenses go to paying wages.

So, while some are crying and some are cheering for this significant change in the employment sector, let’s take a look at what the changes in the penalty rates could actually mean for employees and employers. The below information is based on the ‘penalty rates changes 2017’ published by the Fair Work Commission.

What are penalty rates?

Penalty rates refer to higher pays for employees in a number of different industries who work:

• Weekends
• Public holidays
• Overtime
• Late night or early morning shifts.

Who do the penalty rates changes affect?

The following awards are affected by the changes in the penalty rates:

• Retail industry
• Fast food industry
• Restaurant industry
• Pharmacy industry
• Hospitality industry

Click on the industry that is relevant to you to see how the changes can affect your income or expenses.

When do the penalty rates changes begin?

The public holiday penalty rates changes will begin immediately on 1st July 2017, as well as the evening and after midnight penalties in the restaurant and fast food Awards. However, Fair Work has passed down the decision on 5th June 2017 that the Sunday penalty rates changes will be phased in over 3 or 4 years starting from 1st July 2017. This will depend on the Award type:

• in the Fast Food Award, the changes will be phased in over 3 years for all employees
• in the Retail Award, the changes will be phased in over 4 years for full-time and part-time employees and over 3 years for casual employees
• in the Hospitality Award, the changes will be phased in over 3 years for full-time and part-time employees (there are no Sunday changes for casual employees)
• in the Pharmacy Award, the changes will be phased in over 4 years for all employees.

What are the penalty rates changes?

Retail Industry

• Sunday pay for full time and part time employees will go from 200% to 150%
• Sunday pay for casual employees will go from 200% to 175%
• Public holiday pay for full time and part time employees will go from 250% to 225%
• Public holiday pay for casual employees will go from 275% to 250%

This means:

For full time and part time employees – Sunday

For full time and part time employees – Public holiday

For casual employees – Sunday

For casual employees – Public holiday

Fast Food Industry

• Sunday pay for full time and part time Level 1 employees will go from 150% to 125%
• Sunday pay for casual employees will go from 175% to 150%
• Public holiday pay for full time and part time employees will go from 250% to 225%
• Public holiday pay for casual employees will go from 275% to 250%
• The 10% evening work penalty will apply from 10PM (instead of 9PM) until midnight
• The 15% after midnight penalty will apply to hours worked between midnight and 6AM

This means:

For full time and part time employees – Sunday

For full time and part time employees – Public holiday

For casual employees – Sunday

For casual employees – Public holiday

Restaurant Industry

• Public holiday pay for full time and part time employees will go from 250% to 225%
• Public holiday pay for casual employees will remain at 250%
• The 15% after midnight penalty will apply to hours worked between midnight and 6AM (instead of 7AM)

This means:

For full time and part time employees – Public holiday

Pharmacy Industry

• Sunday pay for full time and part time employees (for work between 7AM and 9PM) will go from 200% to 150%
• Sunday pay for casual employees (for work between 7AM and 9PM) will go from 225% to 175%
• Public holiday pay for full time and part time employees will go from 250% to 225%
• Public holiday pay for casual employees will go from 275% to 250%

This means:

For full time and part time employees – Sunday

For full time and part time employees – Public holiday

For casual employees – Sunday

For casual employees – Public holiday

Hospitality Industry

• Sunday pay for full time and part time employees will go from 175% to 150%
• Sunday pay for casual employees will remain at 175%
• Public holiday pay for full time and part time employees will go from 250% to 225%
• Public holiday pay for casual employees will go from 275% to 250%

This means:

For full time and part time employees – Sunday

For full time and part time employees – Public holiday

For casual employees – Public holiday

If you need to find out exactly how your pay or your employees’ pay is affected depending on your Award, use Fair Work Ombudsman’s Pay Calculator that has been updated with the new penalty rates.