Australia: Full Bench cuts Sunday and public holiday penalty rates in hospitality and retail industries – Penalty Rates decision [2017] FWCFB 1001 (23 February 2017).

What Awards were under consideration?

The decision of the Full Bench of the Fair Work Commission focussed on reviewing weekend and public holiday penalty rates in the:

  1. Fast Food Industry Award 2010 (the Fast Food Award)
  2. General Retail Industry Award 2010 (the Retail Award)
  3. Hospitality Industry (General) Award 2010 (the Hospitality Award)
  4. Pharmacy Industry Award 2010 (the Pharmacy Award)
  5. Registered and Licensed Clubs Award 2010 (the Clubs Award)
  6. Restaurant Industry Award 2010 (the Restaurant Award)

What did the Full Bench say about existing Sunday penalty rates?

The Full Bench held that the existing Sunday penalty rates in the Fast Food, Hospitality, Retail and Pharmacy Awards do not achieve the modern award objectives set out in the Fair Work Act 2009.

How have Sunday penalty rates been reduced?

The Full Bench determined that the existing Sunday penalty rates in the Fast Food, Hospitality, Retail and Pharmacy Awards do not achieve the modern award objective and has determined the following reductions:

Hospitality Award
Full-time and part-time employees:
(no change for casuals)
175 % to 150%
Fast Food Award
(Level 1 employees only)
full-time and part-time employees:
casual employees:
150 % to 125 %
175 % to 150 %
Retail Award
full-time and part-time employees:
casual employees:
200 % to 150 %
200 % to 175 %
Pharmacy Award
(7.00 am – 9.00 pm only)
full-time and part-time employees:
casual employees:
200 % to 150 %
200 % to 175 %

Weekend penalty rates for the Clubs and Restaurant Awards were not changed as the Full Bench was not persuaded by the arguments of various employers that such changes were necessary to achieve the modern award objective.

What did the Full Bench say about public holiday penalties?

The Full Bench determined that public holiday penalty rates be reduced (except in the Clubs Award) as follows:

Permanent Casual
Hospitality Award 250 to 225% 275 to 250%
Restaurant Award 250 to 225% 250%
Clubs Award 250% 250%
Retail Award 250 to 225% 275/250 to 250%
Fast Food Award 250 to 225% 275 to 250%
Pharmacy Award 250 to 225% 275 to 250%

The Full Bench also held that public holiday work is more common in Hospitality and Retail Awards sectors and reducing the penalty rate will have various positive impacts on business and may increase employment.

Any change to Saturday penalties?

The Full Bench was satisfied that existing Saturday penalty rates in the Fast Food, Hospitality, Restaurant and Retail Awards achieve the modern award objective as they provide a relevant and fair minimum safety net.

A review of Saturday penalty rates in the Pharmacy and Clubs Awards will be subject to further proceedings.

Other findings

Loading rates for the Pharmacy Award were not changed for work before 7am or between 9pm and midnight on any day.

The Full Bench held that section 134(1)(da) of the Fair Work Act 2009 which outlines the 'need to provide additional remuneration' for employees working in certain circumstances, including on public holidays and weekends, did not create a requirement that modern awards provide additional remuneration in such circumstances.

The Full Bench rejected a submission that a two-tiered approach to public holiday rates should be adopted whereby different penalty rates would apply for public holidays listed in section 115(1)(a) of the FW Act and those listed as a public holiday under State or Territory law.

When will these changes commence?

The Full Bench has not conclusively determined what transitional arrangements should be made for the implementation of the reductions in Sunday penalty rates, but suggests that the reduction in Sunday penalty rates should take place over several annual adjustments, starting on 1 July 2017, and proposes to hear submissions from interested parties.

The changes to public holiday penalty rates will take effect on 1 July 2017.

© Cooper Grace Ward Lawyers

Cooper Grace Ward is a leading Australian law firm based in Brisbane.

This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please contact Cooper Grace Ward Lawyers.

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