BREAKING NEWS – 4 yearly review of Modern Awards

BREAKING NEWS – 4 yearly review of Modern Awards. Decision handed down by Fair Work Commission February 24th 2017.

Although the move by the Fair Work Commission has come with extensive opinion for and against the controversial decision, and without clear instruction as to when it will come into full effect, it may be time for you to consider your options. Do we implement the changes that might allow for extended hours, or increased employment opportunities for new staff? Or do we stay with the penalty rates currently in place?

Below we have provided an overview of the decision and background, care of the Fair Work Commission.


1. Section 156 of the Fair Work Act 2009 (Cth) (FW Act) provides that the Commission must conduct a 4 yearly review of modern awards (the Review). The Commission’s task in the Review is to decide whether a particular modern award achieves the modern awards objective. If it does not then it is to be varied such that it only includes terms that are ‘necessary to achieve the modern awards objective’ (s.138).

2. As part of the Review, various employer bodies made applications to vary the penalty rates provisions in a number of modern awards in the Hospitality and Retail sectors. These applications have been heard together.

3. This decision deals with the review of the weekend and public holiday penalty rates and some related matters, in Hospitality and Retail awards. The modern awards which are dealt with in this decision are:

• Fast Food Industry Award 2010 (the Fast Food Award)

• General Retail Industry Award 2010 (the Retail Award)

• Hospitality Industry (General) Award 2010 (the Hospitality Award)

• Pharmacy Industry Award 2010 (the Pharmacy Award)

• Registered and Licensed Clubs Award 2010 (the Clubs Award)

• Restaurant Industry Award 2010 (the Restaurant Award)

4. Evidence was given by 143 lay and expert witnesses, of whom 128 were required for cross-examination. Over 5,900 submissions have been received from the principal parties, State and Territory Governments, Church based organisations, political entities and individual employees and employers. Evidence from the final witness was heard on 28 September 2016 and the final written submission was received on 4 February 2017.

5. Variations to modern awards must be justified on their merits. The extent of the merit argument required will depend on the circumstances. Significant changes where merit is reasonably contestable should be supported by an analysis of the relevant legislative provisions and, where feasible, probative evidence.

6. The Full Bench reviewed the Saturday penalty rates in the Fast Food, Hospitality, Restaurant and Retail Awards and (subject to the observations about the Retail Award at [65] and [66]), was satisfied that the existing Saturday penalty rates achieve the modern awards objective – they provide a fair and relevant minimum safety net. The review of Saturday penalty rates in the Clubs and Pharmacy Awards is to be the subject of further proceedings (see [994]–[1009] and [1872]–[1892]).

7. The Full Bench decided that the existing Sunday penalty rates in the Hospitality, Fast Food, Retail and Pharmacy Awards do not achieve the modern awards objective, as they do not provide a fair and relevant minimum safety net.

8. The effect of the decision in respect of Sunday penalty rates is set out below:

Table 1 Proposed changes to Sunday penalty rates in the Hospitality and Retail Awards

Award  Coverage Sunday Penalty
 Hospitality Award  Full-time and part-time employees: 175% → 150%    
(no change for casuals)  
Fast Food Award (Level 1 employees only) Full-time and part time employees: 150% → 125%
Casual employees: 175% → 150%
Retail Award Full-time and part-time employees 200% → 150%
Pharmacy Award 7.00 am – 9:00 pm only) Full-time and part-time employees: 200% → 150%
Casual employees: 200% → 175%

Table 1: Fair Work Commission ruling

Table 2

Proposed public holiday penalty rates in the Hospitality and Retail awards

Award Title Public holiday penalty rates (%)
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

Table 2: Fair Work Commission ruling

It must be noted that the Fair Work Commission has yet to determine when the changes to Sunday penalty rates should come into effect, however it has declared that Public Holiday penalty rates transition should commence from July 2017. Evening & night penalty changes for the Restaurant and Fast Food Award are likely to take place from the 27th March.

On that note, it is likely that transition arrangements to the reduced penalties will occur over 2-4 years. The transition arrangements for the implementation of modern awards took place over a five-year period. The Fair Work Commission says that five years is not appropriate in this instance, given it only effects a small portion of the awards. The likely recommendation would be to transition to the minimum penalty rates within two years. Further decisions in relation to the transition and implementation will come to light over the coming weeks. Please also note, that appeals to the decision are being developed so we will be hearing more about this topic as we edge closer to the end of the financial year.For further information, clarification or assistance in determining what this means for your business, please contact Xavier Miller on 0417 314 736 or at any time.