Penalty Rates Test Case

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The long awaited Penalty Rates Test Case has finally been handed down by the Full Bench of the Fair Work Commission.  The decision is complex running to 551 pages and some matters have not yet been finalised such as what transitional arrangements will apply.

Media coverage has been extensive and in many cases misleading.  A number of industry players including politicians, industry associations, unions and commentators have already been caught out misrepresenting how this decision will impact on people and I expect that this will continue whilst the political fight is undertaken.

The decision is confined to the hospitality and retail Awards, although it is likely that this Decision will be used as a precedent for further applications from various bodies to extend the reduction in penalty rates for other Awards.

The changes to public holiday penalty rates will have effect from 1 July 2017.  The timing of changes to Sunday rates has not yet been finalized.  The Fair Work Commission has indicated that there will be transitional arrangements for the changes.  It is likely that the changes will come into effect over at least two periods and possibly more.

The Fair Work Commission made it clear that this decision should not be seen as a precedent for across the board changes.  They have indicated that any group wishing to seek amendments to penalty rates in their Award will need to establish the merit of their claims.  The Fair Work Commission also made it clear that they see a penalty rate system as both justified and desirable for many industries. The hospitality and retail industries were seen as an exception to the general rule.

The decision resulted in relatively minor reductions in weekend and evening penalty rates, mainly affecting staff employed on a permanent basis. 




A summary of the changes is provided below.

General Retail Industry Award 2010- (most retail shops)

  

Sunday (current)

Sunday (new)

Public Holiday (current)

Public Holiday (new)

Permanent

200%

150%

250%

225%

Casual

200%

175%

275%

250%

Hospitality Industry (General) Award 2010- (most hotels, taverns, most other liquor establishments, motels, serviced apartments, hostels and caravan parks)

  

Sunday (current)

Sunday (new)

Public Holiday (current)

Public Holiday (new)

Permanent

175%

150%

250%

225%

Casual

175%

175%*

275%

250%

 *Casual Sunday remains unchanged

Fast Food Industry Award 2010- (most food establishments where the food is predominantly purchased on a take away basis, and food hall operations)

  

Sunday

Level 1 Employees

(current)

Sunday

Level 1 Employees

(new)

Public Holiday (current)

Public Holiday (new)

Permanent

150%

125%**

250%

225%

Casual

175%

150%**

275%

250%

 ** For level one employees only

Restaurant Industry Award 2010- (most restaurants and café’s where the food in consumed predominately at the place of purchase, and night clubs)

  

Sunday (current)

Sunday (change)

Public Holiday (current)

Public Holiday (change)

Permanent

150%**

150%**

250%

225%

Casual

150%**

175%**

150%**

175%**

250%**

250%**

** Remains unchanged for Level 1 to Level 6

Pharmacy Industry Award 2010- (most community pharmacy’s)

 

Sunday (current)

Sunday (new)

Public Holiday (current)

Public Holiday (new)

Permanent

200%

150%**

250%

225%

Casual

200%

175%**

275%

250%

** 7.00 am – 9.00 pm only

Registered and Licensed Clubs Award 2010

This Award will be subject to further review as the Fair Work Commission found that the employer associations did not sufficiently make out their claim for the changes they were seeking.

The Fair Work Commission has indicated a couple of options going forward but has also expressed a provisional view that an option of cancelling this Award and rolling it into one of the other hospitality based Award had merit.  Further information will be provided as it becomes available.




There are a few other minor changes which will impact on rates of pay, however, they are not significant and further advice will be provided when the position becomes clearer.

What this Decision means in summary is that there have been some relatively minor changes to weekend and public holiday penalty rates.  The final details are not yet known as the Fair Work Commission is still seeking submissions on some issues.  The changes will come in over an extended period.  It is likely that this Decision will now be used as a basis to seek amendments to other Awards in relation to their penalty rate structures.

We will keep clients and correspondents updated as further information becomes available.