Penalty rates, part 1 – why they’re in the news

  • Penalty rates in the news

Penalty rates have been in the news recently, fuelled by the Coalition government’s submissions to the Fair Work Commission on the four yearly review of modern awards, saying:

    • The softening economic environment and labour market should be carefully considered by the Commission during the Review. In particular, the Commission should consider the impact of employment costs on employers’ decision to hire workers over the next four years. (at paragraph 3.3)
    • Given that the model transitional arrangements included in most modern awards (designed to allow employers and employees time to adjust to new minimum wages, loadings, penalty rates and shift allowances in modern awards) operate up until 30 June 2014, it would be appropriate to schedule any review of penalty rates after this date. (at paragraph 7.6)

    This review is a review by the Fair Work Commission of all modern awards. It happens every four years.

    So far, there’s been discussions on how to do a review and what the review is allowed to do, rather than any reviewing of modern awards. The actual review is later. It’s broken up into comments which concern all awards, then comments which concern certain groups of awards. Current groupings (which might change):

    • Group 2: Alpine Resorts Award
    • Group 3: Wine Industry Award
    • Group 4: Restaurant Industry Award, Registered and Licensed Clubs Award, Fast Food Industry Award, Hospitality Industry (General) Award

    Looks like the Fair Work Commission will definitely have penalty rates in its sights in this review. There’s now a specific provision in the Fair Work Act (paragraph 134(1)(da), inserted on 1 January 2014) saying an objective of modern awards is the need to increase base wages for employees working:

    • Unsocial, irregular or unpredictable hours
    • On weekends and public holidays

    In other words, the need for penalty rates.

    The review is expected to be completed by mid 2015. Keep up to date with the progress through FWC’s page on the 4 yearly review of modern awards

    Those interested in making written submissions concerning any claims which affect multiple modern awards or on some technical elements of what the review should look at have until 4pm on Monday, 3 February 2014. There’s a conference about that on Wednesday, 5 February 2014.



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