Impact of Penalty Rate Reduction on Employees in Australia

Running Head: BUSINESS AND CORPORATION LAW 0
Employment Relations

EMPLOYMENT LAW 1
Contents
Introduction......................................................................................................................................2
Summary of the decision.................................................................................................................2
Arguments........................................................................................................................................5
Evidence of the effect......................................................................................................................6
Political debates...............................................................................................................................8
Reversal of Decision........................................................................................................................9
Impact on Future of Fair Work Commission.................................................................................10
References......................................................................................................................................11

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Introduction
In Australia, employees who falls in the purview of registered agreement, award or
enterprise agreement may get a higher rate to perform the work on Saturdays and Sundays,
overtime, public holidays and these higher rates are known as penalty rates. Fair work
commission (hereinafter referred to as FWC) is the main body that reviews and amends penalty
rates for the workers of Australia. This power to commission is given u/s 156 of the Fair Work
Act 2009. Recently FWC reduced these penalty rates for some of the sectors that have been a
matter of debate in this country. Many issues have emerged out of such a decision. In the
presented report, the discussion will be made on decision of the commission, arguments for and
against this decision and impact of amendment in penalty rates on employees.
In addition to this, a political debate also surrounds the judgement of the commission, which will
be discussed in this report. At last, the conclusion will be made on the topic that whether the
decision should be reversed or not.
Summary of the decision
In order to discuss the background of the decision of FWC this is to state that prior to this
decision, the commission received an application from various employer bodies in relation to the
reduction of penalty rates under different modern awards in Retail and hospitality industry. FWC
in its decision reviewed weekend as well as public holiday penalty rates related to retail and
hospitality awards. Following awards have been dealt with this decision:-
 Hospitality Industry (General) Award 2010 (the Hospitality Award)
 Fast Food Industry Award 2010 (the Fast Food Award)

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 General Retail Industry Award 2010 (the Retail Award)
 Restaurant Industry Award 2010 (the Restaurant Award)
 Pharmacy Industry Award 2010 (the Pharmacy Award)
 Registered and Licensed Clubs Award 2010 (the Clubs Award)
FWC has received over 5900 submissions from the principal parties, church-based
organization, state and territory government, individual employees, employers, and political
parties. FWC proceed with the hearing of these applications as per the provisions of section 577
of the far work act. The full bench of this decision examined the Saturday penalty rates in the
Retail, fast food, hospitality, and restaurant awards. After such review, the same has been
satisfied that the penalty rates available to employees achieve modern awards objectives as the
same provides a minimum safety net. Nevertheless, the opinion was not the same for Sunday
penalty rates. In the opinion of the full bench, Sunday penalty rates do not fulfill modern awards
objectives, as the same was not offering a minimum safety net. After reviewing existing Sunday
and public, holiday penalty rates and submission of different parties, FWC decided changes in
the same as follow:-
Award Type of employee Sunday Penalty Rate
Fast Food Awards
(Level 1 employees only)
Full-time and part-time
employees:
150 percent 125 percent
Casual employees: 175 per cent 150 per cent
Full-time and part-time
employees:
175 percent 150 percent