Penalty rates change

From July 1, a drop in penalty rates will apply to pharmacy businesses following the Fair Work Commission (FWC) decision last year.

This will be the second year of penalty rate changes through removing the variance between Sunday and Saturday rates. The first round of penalty rate cuts, in 2017, reduced Sunday and public holiday work rates by five per cent. The full penalty rate reduction rollout is expected to be completed by 2020.

According to Australian workplace relations firm Employsure, representing close to 20,000 small and medium sized businesses, businesses have generally welcomed the reduction in penalty rates, which it says were needed to reflect the 24/7 economy.

“Sunday hours are no more ‘unsociable’ than Saturday, which will progressively shift in line,” Employsure Senior Employment Relations Adviser Andrew Spiteri said.

“An overwhelming number of employers we have consulted with have reported they would increase employment and operating hours on Sundays and public holidays if penalty rates were reduced.”

This view was also reflected in Australian Industry Group surveys, which Employsure says were a key body of evidence used by the FWC in reaching its decision.

Mr Spiteri says the reduction in penalty rates has helped many small businesses remain trading on Sundays or public holidays, offer more jobs and increase overall hours worked.

“The small reduction will have a big impact on small businesses in industries operating on thin margins,” he said.

Details of the new penalty-rate arrangements 

  • Sunday work: full-time and part-time employees 

Those working before 7am and after 9pm will continue to be paid 200 per cent of their base pay rate after July 1. Those working from 7am to 9pm will be paid the following percentages of their base pay rate.

 

Effective period Penalty rate
1 July 2018 to 30 June 2019 180 percent
1 July 2019 to 30 June 2020 165 percent
1 July 2020 onwards 150 percent

 

  • Sunday work: casual employees <bold>

Casual employees working before 7am and after 9pm will continue to be paid 225 per cent of their base pay rate after July 1. This rate includes their casual loading. Casual employees working from 7am to 9pm will be paid the following percentages of their base pay rate. These rates include their casual loading.

 

Effective period Penalty rate
1 July 2018 to 30 June 2019 205 percent
1 July 2019 to 30 June 2020 190 percent
1 July 2020 onwards 175 percent

 

  • Minimum wage up

While employers in the restaurant, hospitality, pharmacy, fast-food and retail industries receive some relief in the form of reduced penalty rates, also kicking in from July 1 is a 3.5 per cent increase in the national minimum wage.

“Millions of employers across all industries will need to come up with an extra $24.30 per week per employee, paid at the expense of their bottom line,” Mr Spiteri said.

“Small-business employers feel the pinch during the peak season and increasing consumer demand for longer operating hours.

“Some simply need to reduce their profit targets and take their extra payroll costs from their profits.”

Mr Spiteri is encouraging employers to begin preparing for the July 1 changes.

“It’s so important to be across these changes and check if the new reduced penalty rates in addition to the increased minimum wage applies to your business,” he said. “Get the right advice to avoid paying too much or too little.”