Fair Work Commission review of penalty rates


As many would be aware from the significant publicity in the media over the last couple of weeks, on Thursday, 23 February 2017 the Fair Work Commission issued a decision after conducting a four-yearly review of modern Awards.  The Commission’s task was to decide whether particular modern Awards achieved the modern Awards’ objective.  Historically, the rationale for penalty rates has been both the need to compensate employees for working outside “normal hours” and to deter employers from scheduling work outside “normal hours”.  The deterrence of employers from scheduling work outside normal house was considered by the Full Bench of the Fair Work Commission to be no longer a relevant consideration in the setting of weekend and public holiday penalty rates.  Therefore, it was accepted that the imposition of a penalty rate may have the effect of deterring employers from scheduling work at specified times or on certain days and it is a consequence of the imposition of an additional payment for working at such times or on such days that it is not the objective of those additional payments.

The decision deals with the review of weekend and public holiday penalty rates in hospitality and retail awards and in particular:

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

Evidence was heard over 39 days from 143 witnesses and over 5,900 submissions were received.

The Full Bench concluded that variations to modern Awards must be justified on their merits. 

The effect of the outcome of the decision is a reduction of Sunday and Public Holiday rates varying from a reduction of 25% to 50%.

Employers seeking clarification on these issues should contact Clelands Lawyers or alternatively the Fair Work Commission.

Ben Farmer