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Short straw: Jordan Leser, left, and Eliza Fawcett at the Shortlist cafe in Darlington. Photo: Tamara Dean

Low-paid restaurant and cafe staff will lose some of their penalty rates for working on Sundays after a long-awaited decision by the industrial tribunal.

The decision means that the loading for working on Sundays will drop from 75 per cent to 50 per cent for some casual workers from July.

The restaurant and catering industries immediately lauded the changes, estimating that businesses would save $112 million each year.

The decision was made by the Fair Work Commission, though two members of the commission issued a strongly worded dissenting judgment.

According to the majority judgment, paying workers higher penalty rates on Sundays "may have a limited effect on employment".

This means that the commission accepted that some cafes and restaurants would be more likely to hire staff if wages were lowered.

But the majority judgment also rejected the argument by the restaurant and catering industry that, for casual workers, working on Sundays was nodifferent to working on Saturdays.

"Working on Sundays involves a loss of a day of family time and personal interaction upon which special emphasis is placed by Australian society,’’the judgment said.

The decision applies only to the two lowest grades of employees in a restaurant, bar, or cafe.

In their dissenting opinion, commission vice-president Graeme Watson and commissioner Michael Roberts said the Sunday loading for the lowest paidcasual workers should reduce by only 20 per cent, staged until January 2015.

Restaurant & Catering Australia chief executive John Hart said that some businesses, now shut on Sundays, could consider reopening.

“This will provide labour cost relief for restaurant and café operators currently trading on Sundays,’’ Mr Hart said of the decision.

The restaurant industry is arguing for deeper cuts to penalty rates.

Mr Hart said the decision would affect between 30,000 and 40,000 workers across the country.

Mr Hart also said that the decision represented the first time the commission had accepted that higher penalty rates could lead to lower employment.

"That's a really important part of what this decision has found," Mr Hart said.

"That link has never been acknowledged before."

United Voice, the union representing cafe and restaurant workers, said it would resist any further cuts.

Acting national secretary of United Voice, David O'Byrne, that the decision risked creating an underclass of lower-paid workers.

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"The real concern for us is the treatment of casuals at the lower end of the classification structure," Mr O'Byrne said.

He said that food and beverage attendants classified as grades one or two were often new to the industry, more vulnerable than experienced workers,and often women.

As a result of the decision, these employees will receive a lower loading on Sundays than employees on higher grades.

"We think people should be treated the same, or with equality," Mr O'Byrne said.

Olaf May 15, 2014, 10:37AM

Simon Melbourne May 15, 2014, 10:59AM

Gina knows best May 15, 2014, 11:18AM

housemartin hong kong May 15, 2014, 11:55AM

The boy who cried wolf Planet Earth May 15, 2014, 12:44PM

Country Carole Melbourne May 15, 2014, 12:56PM

97 comments

zecc Southbank May 15, 2014, 10:20AM

Jay Melbourne May 15, 2014, 10:20AM

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»Great, can't wait to see cafe's pass the savings on to customers with lower prices . . . I won't hold my breath.«

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»They simply won't be satisfied until everyone is on $10 an hour«

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»To be fair, not everyone. They will be happy with 99.9% of us on $10/hr and 0.1% on 7 and 8 figure salaries.«

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»Way to go with the scare-mongering, Jay. «

»Why do you not understand that there is no justification to pay employees so much more if they work on Sundays compared to when they work on Mondays? Theyaren't more productive. The business doesn't charge their customers more. Why should these employees be paid more?«

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»$10 per hour???!! You lazy lot will just blow all that on cigarettes, going to the pub and playing the pokies. $2 per day is the rate that is required to keep our nationcompetitive with the other mining nations in Africa.«

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»I gather you think that the casual work force should be entitled to close down a business on a Sunday because the owner can't afford the wages? Or that peopleshould be denied being able to go to their favourite eatery because it's closed for the day? «

»They are exactly what they are called "penalty" rates. Why penalise a business owner simply for opening on a Sunday? If you want higher paid work go and find it.The rates being paid were absurd and obscene and just another part of the entitlement mentality.«

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»@Housemartin - if the business owner wants to stay open on a Sunday then it should be profitable for everyone... not just the owner - hospitality workers have to ingeneral jump through hoops to run to work at the very last minute because 'owners' are too tight to always have a roster, so we compromise our lives all the time forclose to a minimum wage... «

»The key to being profitable business is its quality, not the fact that it 'thinks' it pay too much to its staff on a Sunday - if that's the case, I'd suggest the owner find anew line of business...«

