Australia: The changing landscape of casual employment in the franchising sector – an update on changes to penalty rates

In the past few months we have seen a number of significant changes to the penalty rate regimes that apply to many franchise networks. In this article, we consider the key changes that are likely to impact on franchise networks and provide suggestions to franchisors as to how they should be preparing for these changes.

Changes to penalty rates

Sunday penalty rates

The Fair Work Commission (FWC) has decided that its controversial cuts to Sunday penalty rates will be 'phased in' through a staged transitional arrangement, in order to mitigate the effects of any hardship likely to be experienced by employees as a result of its decision to cut Sunday penalty rates.

The Sunday penalty rates under the Fast Food Award 2010 and the Hospitality Industry (General) Award 2010 will be reduced by 25 per cent over the next three years. A four-year transition period will apply to employers covered by the General Retail Industry Award 2010 and the Pharmacy Award 2010 where Sunday penalty rates will be reduced by 50 per cent.

The first of these reductions came into effect on 1 July 2017 with the penalty rates under each of these modern awards being reduced by 5 per cent. Future reductions during the transitional period will take effect on 1 July each year during the transitional period.

The Federal Court of Australia will hear an application from the SDA and United Voice to quash the decision to reduce Sunday penalty rates on 18 September 2017. However, for the time being, the 5 per cent reduction that took effect on 1 July continues. As such, franchisors may wish to revisit the penalty rates that they are currently paying to consider if they want to pass on this reduction immediately.

Public holiday penalty rates

The FWC did not decide to 'phase in' the implementation of its previous decision to reduce the public holiday penalty rates in the Fast Food Award, Hospitality Industry (General) Award, General Retail Industry Award or the Restaurant Industry Award 2010. As such, the 25 per cent reduction in public holiday penalty rates that is paid to employees for public holiday work came into effect on 1 July 2017.

Casual conversion

Following an application by the Australian Council of Trade Unions (ACTU) the FWC has determined that modern awards should contain a provision enabling casual employees to elect to convert to full-time or part-time employment, provided that they meet certain conditions.

The FWC proposes to insert a casual conversation clause into 85 modern awards, including the Fast Food Industry Award, the General Retail Industry Award, the Hospitality Industry (General) Award, the Restaurant Industry Award and the Hair and Beauty Industry Award 2010.

The proposed clause will provide that a casual employee who has, over the previous 12 calendar months, worked a pattern of hours on an ongoing basis may elect to convert to full-time or part-time employment.

However, an employer may refuse a request for conversion on the following grounds:

  • it would require 'significant adjustment' to the casual employee's hours of work to accommodate them in part-time or full-time employment within the terms of the applicable modern award;
  • it is not known if or it is reasonably foreseeable that the casual employee's position will cease to exist;
  • the employee's hours of work will 'significantly change' or be reduced within the next 12 months; or
  • on other reasonable grounds based on the facts which are known or reasonably foreseeable as to why the conversion should not occur.

Under this proposed clause, employers will also be required to provide all casual employees with a copy of the casual conversion clause within 12 months of their initial engagement.

It is likely that a casual conversion clause will be inserted into the relevant modern awards later this year.

Overtime rates for casual employees

The FWC has also proposed to make casual employees covered by the Fast Food Industry Award, Hair and Beauty Industry Award, General Retail Industry Award and the Hospitality Industry (General) Award eligible for the payment of overtime penalty rates.

The number of hours a casual employee must work to be eligible for payment of these rates will differ from award to award. For those modern awards that are most relevant to the franchising sector, overtime penalty rates will be payable for all hours worked in excess of, in respect of the:

  1. Hospitality Industry (General) Award – 38 hours per week or 12 hours per day;
  2. Restaurant Industry Award – 38 hours per week or 12 hours per day;
  3. General Retail Industry Award – 38 hours per week or:
    1. outside the span of hours for each day; or
    2. in excess of nine hours per day (but with one day per week where the casual employee may work 11 hours without attracting overtime penalty rates);
  1. Fast Food Industry Award – 38 hours per week or 11 hours per day;
  2. Hair and Beauty Award Industry 2010 – 38 hours per week or 10.5 hours per day.

The overtime penalty rates will be applied to the employee's ordinary rate of pay (as will their casual loading).

These provisions mean that employees need only meet the daily or weekly threshold to be eligible for overtime payments. For example, if a casual employee covered by the Hospitality Industry (General) Award works 2 x 14 hour days in a week, they will be entitled to four hours of overtime penalties, despite working less than 38 hours in the entire week.

Where a casual employee has regularly rostered hours of work a week, the FWC has proposed that to calculate the time worked, the rostered hours be averaged over the length of the roster cycle (which cannot exceed four weeks). For example, where a casual employee works a fortnightly roster in which they work 20 hours one week and 40 the next, the employee will not receive payment for any overtime as they have only worked an average of 30 hours a week.

The FWC's view was that the requirement to pay overtime penalty rates to casuals under these modern awards would not result in a significant cost burden to employers.

The FWC has asked the SDA and United Voice to file draft determinations for these modern awards dealing with overtime rates for casual employees.

Again, it is likely that the new overtime provisions will be inserted into the relevant modern awards later this year.

How to prepare?

As noted above, a number of significant changes have been announced to penalty pay rate regimes over the past few months.

Franchisors (and their franchisees) should use these changes as a good opportunity to review their use of casual employees. In particular, we recommend that franchisors undertake the following steps:

  • assess the number of casual employees that they currently engage who have completed or are approaching 12 months employment;
  • determine whether these casual employees have worked a pattern of hours on an ongoing basis without significant adjustment. For example, has the casual employee been engaged on a regular and systematic basis or only during peak periods on an intermittent basis?
  • determine whether the casual employees' roles can be performed on either a full-time or part-time basis;
  • determine whether:
    • the business would need to make significant adjustments to these casual employees' hours of work to accommodate any request to convert to full-time or part-time employment;
    • the relevant casual positions are required by the business on an ongoing basis; or
    • the relevant casual employees' hours of work will significantly change or be reduced within the following 12 months.

Franchisors are encouraged to work collaboratively with their franchisees in preparation for the changing landscape of casual employment in Australia to ensure compliance with the workplace relations framework, particularly in light of the Protection of Vulnerable Workers Bill which is currently before the Senate.

We are well placed to assist with implementing changes to the penalty rates regimes and developing and rolling out compliance programs.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.