Controversial overtime penalty rates from 1 January

Last year employers welcomed the Fair Work Commission’s (FWC) decision to cut penalty rates for Sunday and public holiday rates in the retail and hospitality industries. Now, the FWC is making another wave of changes that Senior Employment Relations Adviser of Employsure Andrew Spiteri says is “yet another financial burden on industries running on thin margins.”

The various changes apply to the fast food, restaurant, retail, hospitality, hair and beauty, social and community care industries; amongst a total of 11 Modern Awards. The changes take effect from the start of the first full pay period starting on or after 1 January 2018.

Employers in effected industries are rightly confused and frustrated: “These industries have been targeted all year with Award changes and are about to see another wave – at the busiest time of the year” he said.

Broadly, the changes provide part-time employees with greater flexibility of rosters and provide casuals the entitlement to overtime penalty rates – an entitlement not previously given to casual employees.

Under the updated provisions, some casuals are now entitled to overtime penalty rates for work they perform in excess of 38 hours per week or:

Fast Food Award – more than 11 hours in one day (175% for the first two overtime hours and 225% for the overtime hours after, and 225% on a Sunday)

Retail Award – more than 9 hours in one day (175% for the first three overtime hours and 225% for overtime hours after, 225% on a Sunday, and 275% on a public holiday)

Hair and Beauty Award – more than 10.5 hours in any one day (175% for the first three hours and 225% for overtime hours after)

In addition, the Hospitality Award, Registered and Licenced Clubs Award, and Restaurant Award, now allow casuals the same penalty rate entitlements as part-time employees.

While the changes will be welcomed by thousands of affected employees, small business employers are feeling the pinch during the peak season and increasing consumer demand for longer operating hours.

Having witnessed many small businesses frustrated by the repeated penalty rate changes Andrew said: “We speak to thousands of small business owners every week who would like to see government stop making frequent changes to overtime penalty rates and get serious about supporting small business.”

Andrew encourages employers to start getting prepared. “It’s so important to be across these changes and check if the new rates apply to your business. Get the right advice to avoid paying the expensive price of getting it wrong.”