Penalty rate changes as of July 1 – How will this affect you?

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With certainty now obtained, small businesses will begin to transition to the new Sunday penalty rates across a range of awards, however, it is critical that you understand the rules and what you can do as this fiery issue rolls out.

After a four-month consultation process and a multitude of submissions from business groups and unions, the Fair Work Commission recently handed down its decision about how the lower rates for retail, hospitality and pharmacy awards will be introduced.

While the process will take between three and four years, the complexity of the changes has experts warning organisations to read the fine print before taking any action on the changes.

We have pulled together the key information you need to know:

Full-Time and Part-Time employees

1 July 2017       175% – 170%

1 July 2018       170% – 160%

1 July 2019       160% – 150%

  • The Sunday loading for hospitality workers will eventually transition from 175% to 150% of the usual hourly rate for full-time and part-time workers.
  • Casuals will see no change
  • The changes will be introduced over three years, starting with a 5% drop, from 175% loading to 170% from July 1, 2017.

Table 6 - Proposed public holiday penalty ratesNew public holiday loading rates by award, from July 1, 2017. Source Fair Work Commission.

It is important to remember that this does not affect certain hospitality awards, i.e. the Registered and Licensed Club Award 2010, which Clubs fall under, however, it does impact on Pubs and Hotels.

It is going to be important for organisations to keep calm and not jump the gun as the Fair Work Commission has clearly outlined the transition plans, including timing, that must be adhered to.

Activities to avoid

  • While a business might have employees whose wages will eventually have a 150% loading apply on Sundays, it is important to remember that this process is to be rolled out over the allocated three to four year period. Take note of the timing and follow the plan.
  • Organisations may come across a situation where employees are on different hourly rates, it will imperative not to prioritise more cost-effective workers across Sunday shifts, apart from this being poor management, it could result in adverse action claims.

The main thing to remember through all of this, is that your employees are going to need guidance and information to help them understand the changes. In order to successfully transition your workplace, it will be critical to discuss the impact of these changes and clearly outline the process.

Businesses will have to sit down and work out their new obligations, both on the penalty rate changes and the new minimum wage level, which will also come into effect on July 1; remember there will be an increase on one hand and a decrease on the other.

Good employers will be discussing these changes, and their decisions, early on so that their hard-working team are in the loop every step of the way.

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