Fair Work Announces Penalty Rates Transitional Arrangements

Katrina Marquez

5 June 2017    |   

Today the Fair Work Commission has released its decision regarding the Transitional Arrangements to the changes in penalty rates. On February 23 2017, the Fair Work Commission released its decision to amend Sunday and Public Holiday penalty rates in a number of Modern Awards. Sunday Penalty Rate Changes Sunday penalty rates will be reduced to 150% for full-time and part-time employees under the Hospitality Award, the Retail Award, and Pharmacy Award. Sunday penalty rates will be reduced to 175% for casual employees under the Retail and Pharmacy Award. The Sunday penalty rate for casual employees under the Hospitality Award remains unchanged at 175%. Sunday penalty rates for Level 1 Fast Food Award employees will also be changed. Full-time and part-time employees will see a reduction to 125%, and casual employees will see a reduction to 150%. Public Holiday penalty rates were also reduced for the Hospitality, Retail, Pharmacy, Fast Food and Restaurant Awards. The Fair Work Commission faced backlash over the decision, with many employee industry groups citing that a reduction in penalty rates would leave the ‘most vulnerable’ workers worse off as a result of taking home less pay. The Commission has today announced that it was not sufficiently persuaded that the impacts were substantive enough to not go ahead with the proposed changes, citing the positive employment benefits as more significant. It has also rejected the SDA’s request of introducing different transitional arrangements for current staff and employees employed after July 1 2017, as it would potentially create significant disharmony between employees, and additional complexities for employers transitioning to the new penalty rates. As such, the Fair Work Commission has announced its Transitional Arrangements for the relevant Modern Awards, these are outlined below. Transitional Arrangements to Penalty Rates Transitional Arrangements Fast Food Award Source: Fair Work Commission Transitional Arrangements Hospitality Award Source: Fair Work Commission Transitional Arrangements Retail Award Source: Fair Work Commission Transitional Arrangements Pharmacy Award Source: Fair Work Commission Proposed Changes to Public Holiday Penalty Rates The proposed changes to Public Holiday penalty rates will take effect July 1 2017, without transitional arrangements. Source: Fair Work Commission   For more information on the Transitional Arrangements made to the aforementioned Awards, please visit the Fair Work Commission website.

Today the Fair Work Commission has released its decision regarding the Transitional Arrangements to the changes in penalty rates.

On February 23 2017, the Fair Work Commission released its decision to amend Sunday and Public Holiday penalty rates in a number of Modern Awards.

Sunday Penalty Rate Changes

Sunday penalty rates will be reduced to 150% for full-time and part-time employees under the Hospitality Award, the Retail Award, and Pharmacy Award.

Sunday penalty rates will be reduced to 175% for casual employees under the Retail and Pharmacy Award. The Sunday penalty rate for casual employees under the Hospitality Award remains unchanged at 175%.

Sunday penalty rates for Level 1 Fast Food Award employees will also be changed. Full-time and part-time employees will see a reduction to 125%, and casual employees will see a reduction to 150%.

Public Holiday penalty rates were also reduced for the Hospitality, Retail, Pharmacy, Fast Food and Restaurant Awards.

The Fair Work Commission faced backlash over the decision, with many employee industry groups citing that a reduction in penalty rates would leave the ‘most vulnerable’ workers worse off as a result of taking home less pay. The Commission has today announced that it was not sufficiently persuaded that the impacts were substantive enough to not go ahead with the proposed changes, citing the positive employment benefits as more significant. It has also rejected the SDA’s request of introducing different transitional arrangements for current staff and employees employed after July 1 2017, as it would potentially create significant disharmony between employees, and additional complexities for employers transitioning to the new penalty rates.

As such, the Fair Work Commission has announced its Transitional Arrangements for the relevant Modern Awards, these are outlined below.

Transitional Arrangements to Penalty Rates

Transitional Arrangements Fast Food Award

Source: Fair Work Commission

Transitional Arrangements Hospitality Award

Source: Fair Work Commission

Transitional Arrangements Retail Award

Source: Fair Work Commission

Transitional Arrangements Pharmacy Award

Source: Fair Work Commission

Proposed Changes to Public Holiday Penalty Rates

The proposed changes to Public Holiday penalty rates will take effect July 1 2017, without transitional arrangements.

