Fair Work Commission cuts penalty rates

The Fair Work Commission (FWC) has today handed down its much awaited penalty rates decision.

The decision was handed down following 39 days of hearing, 143 expert and lay witnesses and 5,900 submissions. A copy of the decision summary can be found HERE.

Justice Ross, Vice President Joe Catanzariti, Deputy President Ingrid Asbury, Commissioner Peter Hampton and Commissioner Tim Lee have determined to introduce following changes to Sunday penalty rates:

Award Previous Sunday Penalty Rate New Sunday Penalty Rate
Hospitality Industry (General) Award 2010 175% 150%
Fast Food Industry Award 2010 – level 1 employees only Full time and part time employees: 150% 125%
Casual employees: 175% 150%
General Retail Industry Award 2010 Full time and part time employees: 200% 150%
Casual employees: 200% 175%
Pharmacy Industry Award 2010 – between 7am and 9pm only Full time and part time employees: 200% 150%
Casual employees: 200% 175%

The Commission determined not to reduce the Sunday penalty rates for the restaurant and clubs industries on the basis that these industries had not established a merits case for such a reduction. The FWC is, however, considering review of the Clubs and Pharmacy Saturday penalty rates in separate proceedings.

The FWC also made the following changes to the Public Holiday penalty rates under the following Awards:

Award Previous PH Penalty Rate New PH Penalty Rate
Hospitality Industry (General) Award 2010 Full Time and part time: 250% 225%
Casual employees: 275% 250%
Restaurant Industry Award 2010 Full Time and part time: 250% 225%
Casual employees: 250% 250% – no change
Registered and Licensed Clubs Award 2010 Full Time and part time: 250% 250% – no change
Casual employees: 250% 250% – no change
Fast Food Industry Award 2010 – level 1 employees only Full time and part time employees: 250% 225%
Casual employees: 275% 250%
General Retail Industry Award 2010 Full time and part time employees: 250% 225%
Casual employees: 275/250% 250%
Pharmacy Industry Award 2010 Full time and part time employees: 250% 225%
Casual employees: 275% 250%

How can this affect your business?

These amendments to the above Awards will create greater consistency across the hospitality sectors, and increase profitability. It is important to note that the distinction in penalty rates between National and State or Territory based public holidays has been removed from the Hospitality Industry (General) Award 2010. The Commission has also made the decision to vary the early/late night loadings of the Restaurant Industry Award 2010 and Fast Food Industry Award 2010.

Although the Commission has determined to make changes to Sunday penalty rates, they have not come to a concluded view on how these changes will be implemented. The Commission will seek further submissions this point, but has expressed a provisional view that the changes to Sunday penalty rates ought to be introduced in a series of annual adjustments on 1 July of each year, commencing July 2017.

In respect of the changes to public holiday penalty rates, though, the Commission has determined that the changes to these rates will take effect on 1 July 2017.

What should you do?

Employers should take care not to commence paying the amended penalty rates until the requisite changes have been made under the formal Award process.

Employers in the aforementioned industries should also review any written contracts of employment or Enterprise Agreements to determine whether the above penalty rates have been included as terms of employees’ employment. In such cases employers may be prevented from implanting the above changes to penalty rates. In the event that contracts or Enterprise Agreements contain such clauses, or if you are not sure, we suggest that you contact the Employment & Industrial Relations Team at Meyer Vandenberg for advice on clauses, or the process by which a contract or Enterprise Agreement may be amended.

For more information contact the Employment & Industrial Relations Team:

William Ward — Special Counsel — Employment and Industrial Relations
(02) 6279 4336
william.ward@mvlawyers.com.au

Kirsty Easdale — Senior Lawyer — Employment and Industrial Relations
(02) 6279 4441
kirsty.easdale@mvlawyers.com.au