Over the Easter period, the Federal Labor Government announced that, if re-elected, it would amend the Fair Work Act 2009 (Cth) to prevent any modern award variation that would reduce or eliminate penalty rates for work on evenings, weekends and/or public holidays.

The measure is in response to an application by employer groups to introduce a voluntary exemption clause into the General Retail Industry Award. This Award is estimated to cover some 350,000 Australian employees.

The variation sought would apply to full-time or part-time employees classified at Levels 4–8 of the Award. These classifications apply to managerial and supervisory employees. The exemption clause would include a 25% loading, so that relevant employees could be paid at least 125% of the minimum weekly rate in lieu of various entitlements including penalty rates.

If the Labor’s proposed legislation comes into effect, it will effectively prevent the Fair Work Commission (FWC) from dealing with the application.

The new law would not prevent employers from seeking to make enterprise agreements that provide for ‘loaded’ or ‘all-in’ pay rates that dispense with the separate entitlement to penalty rates (subject to FWC approval and satisfaction of the better off overall test). It would also not hinder the use of contractual arrangements that seek to set off over-award rates of pay against award monetary entitlements to penalties, loadings and overtime.