Source: Fair Work Commission

 

For more information on the Transitional Arrangements made to the aforementioned Awards, please visit the Fair Work Commission website.

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Easter Penalty Rates 2015 — What you need to know about paying staff

Easter is coming up soon, and that means two things! A new season of Game of Thrones to feast on, and – perhaps less excitingly – public holiday rates to pay staff. As a business owner, accountant, or bookkeeper, it’s important to be aware of how public holiday rates over Easter and ANZAC Day should be paid in your state. First, let’s see when the holidays will be in 2014. You might be surprised! If your business is open on any of these public holidays, you’ll need to pay staff the appropriate public holiday rates. You should check your award, which will tell you exactly what multiplier or penalties to apply, often under a Public Holidays section. A common multiplier is 2.5x. Some businesses pay staff salaries, or pay casually “above award”. Public holiday penalties still apply! If you have a contract, it should cover this – check with Fair Work if you are unsure. Staff who don’t work on a public holiday If you have full or part time staff who should have worked on any of the weekday public holidays – Good Friday, Easter Monday, and Easter Tuesday in specific cases – they are still entitled to pay, even if they do not work. Generally you’ll pay at base rate for the hours staff would have been entitled to. Of course, if staff do work on the day, you’ll pay at a higher rate as dictated by the award (see above). But keep in mind: this only applies if they usually work on that day. For example, a part timer in Queensland who generally works Tuesday to Thursday probably wouldn’t get paid the public holidays because there’s no public holiday on those weekdays. Check your award/agreement to be sure! If your award dictates how rostered days off work, you should check to see if staff with an RDO on a public holiday are still paid. In some states, some kinds of businesses are not permitted to open on public holidays due to trading regulations. If this applies, you will probably still be required to pay staff who would otherwise work on that weekday. Again, if you’re not sure, it’s best to ask. Staff who work on a day that isn’t a public holiday Keep in mind that the rest of the award doesn’t shut off just because it’s Easter. For example, if you are in Tasmania and pay Saturday rates, you’ll still need to pay these on Easter Saturday (which is not a public holiday for you). Did you know… If an employee takes sick leave around a public holiday (eg. Thursday April 24 to Monday April 28), they still get paid the public holiday if they were otherwise supposed to work that day (ie. full/part time) If an employee takes annual leave, public holidays during the leave period don’t count towards their annual leave balance Public holidays do not need to be paid for staff on unpaid leave Staff cannot be forced to work on a public holiday if they have reasonable grounds for doing so. Common reasons include: the amount of notice given, family responsibilities (especially over Easter), and whether one could reasonably expect the business to be open on a public holiday. Tanda’s employee time clocks automatically interpret industry awards – including public holidays – so you can be sure you paid staff right, without tedious manually data entry Add the Fair Work Infoline to your speed dial, they are always happy to help. The number to call for any payroll queries is 131 394. Note: none of the above constitutes formal payroll advice. Always check with your accountant, bookkeeper, or Fair Work.

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Greens MP introduces franchise wages bill

