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Background information
Background
(The information below has been taken from the Fair Work Ombudsmans Internet page accessed at http://www.fairwork.gov.au/pay/penalty-rates-and-allowances and from Australian Business Consulting Solutions Workplace Info Internet page accessed at http://www.fairwork.gov.au/pay/penalty-rates-and-allowanceshttp://workplaceinfo.com.au/payroll/payments-and-expenses/penalty-payments
The information on the Fair Work Commission was drawn from the Wikipedia entry titled Fair Work Commission. The full text of the article can be accessed at https://en.wikipedia.org/wiki/Fair_Work_Commission)
Definition and scope
Penalty rates or payments refer generally to those payments made to employees who work outside the ordinary day-time hours of the business e.g. on weekends and public holidays.
Employees often get a higher pay rate when working:
weekends
public holidays
overtime
late night shifts or
early morning shifts.
There are some workplace arrangements that affect how penalty rates and allowances are paid. These include:
salary payments
employment contracts
individual flexibility agreements (IFAs)
a guarantee of annual earnings.
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.
Enterprise bargaining has impacted on penalty rates in many businesses and has also changed the traditional approach to penalty rates adopted by awards. So, for example, work times that used to attract penalties are no longer treated as penalty times (for example, Saturday work).
Source of entitlement
An entitlement to penalty payments can be found in awards and agreements.
Cumulative penalty rates
A limitation is usually imposed on the accumulation of penalty rates paid in respect of overtime, Sunday and holiday work and shift work.
An employee who works overtime on a night shift might under one provision of the award concerned be entitled to time and a half or double time and under another provision to a shift allowance for the night shift.
If the double-time maximum is prescribed by the award in question, however, the employee would not receive more than double rates whatever the period of overtime might be or the time at which it is worked.
Most awards prescribe a limitation on the extent to which any extra rates included may accumulate when two or more rates operate at the same time.
In the case of special rates or disability allowances, for example, it is generally provided that when two or more of such rates are payable simultaneously only the highest of the rates shall be paid.
The Fair Work Commission
The Fair Work Commission (FWC), formerly known as Fair Work Australia (FWA), is the Australian industrial relations tribunal created by the Fair Work Act 2009 as part of the Rudd Government's reforms to industrial relations in Australia. Operations commenced on 1 July 2009 as the successor of the Australian Industrial Relations Commission. Ms Bernadette O'Neill is its current general manager.
FWC's functions include the setting and varying industrial awards, minimum wage fixation, dispute resolution, the approval of enterprise agreements, and handling claims for unfair dismissal. It is the successor body to the Australian Industrial Relations Commission, though it also performs functions previously performed by the Workplace Authority and the Australian Fair Pay Commission.