What are penalty rates? 

Being rostered on on a Saturday or Sunday may sound a little bit daunting, given that weekends are often the days of the week where you can take time off to relax, recharge, and spend quality time with your friends and family. Being asked to stay back for a few extra hours after a long day of work may burn you out as an employee, however, if you consider money as a driving factor to get to work, you may be more inclined to accept the shift due to penalty rates.

Employees are paid penalty rates for working outside of business hours, and this Legal Kitz blog is here to take you through exactly what penalty rates are, and how to calculate them.

What are penalty rates? 

Penalty rates were introduced back in the 1940s after the union movement campaigned for them, and they are the higher pay rates that are paid to employees who work outside of regular business hours or days, such as evenings, weekends or public holidays. Employees are entitled to these penalty rates when work is undertaken during weekends, public holidays, overtime, late night shifts, or even early morning shifts.

An employee receives these rates on top of their regular wage, for compensation for the hours spent working during inconvenient times. These penalty rates are often calculated as a percentage of an employee’s regular wage, and the terms “time and a half” or “double time” are commonly used to describe the employee being paid at 150% or 200% of their regular wage. 

Am I allowed to refuse work if I want to? 

It is not essential that an employee accepts work during the weekend or unusual times, however employers can demand work when grounds are reasonable to do so, or if stated separately on a contract that an employee must be available for work when an employer requests. On the other hand, employees can reject work on weekends or unusual times when there are reasonable grounds to do so, or if stated in the award or contract that it is not necessary that an employee agrees to work out outside of their regular times. 

How do I calculate penalty rates? 

Working inconvenient hours or days of the week do not have the same penalty rate throughout. The penalty rate an employee receives is also highly dependent on the certain industry they work for. The following are examples of penalty rates calculated based on an employee’s normal hourly rate:

Fast Food Industry Award (not casual) 

Saturday (125%), Sunday (125%), Public Holiday (225%). 

Fast Food Industry Award as (casual) 

Saturday (150%), Sunday (150%), Public Holiday (250%). 

General Retail Industry Award (not casual) 

 Saturday (125%), Sunday (165% (15% cut)), Public Holiday (225%). 

General Retail Industry Award (casual) 

Saturday (140%), Sunday (175% (10% cut)), Public Holiday (250%). 

Hospitality Industry Award (not casual) 

Saturday (125%), Sunday (150%), Public Holiday (225%). 

Hospitality Industry Award (casual) 

Saturday (150%), Sunday (175%), Public Holiday (250%). 

Restaurant Industry Award (not casual) 

Saturday (125%), Sunday (150%), Public Holiday (225%). 

Restaurant Industry Award (casual) 

Saturday (150%), Sunday (150%), Public Holiday (250%). 

Alternatively, Fair Work Australia provides a Pay and Conditions Tool in order for an employer to understand specifically how much they should be paying their employees in penalty rates for working unusual hours. 

What are the penalties for failing to pay these penalty rates? 

It is considered a serious offence to underpay your staff, and this can incur serious and heavy fines for a business. If an issue is brought forth towards the Fair Work Ombudsman Australia, the employer will not only have to pay back pay, but also additional fines and penalties on top of the sum the employee will receive. In addition, Fair Work can also apply an additional penalty worth $63,000 for breaching an award, and also take individual employers to court if found contributing directly to the business’ violation.

Legal advice

Working outside regular hours is a good way to earn additional income on top of your wages. These penalty rates vary from day and time of the week worked, and is often an persuasive factor for employees to accept work. However, employees should always keep in mind that they are not obliged to work these shifts if they wish to not do so under reasonable circumstances, unless they have agreed to do so under a specific agreement or contract.

If you need any assistance with any employment related law, Legal Kitz can help! Our lawyers specialise in employment related matters and can help you as either an employer or employee. Book here for a FREE consult now! Furthermore, our sister company Business Kitz offers a subscription plan for 200+ affordable business, legal and employment document templates.

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