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.
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.
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.
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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:
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.