The Albanese Government has just tabled its penalty rates bill in parliament, with industry leaders claiming it will strip away genuine wage flexibility for workers.
The Fair Work Amendment (Protecting Penalty and Overtime Rates) Bill 2025 will prevent variations to awards that would reduce or remove an employee’s penalty rates or overtime rates.
This is according to Prime Minister Anthony Albanese and Minister for Employment and Workplace Relations Amanda Rishworth, with both sharing that penalty rates and overtime rates are an essential feature of the award safety net and should be protected.
“Our number one focus is continuing to deliver cost-of-living relief to Australians,” Albanese said.
“Protecting penalty rates for millions of workers is an important part of that – making sure Australians can earn more and keep more of what they earn.”
However, the Australian Retailers Association (ARA) CEO Chris Rodwell said the forbidding of businesses and their employees from negotiating the incorporation of penalty rates into base salary is a further reflection that Australia’s ‘industrial relations’ are not fit-for-purpose and incapable of lifting labour productivity.
Further, he added that the premise on which this bill is based is a fiction.
“There has been no effort to abolish penalty rates,” Rodwell said. “The focus has been on giving employees a choice around their salary, allowing them to opt for a higher base salary in lieu of penalty rates, and to improve job security.
“The Federal Government’s continued heavy-handed regulation of workplaces has the effect of tangling businesses, especially small retailers, in cost and compliance. It undermines efforts to improve productivity and lift living standards.”
The ARA’s application to the independent umpire also included other workplace flexibility options, including the potential for some employees to lock in a 4-day working week.
“Retailers are committed to ensuring work arrangements are modern and flexible to support employees and their own business needs,” Rodwell said.
“We are considering the potential impact of the legislation, but remain deeply concerned that it cancels out a choice for both employees and employers to come to a reasonable, mutually beneficial work arrangement. In the case of proposed salary absorption, the value of that, on average, for retail managers who opt in would be enhanced financial security in the form of a pay increase of more than $5,800.
“Should the legislation pass in its current form, it is ultimately a matter for the FWC, as an independent body, to determine its impact on our proposal regarding the General Retail Industry Award.”
Meanwhile, Australian Industry Group CEO Innes Willox said the new bill will provide less flexibility when Australian workers want more in their pay packet.
"This is badly drafted legislation that is going to make it harder for employers to employ people who want to work when it suits them,” Willox said.
"The [Fair Work] Commission is already required by law to ensure that awards provide a fair safety net of terms and conditions, and in doing so is required to consider the need for employees to receive additional remuneration for working unsociable hours, such as on weekends and public holidays.
"The Government should be encouraging the Commission to consider how it can simplify and improve our notoriously outdated and unworkable award system. Sadly, this Bill instead proposes to tie the Commission's hands.”
The Australian Council of Trade Unions (ACTU), however, have commended the bill, adding it will prevent employers from cutting penalty rates of award-reliant workers.
ACTU secretary Sally McManus said penalty rates are an essential part of millions of workers’ take-home pay.
“Unfortunately, for decades, employers have pushed and pushed to erode or abolish them,” McManus said.
“Fair protections like penalty rates matter most to the people who can least afford to lose out, including young workers, women, casual workers and those in part-time jobs.”
Workplace Relations Minister Rishworth said the new bill will ensure the wages of around 2.6 million modern award-reliant workers are protected.
“Millions of hard-working Australians rely on penalty rates and overtime rates to keep their heads above water, which is why this Bill is so critical and should receive the support of both the Opposition and the Greens.”