Penalty rates¶

Penalty rates are higher rates of pay for working at particular times. Fair Work explains that penalty rates can apply when an employee works evenings, weekends or public holidays. Some jobs also pay penalty rates for early mornings, late nights or shift work.

The word "penalty" does not mean the employee has done anything wrong. It means the employer pays extra for hours worked at times most people would rather have off. How much extra, and which times count, is set by the award or registered agreement that covers the employee. An award is a Fair Work document setting minimum pay and conditions for a type of work; a registered agreement is a workplace deal approved by the Fair Work Commission.

In one line

Penalty rates are higher pay for working at particular times, such as weekends or public holidays — and the rates are set by the award or registered agreement.

Why this matters¶

Staff who work weekends, public holidays or late shifts may be owed more than their base rate. Because the rates and the times they apply change from one award to the next, you cannot assume. Knowing what penalty rates are, and where to check them, helps you pay the right amount.

What you will learn¶

What penalty rates are
When penalty rates can apply
Where to check the penalty rates for a job

Understanding the concept¶

Fair Work describes penalty rates as higher pay rates that can apply for working at certain times, such as evenings, weekends and public holidays. Shift work can also attract penalty rates.

The exact rates, and exactly when they apply, depend on the award or registered agreement. Fair Work is clear that the penalty rates an employee is entitled to depend on the award or agreement that covers them, so there is no single set of penalty rates that applies to every job. For work on a public holiday, Fair Work states that employees are paid at least their base pay rate for the hours worked, with the actual penalty rate again set by the award or agreement.

To find the rates for a specific job, check the relevant award or agreement. Fair Work provides a free Pay and Conditions Tool and downloadable pay guides that set out the penalty rates for each award.

For accountants & bookkeepers

Penalty rates, casual loading and overtime can interact, and awards vary in how they combine. Some awards express a public-holiday or shift rate that already includes casual loading; others stack them. Work from the specific award or agreement wording rather than a general rule, and use the Fair Work Pay and Conditions Tool or the award's pay guide to confirm the figure.

Example¶

Riley works in a role covered by an award. Riley is rostered on a Sunday and on a public holiday. Because these are times the award treats as attracting penalty rates, Riley is paid more than the ordinary rate for those hours. To work out how much more, the employer checks Riley's award, which sets the penalty rate for Sunday work and the rate for public-holiday work. The employer pays each block of hours at the rate the award sets for that time.

Common mistakes¶

Assuming one penalty rate applies everywhere — the rate is set by the award or agreement and varies.
Paying only the base rate for weekend, public-holiday or late-shift work when the award requires more.
Guessing which times attract penalty rates instead of checking the award.
Treating penalty rates as a punishment — they are simply higher pay for working at particular times.

How this works in myaccountant¶

In the app — when you run a pay run, you can add a penalty pay item for an employee and enter the hours and the rate that apply under their award or agreement. The penalty amount is added to their gross pay and appears as its own line on the payslip, so the employee can see it separately from their ordinary pay.

Key points¶

Penalty rates are higher rates of pay for working at particular times.
They can apply to weekends, public holidays, and early, late or shift work.
The rates, and the times they apply, are set by the award or registered agreement.
There is no single set of penalty rates that applies to every job.
For public-holiday work, employees are paid at least their base pay rate.
Check the award, agreement or the Fair Work Pay and Conditions Tool for the exact rates.

Learn next¶

General information only — not tax, super or financial advice.

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