Penalty Rate Transition: Update

The Fair Work Commission released two major decisions this week: its order regarding the timing for the implementation of reductions in penalty rates for Sunday and public holiday work in four major retail and hospitality awards, followed by its annual review of the general minimum wage.  It is interesting to review the combined impact that the two decisions will have on the wages of workers in sectors affected by the penalty rates decision.

Does the Fair Work Commission’s decision to phase those cuts in over two or three years somehow protect the workers who will now receive lower wages for work on Sundays and holidays?  Our previous research suggested this was not possible.

This new Briefing Note re-examines that question in light of the Fair Work Commission’s two actual decisions on the staging of lower penalty rates and the increase in the minimum wage.  We find that the phase-in period merely delays the impact of the lower penalty rates on real wages of Sunday workers.  Real Sunday wages for retail workers decline by almost 25 percent by the end of the phase-in: driven down both by the annual reductions in the penalty rate (which overwhelm annual minimum wage increases) and by the steady impact of inflation.

See our Briefing Note, Penalty Rates, Minimum Wages, and Purchasing Power, for full details.


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