Ratings Season: Penalty Rates and the Fair Work Commission

Jun 8, 2017
Reading Time: 2 minutes
Written by Lily O'Keefe

This week the Fair Work Commission has handed down its ruling in the weekend penalty rates review that has been afoot since 2015. The decision has received mixed reviews from a range of industry leaders, however the Commission hopes the cuts will boost employment and improve the consumer experience in services industries.

Every business is different. We recommend consulting an employment lawyer to see the implications of the changes for your business.

Who will be affected?

The Fair Work Commission has made penalty rate cuts which will affect employees in the fast food, hospitality, retail, and pharmacy industries. Notably, restaurant and cafe employees will not be affected.

See the full summary of the Fair Work Commission decision here.

What are the penalty rate cuts being implemented?

The nominated transition period is four years, with full implementation of penalty rate cuts across the affected sectors by 2020. Employees in fast food or hospitality will have Sunday penalty rates reduced by 5 per cent this year, and 10 per cent in 2018 and 2019 respectively. Similarly, retail or pharmacy employees will have their Sunday pay cut by 5 per cent this year, but it will reduce by a further 15 per cent every year until 2020.

What has been the reaction to the cuts?

The Turnbull government has supported the penalty rate cuts, citing benefits for small business owners being able to afford to keep their businesses open on Sundays. While retailers stand to enjoy benefits from the changes, National Retail Association chief executive Dominique Lamb has questioned the decision in regards to the lengthy transition period, stating the retail industry would have favoured a two year period in which to fully implement the cuts.

What does this mean for small business owners?

The Fair Work Commission hopes that by reducing the wages payable to Sunday staff across the aforementioned industries business owners will hire more staff on, improving both the quality of their service and bolstering casual employment. The effects of the cuts in practice are yet to be seen.

If you are unsure how this will affect your business, we recommend getting in touch with an employment lawyer.

Let us know what you think about the Fair Work Commission’s penalty rate cuts by tagging us #lawpath or @lawpath

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