A new bill called the Fair Work Amendment (Recovery of Unpaid Amounts for Franchisee Employees) Bill 2015 was introduced to Parliament last week. The bill, sponsored by Melbourne Greens MP Adam Bandt, is a direct response to the recent 7-Eleven saga, in which the Fair Work Ombudsman has already found over $600,000 in underpaid wages and entitlements. The bill aims to prevent this by making the franchisor responsible for correcting underpayments if the franchisee is not able to pay staff correctly and on time. You can read the text of the bill here, as well as its explanatory memoranda. Nobody would argue that it’s fair how 7-Eleven staff were underpaid, but this bill skirts a fine line that all franchisors should be aware of. The bill is written in the typical legalese of the Fair Work Awards and the National Employment Standards, but the gist of it is: If a franchisee employer does not pay an employee by pay day, then the employee, or someone acting on their behalf, can give the franchisor a written demand for payment. The employee doesn’t need to do this immediately. They have 6 years from the pay day in which they can make this request. The franchisor has 14 days to pay the employee what they’ve requested. If the franchisor doesn’t pay the employee within the given 14 days, the employee (or a lawyer) can take the franchisor to court. So if the franchisor disagrees with the employee’s written request… it must go to court! The court must add interest to the amount already owed to the employee. This interest is calculated from the pay day (so at this point it’ll already be 14 days worth). In short, if this bill became law, every franchisor in Australia would have unknown liabilities on their books for the wages of everyone who’s ever worked at one of their franchises any time in the past 6 years. And they could get these written notices if a franchisee gets their payroll out an hour late. This bill could certainly set a precedent for even more responsibilities for head office over what franchisees are doing. We think this could significantly change the dynamics of franchise agreements and cause a lot of headaches. It’s important for franchises to be ready for this sort of thing. Whether mandated by law or common sense, as a franchisor you need to be sure that your franchisees aren’t doing dodgy things with payroll that are going to see your brand on the front page of the Australian.   About the author Jake Phillpot is a Director of Tanda, a specialist time and attendance company focusing on the interpretation of Australian Modern Awards and Enterprise Agreements. Tanda maintains templates of popular Modern Awards including Fast Food, Hospitality, Retail, and Restaurant. These templates include the Fair Work mandated minimum wages of all levels of staff, as well as rules for penalty rates, allowances, and overtime based on the times that staff worked. For more information, read a Franchise Case Study with Red Rooster or call Jake on 1300 859 117. You can also request an enterprise POA.

