Franchisors – Beware recent penalty rate changes for casual workers

Paying your staff the right wages is critical, regardless of the nature of your business. Franchises have been under particular scrutiny over the past couple of years, thanks to a series of underpayments hitting the headlines. With a current inquiry into the Franchising Code of Conduct also underway, it’s more important than ever that you’re on top of recent changes to penalty rates for your casual staff.

What has happened?

In 2017, the Fair Work Commission decided to cut Sunday and public holiday penalty rates in the Fast Food, Hospitality, Pharmacy and Retail Awards. These changes came into effect in July of this year.

For those in the retail sector; in September the Fair Work Commission has recently determined that penalty rates on Saturdays and for evening work be increased for over 350,000 casual retail workers from November this year.

What changes do I need to be aware of?

  • Casual employees are now entitled to receive overtime penalty rates.
  • Casual workers under the Retail Award have had hourly rates cut from 200% loading to 175% loading on Sundays.
  • Public holiday penalty rates have been cut from 275 – 250% loading to 250% loading.
  • The latest penalty rate changes for casual retail workers results in 5% loading from 1 November for each hour worked after 6pm, from Monday to Friday. This will increase to 15% loading by 2020. They will receive an additional 15% pay for all ordinary hours worked on a Saturday (on top of 25% casual loading), rising to 25% by 2020.

Franchisors under the Hospitality and Fast Food Awards will experience yearly changes in penalty rates until 1 July, 2019, while those under the Pharmacy and Retail Awards, will need to stay on top of changes until 1 July, 2020.

What should I do?

If you haven’t already, communicate the changes with your franchisees. Underpayment, even inadvertently, is a serious breach and can cause reputational as well as financial damage to your business.

It is also recommended to review your payroll processes and making sure systems have been updated accordingly.

Where can I find more information?

The Fair Work website has a great range of information and tools to assist you in determining the correct rates for your staff. To discuss what the recent changes mean for your franchise, please contact Racha Abboud.