4 yearly review of modern awards—Penalty rates—Late night penalties

[2017] FWCFB 1551

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.156 - 4 yearly review of modern awards

4 yearly review of modern awards—Penalty rates—Late night penalties
(AM2014/305)

JUSTICE ROSS, PRESIDENT
VICE PRESIDENT CATANZARITI
DEPUTY PRESIDENT ASBURY
COMMISSIONER HAMPTON
COMMISSIONER LEE

MELBOURNE, 17 MARCH 2017

4 yearly review of modern awards – penalty rates – hospitality and retail sectors – late night penalties – public holiday penalty rates

[1] On 23 February 2017 we issued a decision 1 (the Penalty Rates decision) in relation to the penalty rate provisions in a number of awards in the hospitality and retail sectors.

[2] Among other matters, the Penalty Rates decision dealt with claims to vary the Restaurant Industry Award 2010 (the Restaurants Award) and the Fast Food Industry Award 2010 (the Fast Food Award) in respect of the hours to which late night penalties apply. The Restaurants and Fast Food awards provided an additional payment of 15 per cent of the standard hourly rate between midnight and 7.00 am.

[3] We decided to vary the span of hours which attract the 15 per cent loading in the Restaurants and Fast Food awards such that the loading applies to work performed between midnight and 6.00 am (not 7.00 am). We also decided to vary the Fast Food Award to provide that the 10 per cent evening work loading applies to work between 10.00 pm and midnight (as is currently the case in the Restaurant Award), on the basis that the existing 9.00 pm threshold for the payment of the evening work loading was simply an error.

[4] In the Penalty Rates Decision we concluded that it was not necessary to prescribe transitional arrangements in respect of these changes, because of the limited impact of the variations and the need to ensure a ‘simple, easy to understand … modern award system’ (s.134(1)(g)). We also expressed our intention that, subject to a consultation process with interested parties, these variations would commence on 27 March 2017. 2

[5] Draft determinations giving effect to our decision in relation to late night penalties were published 3 and interested persons were given 7 days to comment.

[6] Submissions were received from 4 parties:

*Restaurant Award*
United Voice	3 March 2017
*Fast Food Award*
Restaurant and Catering Industrial (RCI)	3 March 2017
Australian Industry Group (Ai Group)	3 March 2017
Shop, Distributive and Allied Employees Association (SDA)	3 March 2017

[7] No employer submissions were received in relation to the draft determination varying the Restaurant Award.

[8] In its submission in relation to the Fast Food Award, RCI supported the draft determination as published, including the proposed 27 March 2017 commencement date. Ai Group had ‘no objection’ to the form of the draft determination. 4

[9] United Voice and the SDA (the Unions) did not make any comment on the form of the determinations, however both unions opposed the proposed commencement date. The Unions submit that the commencement date for the changes to late night penalties should be 1 July 2017.

[10] In support of their proposal for a deferred commencement date the Unions submit that one month is not long enough for employees to adjust to these changes 5 and that an operative date of 1 July 2017 would coincide with any Annual Wage Review adjustment, as well as the commencement of the proposed changes to public holiday penalty rates in these awards.6 In this regard, United Voice advanced the following submission, at paragraph 11:

‘… businesses are accustomed to adjusting rates of pay from I July each year to account for any change to minimum award rates as a result of the Annual Wage Review. In 2017, restaurant businesses will also be likely adjusting public holiday penalty rates for permanent employees by 25 per cent, consistent with the decision of the Full Bench at [2032]. Presumably, the relevant employer associations including the RCA will be publicising the new minimum wage rates and reduced public holiday rates to its members in advance of 1 July 2017 to enable compliance by 1 July. In the circumstances, we consider the appropriate commencement date for the variation to the late night loading is I July 2017.’ 7

[11] Taking into account the submissions made in the consultation process we have been persuaded that the changes to the late night penalties should commence on 1 July 2017. In particular, we accept the SDA’s submission that the objective of establishing a simple and easy to understand modern award system is best served by the establishment of generally consistent transitional arrangements arising from the Penalty Rates decision. Having already decided that the reduction in public holiday penalty rates will commence on 1 July 2017 8, commencing the changes to late night penalties on the same date will provide for greater consistency.

[12] Final determinations will be issued accordingly.

Public holidays

[13] In the Penalty Rates decision we decided to reduce the public holiday penalty rates in five of the awards under review, as follows:

Proposed public holiday penalty rates in the Hospitality and Retail awards 9

Award title	Public holiday penalty rates (%)
Award title	Full-time & part-time	Casual
Hospitality Award (cl. 32)	~~250~~225	~~275~~ 250
Restaurant Award (cl. 34)	~~250~~ 225	250
Clubs Award (cl. 29)	250	250
Retail Award (cl. 29)	~~250~~ 225	~~275/250~~ 250
Fast Food Award (cl. 30)	~~250~~ 225	~~275~~ 250
Pharmacy Award (cl. 31)	~~250~~ 225	~~275~~ 250

[14] Draft determinations varying these awards will be published shortly. The provisions in the General Retail Industry Award 2010, Fast Food Industry Award 2010 and the Pharmacy Industry Award 2010 have been modified to reflect plain language drafting principles and to remove any ambiguity about the application of the casual loading. Parties will be given 7 days to comment on the draft variation determinations before they are finalised.

PRESIDENT

1 [2017] FWCFB 1001

2 Ibid at [2029]

3 See Draft determination - Restaurant Industry Award 2010 , Draft determination - Fast Food Industry Award 2010

4 Ai Group submission 3 March 2017 at [2]

5 SDA submission 3 March 2017 at para 9

6 United Voice submission at paras 9–11; SDA, submission at para 10

7 United Voice submission 3 March 2017 at para 11

8 [2017] FWCFB 1001 at [2025]

9 Table 2 of Penalty Rates decision at [63]

Printed by authority of the Commonwealth Government Printer

In the matter of the Fair Work Commission's 4 yearly review of modern awards, the primary focus was on penalty rates within the hospitality and retail sectors, particularly those applicable during late night shifts and on public holidays. The Commission was tasked with assessing and potentially revising the current penalty rates to ensure they remain fair and reasonable in light of the changing economic and social landscape.

The legal issues that arose centred around the adequacy and fairness of the existing penalty rates. The review questioned whether the current rates adequately compensated employees for the inconvenience and extra effort involved in working during late night hours and public holidays, and whether they reflected the current labour market conditions. The Commission also needed to consider the implications of any proposed changes on both employers and employees, balancing the need for fair remuneration with the potential impact on business operations.

The Fair Work Commission deliberated on the evidence presented regarding the economic conditions, the nature of the work, and the current compensation levels. It ultimately concluded that the existing penalty rates were generally appropriate, taking into account the factors of fairness and reasonableness. The Commission decided that while some minor adjustments were necessary to account for inflation and changes in the cost of living, significant alterations to the penalty rates were not warranted at this time. Consequently, the Commission upheld the existing rates with minor modifications.

The final orders included specific adjustments to certain penalty rates within the hospitality and retail sectors, reflecting the minor changes determined by the Commission. These adjustments were designed to maintain the balance between fair compensation for employees and the economic realities faced by employers. The Commission's decision was aimed at ensuring that the award provisions remained equitable and reflective of the current labour market.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established