Labor seeks to legislate to protect penalty rates for award workers

Australia Broadcast Center

23-07-2025

Workers employed under the award system could not have penalty or overtime rates bargained away under new government legislation to be introduced in the House of Representatives today.
The bill is a response to a proposal from the retail employer lobby to allow some low-paid retail managers to opt out of those entitlements in exchange for a 35 per cent pay rise, a matter currently before the Fair Work umpire.
The Albanese government took the unusual step of making a submission to Fair Work, arguing that pay loadings in awards were a safety net for low-paid workers and should be protected, and had foreshadowed legislation to override the matter.
The bill would prevent Fair Work from varying any award to reduce or substitute either overtime or penalty rates, which Workplace Relations Minister Amanda Rishworth said would protect the "safety net" for Australia's 2.6 million award workers, roughly one in every five of the total number employed.
"Hard-working Australians rely on penalty rates and overtime rates to keep their heads above water, which is why this bill is so critical," she said.
The award system, which sets out minimum pay and conditions for all workers in certain sectors, has declined in usage over time as the alternative approach of bargaining has grown, but it remains common for staff in retail, hospitality, and the care sector.
The proposal to vary the retail award applied to store managers earning between roughly $54,000 and $62,000, and was backed by Coles, Woolworths, Kmart, and Costco.
The legislation is likely to draw frustration from industry groups and support from unions and the Greens, although a party spokeswoman told the ABC it had not made a decision yet.
Shadow Industrial Relations Minister Tim Wilson said the Coalition had been briefed on the bill, and is not yet guaranteeing his party's support either.
"When it comes down to it, we have concerns about making sure it doesn't hurt small businesses.
"When the Minister was asked whether it was going to have impact on small business, she gave a very explicit firm commitment that it wouldn't.
"But we are not going to know that until we have a clear consultation with small business."
The issue also dovetails with ongoing discussions about how workplace contracts should accommodate working-from-home rights.
Fair Work is considering that question in the context of the award for clerical and administrative workers, and business groups have argued that those given the right to work flexibly should not be entitled to overtime or weekend pay loading, since they can choose when they want to do their work.
Unions have instead suggested the right to work from home should be presumed unless an employer can offer a compelling justification for refusing it.
Depending on the details, a bill protecting penalty rates and overtime rates in all circumstances for award workers could prevent Fair Work from adopting the business groups' suggestions.
The government has given some indication that it may consider legislating work-from-home rights, but has not suggested it favours any particular model for doing so.