»If you want the finer things in life Housemartin then I suggest you pay for it... otherwise... learn to cook at home!!«

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»Simon, its because a Saturday and a Sunday are non-working days. They are days for family time. Working on those days cuts into that family time therefore thoseworkers should be compensated accordingly. I can't believe you don't know that. Their wages should not have been cut. I will no longer go for a coffee if I happen tobe out shopping on a Sunday just to spite this ruling.«

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»Why can't you just accept it? If everyone is on large salaries, ALL the prices are high up and nobody is better off, as you pay about same proportion of your salaryfor goods and services.Most of the prices in Australia are so high because of high property costs (rental) and high labor cost. It will actually be better for the country to have lower salaries.Yes, some will be on much higher, but they will be either high-skilled or running a company. And I do not have a problem with that. After all, if someone brings inprofit of $10mil, they can have $1mil salary. «

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Rudolf May 15, 2014, 1:43PMComments are now closed

»Rudolf«

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9 March 2010

The calculation of penalty rates for casuals has generally changed under modern awards — compared tothe previously applicable calculation method. This issue was raised in an inquiry to WorkplaceInfo.

Q We have a number of casual employees who are sometimes required to perform work outside thespread of ordinary hours prescribed by the applicable modern award. The employees have queried the basis on which we calculate their overtime pay — which is calculated atthe rate of time and a half for the first three hours and double time thereafter. The award is silent as to whether the overtime pay is calculated on the ordinary hourly rate or the ‘loaded’casual hourly rate (+ 25%). We currently calculate overtime on the ordinary hourly rate, excluding the casual loading. Are we correctin calculating overtime pay for casuals in this manner?

A The interpretation of this issue may have changed in some industries and occupations with theintroduction of modern awards. Previously, in some jurisdictions, industrial tribunals had determined that the casual loading wasconsidered part of a casual’s ordinary pay, meaning it was included in any calculation of penalty ratesunless otherwise specified by the applicable industrial instrument. Loading on ordinary rate However, in its Award Modernisation decision in December 2008 (see para [50]), the Australian IndustrialRelations Commission (now Fair Work Australia) decided that, as a general rule, where penalties applysuch as overtime, shift penalty, weekend work, work on a public holiday, etc, the penalties and the casualloading are both to be calculated on the employee’s ordinary time rate. This means the penalties are to be calculated on the hourly rate exclusive of the casual loading.Depending on the wording of a modern award, there are differing methods of calculating penalty rates fora casual worker, these being:

where a modern award is silent on this matter, the penalty is to be calculated on the base rate ofpay and then the casual loading is added separately.

Example Where a casual’s base rate is $20 per hour and the casual loading is 25%, then a penalty of timeand a half would be calculated as: $20 (base rate) × 1.5 = $30 plus the casual loading of $5 (25% of the base rate of $20) = $35 per hour

the modern award may express a total percentage for work performed by a casual at certain timesthat includes the appropriate penalty rate and the casual loading.

Example The Hospitality Industry (General) Award 2010 provides that a casual employee working Sunday ispaid 175% of the ordinary rate (inclusive of the 25% casual loading). This represents the addition oftime and a half (150%) and the casual loading (25%). For a casual on $20 per hour, this providesthe same result as the first example, ie $35 per hour.

Check modern award The specific provision of the applicable modern award will determine the correct method of calculatingpenalty rates for casual employees covered by that award and may differ from the above examples. It should also be noted that where an employee is covered by a modern award the existing casual loading

Home > Payroll > Payments and expenses > Q&A > Casual loading and penalty rates — calculations under modern awards

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18 July 2014

10 June 2014

By Paul Munro on24 March 2014

Ask the ATO: FBT on work-related travelvs FIFO arrangements

Today’s question to the ATO relates to the difference betweenwork-related travel and fly-in-fly-out (FIFO) arrangements.Read more

Public holiday pay —are allowancesincluded?

If an employee receives an allowance relating to theperformance of their duties, do we pay this allowance for apublic holiday that is not worked? Read more

Should allowances beincluded in penaltyrates?

We paid a couple of employees the ordinary rate for somerecent overtime, but they’re claiming they should also be paidcurrent allowances. How does the relevant award handlethis? Read more

(ie federal award or NAPSA) is subject to the modern award’s transitional provisions, which will becomeoperative from the first full pay period to commence on or after 1 July 2010. Source: Paul Munro, IR Consultant.

