The long awaited decision: penalty rates changes in the hospitality and retail sectors

The Fair Work Commission has varied penalty rates in a range of modern awards covering hospitality and retail employees. The changes will start to take effect over the coming months, although the transitional arrangements have not yet been finalised so employers will need to watch this space. Employers operating under any of the awards listed below should review the award and seek advice about implementing the changes:

  • Fast Food Industry Award 2010 (Fast Food Award)
  • General Retail Industry Award 2010 (Retail Award)
  • Hospitality Industry (General) Award 2010 (Hospitality Award)
  • Pharmacy Industry Award 2010 (Pharmacy Award)
  • Registered and Licensed Clubs Award 2010 (Clubs Award)
  • Restaurant Industry Award 2010 (Restaurant Award)


Sunday penalty rates

Lower Sunday penalty rates will apply to certain employees covered by awards listed below.  These changes are expected to be phased in through a series of annual adjustments on 1 July each year starting from 1 July 2017, although the Commission is yet to confirm details of the transitional arrangements. 


 Hospitality Award                                                     Sunday penalty rate change

 Full-time and part-time employees:                        175% ->150 %

(no change for casuals)

 Fast Food Award

       (Level 1 employees only)                          

       Full-time and part-time employees:                         150% -> 125%

 Casual employees:                                                    175% -> 150%

Retail Award

       Full-time and part-time employees:                        200% ->150%

Casual employees:                                                    200% -> 175%

 Pharmacy Award

(7.00 am – 9.00 pm only)

       Full-time and part-time employees:                       200% -> 150%

Casual employees:                                                   200% -> 175%


Public holiday penalty rates

The Commission reduced penalty rates payable on public holidays with effect from 1 July 2017 for each of the following awards:

 Award                               Public holiday penalty rate change

                                           Full & part time employees        Casual employees             

 Hospitality Award           250% -> 225%                                275% -> 250%

Restaurant Award           250% -> 225%                                250%

Retail Award                   250% -> 225%                                275/250% -> 250%

Fast Food Award            250% -> 225%                                275% -> 250%

Pharmacy Award            250% -> 225%                                 275% -> 250%   


Saturday penalty rates

The Commission decided not to vary Saturday penalty rates for most hospitality and retail employees, although Saturday penalty rates in the Clubs and Pharmacy Awards have not yet been finalised.


Early/late night work penalty rates

Certain penalty provisions in the Restaurant Award and the Fast Food Award relating to early/late night work, span of hours and loadings have been varied.  These changes are to take effect in late March 2017 which means employers covered by these awards should review the changes without delay.


Things to watch

The Commission has indicated it will consider whether a loaded rate (i.e., a higher hourly rate payable for all hours in lieu of certain penalty rates) should be introduced in retail and hospitality modern awards, noting that “subject to appropriate safeguards… ‘loaded rates’ may make awards simpler and easier to understand”.  The Commission has also invited submissions on a range of other matters, including the transitional arrangements to phase in the changes to Sunday penalty rates. We recommend that employers continue to watch this space over the coming months.  This is also a good time to review template and existing contracts to make sure they are flexible enough to accommodate the reduced penalty rate arrangements as they are phased in.