by Heidi Bishop, Senior HR Consultant, EastCoast HR Group.

The Fair Work Act provides that the Fair Work Commission must conduct a four yearly review of modern awards predominantly to decide whether or not a particular modern award achieves the modern awards objectives.

The decision announced on 23 February, 2017 to reduce in many cases, weekend and public holiday penalty rates impacts workers covered under the following awards:

  • Fast Food Industry Award 2010
  • General Retail Industry Award 2010
  • Hospitality Industry (General) Award 2010
  • Pharmacy Industry Award 2010
  • Registered and Licenced Clubs Award 2010
  • Restaurant Industry Award 2010.

After hearing verbal submissions from 143 witnesses (both expert and lay persons) over 39 days in a two-year period (2015 and 2016) and examining over 5900 written submissions, the Fair Work Commission handed down its decision to reduce penalty rates in the above sectors.

Historically, the rationale behind penalty rates was to deter employers from scheduling work outside ‘normal hours’ and to compensate employees for the inconvenience of working weekends and public holidays.

The Commission took into consideration that the hospitality and retail industries are sectors where consumer expectations of access to services has expanded over time to seven days per week. Working public holidays is also more common within these sectors as well.

In making its decision the Commission also took into account these sectors are also an important source of entry level jobs for relatively unskilled casual employees and young people (particularly students) needing flexible working arrangements. It is interesting to note that under the fast food Award Level 1 employees are affected by the changes and Level 2 and 3 are not as they are deemed “career” employees.

The benefits the Commission are looking for from a reduction to penalty rates include:

  • Increased trading hours on Sundays and Public holidays
  • A reduction in the hours worked by some owner operators
  • An increased level and range of services offered on Sundays and Public holidays and
  • An increase in overall hours worked.

Whilst the Commission’s decision has caused headlines and uncertainty for many workers, it is prudent for us as employers to look at the specific detail of changes to each Award and how these changes will affect your individual business and employees.

The penalty rate changes will come into effect 1 July 2017 under yet to be determined transitional arrangements in a move designed to reduce the impact on employees currently covered by existing penalty rate arrangements.

Click to read FWC Penalty rates decision summary