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Use PayCheck Plus (http://paycheck.fwo.gov.au/PayCheckPlus.aspx) to calculate penalty rates and allowances in your industry.

You can also check out our pay guides (http://www.fairwork.gov.au/pay/minimum-wages/pay-guides) for pay rates, allowances and common penalties in yourindustry.

Penalty ratesEmployees often get a higher pay rate when working:

weekends

public holidays

overtime

late nights shifts or

early morning shifts.

AllowancesAllowances are extra payments made to employees who:

do certain tasks or have a particular skill

use their own tools at work

work in unpleasant or dangerous conditions.

Common allowances include:

uniforms and special clothing

tools and equipment

travel and fares

car and phone

first-aid

leading hand / supervisor

industry of employment (eg. building and construction).

Find information about penalty rates and allowances in your award by selecting from the list below.

Workplace arrangements affecting penalty rates and allowancesThere are some workplace arrangements that affect how penalty rates and allowances are paid. These include:

Salary payments (http://www.fairwork.gov.au/Pay/Minimum-wages/salary-payments)

Employment contracts (http://www.fairwork.gov.au/awards-and-agreements/employment-contracts)

Individual flexibility agreements (IFAs) (http://www.fairwork.gov.au/Employee-entitlements/Flexibility-in-the-workplace/individual-flexiblity-agreements)

a guarantee of annual earnings (http://www.fairwork.gov.au/Dictionary.aspx?TermID=2047) .

The overall amount an employee is paid under one of these arrangements must be at least the same as the amount they would be paid under their award.

The wages in IFAs, salary payments, employment contracts and guarantees of annual earnings have to offset other penalties and loadings in awards.

Think a mistake might have been made?

Based on what you've told us, it looks like you're covered by the Restaurant Industry Award 2010 [MA000119].

Go to the Restaurant Award pay guide ( 1.2MB) (http://www.fairwork.gov.au/ArticleDocuments/712/restaurant-industry-award-2010-[MA000119]-pay-guide.rtf.aspx) to find:

the 5 frequently used penalty rates for each classification

all allowance payments.

To find all available penalty rates and allowances in this award, use PayCheck Plus (http://paycheck.fwo.gov.au/PayCheckPlus.aspx).

To find out more about who this award applies to, go to Awards (http://www.fairwork.gov.au/awards-and-agreements/awards/default) .

Penalty rates and allowances - Pay - Fair Work Ombudsman http://www.fairwork.gov.au/Pay/penalty-rates-and-allowances

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You might also be interested in

Mistakes can happen. The best way to fix them usually starts with talking.

Check out our Help resolving workplace issues (http://www.fairwork.gov.au/how-we-will-help/how-we-help-you/help-resolving-workplace-issues/default)section for practical advice on:

figuring out if a mistake has been made

talking to your employer or employee about fixing it

getting help from us if you can't resolve it.

Paying wages (http://www.fairwork.gov.au/Pay/paying-wages)

Working on public holidays (http://www.fairwork.gov.au/Leave/Public-holidays/working-on-public-holidays)

When overtime applies (http://www.fairwork.gov.au/Employee-entitlements/hours-of-work-breaks-and-rosters/Hours-of-work/when-overtime-applies)

Pay slips and record-keeping overview (http://www.fairwork.gov.au/Pay/pay-slips-and-record-keeping/default)

Page reference No: 1677-2905

What to do nextUse PayCheck Plus (http://paycheck.fwo.gov.au/PayCheckPlus.aspx) tocalculate penalty rates andallowancesWatch our video on how to usePayCheck Plus(http://www.fairwork.gov.au/website-information/using-fairwork-gov-au#using-our-calculators)Use the List of awards(http://www.fairwork.gov.au/awards-and-agreements/awards/list-of-awards) tocheck the penalty rates, andallowances in an awardSearch the Fair WorkCommission website (https://www.fwc.gov.au/awards-and-agreements/agreements/find-agreement) tocheck penalty rates andallowances in a registeredagreement

Help for small businessFind tools, resources andinformation you might need onour Small business page(http://www.fairwork.gov.au/Find-help-for/Small-business/default) .

The Fair Work Ombudsman is committed to providing advice that you can rely on.

The information contained on this website is general in nature. If you are unsure about how it applies to your situation you can call our Infoline on 13 13 94 orspeak with a union, industry association or workplace relations professional.

Visitors are warned that this site may inadvertently contain names or pictures of Aboriginal and Torres Strait Islander people who have recently died.

www.fairwork.gov.au

Copyright © Commonwealth of Australia 2010

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