FWC Makes Major Changes to Penalty Rates

The Fair Work Commission has announced reductions in Sunday and public holiday penalty rates in the retail, fast food and hospitality industries, meaning hundreds of thousands of Australian employees are facing pay cuts.


The commission reviewed Saturday rates but decided against any reductions.

Justice Iain Ross said the FWC made the call to cut Sunday and public holiday rates because they were not a “fair and relevant” safety net and agreed with employers that reducing rates might increase employment.

The FWC chose to cut Sunday rates but not as low as Saturday levels because “Sunday work has a higher level of disutility” for employees.

Justice Ross said evidence from business owners demonstrated that the present level of Sunday rates had led them to restrict trading hours, reduce staff levels and restrict the services provided.

The Australian Council of Trade Unions has said nearly half a million people, including some of the country's lowest-paid employees, would lose up to $6,000 a year.

The pay cuts take effect from July.

Key elements of the decision include:

(a) reduce Sunday penalty rates in the retail industry from 200% to 150% (for permanent staff) and 175% (for casuals)
(b) reduce Sunday penalty rates in the hospitality industry from 175% to 150% (for permanent staff only);
(c) reduce Sunday penalty rates in the fast food industry from 150% to 125% (for permanent staff) and 175% to 150% (for casual staff); and
(d) reduce public holiday penalty rates from 250% to 225% across the hospitality, retail fast food and pharmacy industries.

Nigel Ward, CEO of Australian Business Lawyers & Advisors, said this was a “colossal case”, which will have far-reaching consequences for the industrial relations system and economy more broadly.

The decision represents the culmination of more than two years of work by Australian Business Lawyers & Advisors (ABLA) who represented the Australian Chamber, NSW Business Chamber and Australian Business Industrial.

“The Commission’s consideration of over 130 lay witnesses and more than 6,000 public submissions demonstrates that all parties have had their positions properly considered,” said Ward.

“While the decision’s realignment of Sunday penalty rates in the affected industries will be welcomed by all employers, the real message is that the decision shows that the Fair Work Commission is prepared to reassess historical norms if a merit based case demonstrates a need for change.”

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