Penalty Rates.

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What Are Penalty Rates In Australia?

In Australia, employees covered by an Award, enterprise agreement or registered agreement may be entitled to a higher pay rate and additional allowances when working on weekends, public holidays, overtime, early in the morning and/or late at night.

The exact rate, multiplier and loading to be applied is outlined in the relevant industry Award or agreement.

History of Penalty Rates

Penalty rates were first introduced to Australia in 1947. The move was encouraged by various unions and state regulatory bodies, who argued that employees deserved a higher pay rate when asked to work outside normal hours.

Even with the post-war economic boom, changing consumer habits and an increased acceptance of flexible working arrangements, penalty rates remained firmly fixed within Australian society and are seen as a vital form of compensation for employees who work on weekends, public holidays and outside normal trading hours.

Still, over the past decade, the Fair Work Commission has been more inclined to amend penalty rates in line with changing societal expectations. The Fair Work Commission has opted to merge or reduce penalty rates for certain industry Awards. Some examples are the reduction of Sunday penalty rates in 2017 in the Retail, Fast Food, Restaurant, Pharmacy and Hospitality Awards.

What Are Weekend Penalty Rates?

Weekend penalty rates are higher pay rates applied to employees who perform work on the weekend.

The purpose of weekend pay rates is to offer compensation for employees who work outside “normal” weekday hours. Not all workplace agreements or Modern Awards require payment at a higher rate. However, most will require an employer to pay at least 150% (time and a half) of the normal base wage for work performed on a Saturday and 200% (double time) for employees who perform work on a Sunday.

Worried About Underpayments?

If you seek and follow our Advice and still underpay, we’ll cover the underpayment bill. That’s the Employsure Wage Guarantee.

Allowances And Extra Payments

Some employees are entitled to extra payments due to the nature of their job. This may apply to employees who do certain tasks or have a unique skill, use their own tools and equipment, or work in harsh or dangerous conditions. Employees may also be entitled to a meal allowance when working overtime.

An employee is entitled to allowances as compensation for:

  • tools and equipment
  • first aid kits
  • special clothing and uniforms
  • the cost of travel, fares and tollways
  • cars and phones provided by the company
  • associated costs for working in a particular industry

For advice on understanding penalty rates in Australia, fill out the online form or contact us today to request a free consultation with a workplace relations specialist.

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Frequently Asked Questions

  • What Does Penalty Rate Mean?

    A penalty rate is a name for a higher pay rate or additional allowance.  In Australia, employees covered by an Award, enterprise agreement or registered agreement may be entitled to a penalty rate when working on weekends, public holidays, overtime, early in the morning and/or late at night.

  • What Are Australian Penalty Rates?

    An Australian penalty rate is a higher rate of pay that an employee may be entitled to. There are many penalty rates, and when and how they are applied depends on the employee’s relevant Modern Award, enterprise agreement or contract. If you’d like more information on what the penalty rates for your employee are, get in touch with Employsure on 1300 207 182.

  • What are Sunday Penalty Rates in Australia?

    Sunday penalty rates in Australia refers to a higher rate of pay that an employee is entitled to when working on a Sunday. Whether an employee is entitled to a Sunday penalty rate, and the rate of extra pay, depends on the employee’s relevant Modern Award, enterprise agreement or contract. If you’d like more information on what the Sunday penalty rate for your employee is, get in touch with Employsure on 1300 207 182.

  • When Were Penalty Rates Cut in Australia?

    Penalty rates gradually changed – some have been cut and some are increasing – between 2017 and 2020, in the Restaurant, Hospitality, Pharmacy, Fast Food and Retail awards. The last change was made in July 2020, affecting the Retail and Pharmacy Awards.

  • What Is Double Time and Half?

    Double time and half refers to a penalty rate that pays two and a half times the normal rate. For instance, there may be a penalty rate that pays at 250% of the rate of a minimum wage for an employee working on a public holiday.

  • What Are Public Holiday Rates In Australia?

    The public holiday rates in Australia are incredibly varied. The rate an employee is paid for working on a public holiday depends on their applicable Modern Award, enterprise agreement or individual contract. If you’d like more information on what the public holiday rate for your employee is, get in touch with Employsure on 1300 207 182.

  • What Is the Minimum Casual Hourly Rate in Australia?

    The national minimum wage for the 2020/21 financial year for casual employees is currently $24.80 per hour. However, unlike most years, the annual increase to the minimum wage has been staggered and will start on three different dates, depending on the Award. For example:

    • Group 1 Awards – from 1 July 2020
      • Frontline Heath Care & Social Assistance Workers
      • Teachers and Child Care
      • Other Essential Services
    • Group 2 Awards – from 1 November 2020
      • Construction
      • Manufacturing
      • A range of other industries
    • Group 3 Awards – from 1 February 2021
      • Accommodation and Food Services
      • Arts and Recreation Services
      • Aviation
      • Retail
      • Tourism

    If you’d like more information on what the minimum casual rate for your employee is, or when the minimum wage increase will start for your business, get in touch with Employsure on 1300 207 182.

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