Awards & Rostering    |   

The Different Kinds of Award Interpreters

We often chat to people who have looked at a few different award interpretation tools on the market. Most are not really sure which award interpretation tool is right for their business.  In this post, we’re going to take a look at the different kinds of award interpreters out there to help you understand what is important when looking for a tool for you or your clients. Firstly, an Award Interpreter (read about Tanda’s Award Interpreter) is software that figures out how much staff should be getting paid based on their hours and times worked.  What award interpreter is right for you? There are four different kinds and the right one depends on how your staff get paid. Salary Costing Tools: Used to calculate payroll when all your staff are paid a fixed salary. Hourly Wage Calculators: Calculates when staff get paid a single hourly rate for all hours worked. Single Rate Calculators: Pays staff only single types of pay like weekday, Saturday and Sunday rates. However, it cannot handle any of the more common rate scenarios set out in Awards. Award Rule Engines: Does all of the above. In addition, they also calculate overtime, penalty rates, allowances, accruals and leave. “All my staff get paid a salary.” If you only employ salaried staff, a Salary Costing Tool is perfect for you. This is common in white collar workforces like accounting firms. In this case, you enter each employee’s yearly salary, set rules about how leave accrues and the tool does the rest. This is simple because staff are paid the same thing most pay runs. Most payroll systems (including MYOB and Xero) already include such a tool. If this is you, you’re in luck – you will not need an additional system for award interpretation! “My staff get paid the same hourly rate for all hours worked.” This might come up if you run a very small business with only a few staff. This is where nobody works on weekends, receives overtime or penalty rates. Generally, this means the business is only open for a few hours on days that it does open. If that’s you, you’re after an Hourly Wage Calculator. Warning: Be careful with this one. It’s easy to miss subtle wordings in Awards that require you to pay different rates at different times. Keep in mind that if any of your staff ever get more than one pay rate in a week, an hourly wage calculator won’t work as well anymore (even if it doesn’t regularly happen). Using an Hourly Wage Calculator, you enter the hourly rate for each employee. Each week you only enter the number of hours worked (you don’t worry about times). The tool multiplies the hourly rate by the number of hours to calculate total pay. Most payroll systems (including MYOB and Xero) already include such a tool, so if this is you, you’re also in luck – you won’t need an additional system for award interpretation! “I employ only one type of employee. They receive weekday and weekend rates only.” If you have staff that get paid hourly and receive different rates on weekdays, Saturdays, and Sundays, you might be able to use a Single Rate Calculator. However, be careful because this only works if you have a single employment type. An Employment Type refers to the way someone is employed. This includes full-time, part-time, casual or shiftworkers. If everyone you employ is the same employment type (e.g. everyone is Full Time) then this might work for you. When using a Single Rate Award Calculator, you enter the hourly rate that each employee gets during the week. You enter the multiplier for Saturday and Sunday shifts. Also, Public Holidays, if the calculator supports it. If an employee gets a base rate of $20 and your Saturday multiplier is 1.5 (Time and a Half), they receive $30 on Saturday’s. When you enter a timesheet the system pays staff at the appropriate rate based on the days worked only. Why do these only work for one employment type? If you you have a Full Time employee (base $20/hour), and a Casual employee (base $20/hour + 25% casual loading = $25/hour). This table shows how a Single Rate Award Calculator would calculate the cost of two shifts. Weekday Rate – Full Time Saturday Rate – Full Time Weekday Rate – Casual Saturday Rate – Casual 20 30 25 37.5 In most awards, you’re meant to apply the 1.5 multiplier and then the 25% casual loading! Here is how Fair Work’s Pay Rate Calculator says you should have paid: Base Rate – Full Time (1x) Saturday Rate – Full Time (1.5x) Base Rate – Casual (1.25x) Saturday Rate – Casual (1.75x) 20 30 25 35 Single Rate Award Calculator’s are great if you have staff on a single employment type as all their multipliers will be the same. However as soon as you have different kinds of staff, it stops working correctly. (It also doesn’t work if you have to pay overtime, penalty rates, deal with leave or accruals. It’s really just for simple weekend rates) Some payroll systems include Single Rate Calculators, but most likely you’ll need an external system. Most award interpretation tools on the market can be used for Single Rate Calculation. If that’s what you need, just pick whichever looks good and is well supported. However, if you have multiple employment types, or other more complex pay requirements (eg. Overtime, Allowances, Penalty Rates, RDOs, TOIL, or Leave costing), read on… “I employ more than one type of employee,” or “I have to pay overtime, penalty rates or allowances,” or “I have to manage RDO or TOIL accruals and leave” If any of these sound familiar, you’re after an Award Rule Engine. It’s called a rule engine because it’s based on different payroll rules that you configure, allowing you to pay staff at different rates across the week. However, it also covers different rates within the same day and for different employment types. Some Award Rule Engines also come with pre-built sets of rules called Templates. A template contains all of the rules necessary to pay under a particular Fair Work Award. A good template will include all of the base rates for different levels of staff (each employee will have a minimum wage and the template should include this). A really good template will automatically keep your payroll software up to date based on Fair Work Award updates. Here’s some other things to keep an eye out for when comparing Award Rule Engines. You should ask these questions before implementing a system so you don’t get burned 3 months down the track. Can I set different Saturday/Sunday multipliers for Full Time and Casual staff? When staff pay rates go up (each year when the Fair Work updates minimum rates), are these updated automatically? Are staff pay rates automatically updated in the linked payroll system? Does the engine understand the concept of Ordinary Hours? (Ordinary hours of work accrue superannuation and count towards overtime, while non-ordinary hours don’t. Systems that treat all time as ordinary can end up costing you a lot more in labour costs – and staff won’t complain if you get that wrong!) Can I configure different pay rates for junior staff? Does the system automatically update them on birthdays? How does the engine handle RDOs or TOIL accrual? Are you able to configure accrual for arbitrary leave types? Can the engine pay the correct allowances for split shifts? Can you configure how long a shift must be “split” before this kicks in? Can you configure automatic allowances (like Laundry Allowances) and manual ones (like Overtime Meal Allowances)? Just for specific employees? Based on the times or days that they work? Can I configure specific Public Holiday dates for each employee (important if you have  multiple sites with different Show Holidays or Regional Public Holidays). How is overtime calculated if an employee takes leave midway through the pay period? What if they take it on the last day? Can I calculate overtime based on an employee working outside their rostered hours? If a Template has been built based on an Award, can I change the ordinary span of hours based on agreement with the majority of my staff? Can I configure special provisions for shift workers? By the way… with Tanda’s Award Rule Engine, the answer to all those questions is yes! Hopefully, this post has helped clear some confusion around the types of tools that exist in the market and what you can use depending on how your workforce is set up. If you’ve got any further questions, feel free to email us on info@tanda.co

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About the author

Katrina Marquez

Customer Success: With a background in industrial relations, Katrina brings a wealth of knowledge to our Tanda team.

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