Are you ready for casual penalty rates to increase?

Employers in the retail industry are soon to be affected by the next phase of the transitional arrangements to increase Saturday and evening penalty rates for casual employees. It is crucial that employers are alert to upcoming changes following the Fair Work Commission’s decision late last year, which received widespread criticism from retailers.

From 1 November 2018, penalty rates were increased for casual employees covered by the General Retail Industry Award 2010 (Award). In order to soften the impact for employers, the increase in November last year was just one step in a phased increase to the full penalty rate increase.

Penalty rates for casual employees will increase as follows:

Saturday work

Saturday casual
Total add’n to base rate
(Penalty rate + casual loading)
1 October 201920%45%
1 March 202025%50%

Evening work (Mon-Fri hours after 6pm)

Evening work casual
penalty (Mon-Fri)
Total add’n to base rate
(Penalty rate + casual loading)
1 October 201910%35%
1 March 202015%40%
1 October 202020%45%
1 March 202125%50%

This phased transition is shorter than the five-year transitional period originally requested by the Australian Retailers Association and Master Grocers Australia, however it is a welcome decision for retail employers to mitigate the hardship imposed by the changes, as opposed to that which employers would have felt if the increases had been implemented immediately in full, as was argued for by the SDA.

The Saturday penalty increase applies to all hours worked on a Saturday, whilst the evening penalty applies only to hours worked after 6pm.

These changes apply to casual employees only. Saturday and evening penalty rates for permanent employees (full time and part time) remain unchanged.

Alongside the penalty increases for casual retail employees, the FWC introduced a gradual reduction to the Sunday penalty rates for shift workers (from 195 per cent to 175 per cent for permanent shift workers and from 220 per cent to 200 per cent for casual shift workers). The first two stages in this reduction took effect in November 2018 and July 2019, and will be further reduced in the final stage to 200 per cent as of 1 July 2020. In addition, Sunday penalty rates for non-shift workers continue to be reduced annually in July each year, with the final reduction taking effect from 1 July 2020.

What should you do?

From the first full pay period on or after 1 October 2019, employers operating in the retail industry must ensure they are paying all Award-covered casual staff the correct Saturday and evening penalty rates, particularly bearing in mind the coming Christmas retailing season.

Employers should:

  • carefully review their wage arrangements and plan to implement the necessary penalty increases (or decrease, in the case of shift workers) from the first full pay period on or after 1 October 2019;
  • diarise to review the rates again next year prior to the next phase of the transitional arrangements taking effect in March 2020; and
  • in the case of employers already paying above-award rates to casual staff, review these arrangements to ensure the payments remain high enough to accommodate the penalty increases.

Written by HR Legal


1 comment

  1. Gouri Annert posted on September 26, 2019

    Penalty rates should apply to hours that are not the normal hours for that industry. 9am to 5pm is for office workers. But ever since the internet came into play, retail hours have changed and that should now be normal trading hours, anything other than those hours require penalty rates applied. Also Sunday was to go to Church, I believe...I do not see the Churches crowded on a Sunday.

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