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Penalty rates are higher pay rates that your employees need to be paid for working particular hours or days.

Employees may be entitled to a penalty rate when working:

  • weekends
  • public holidays
  • overtime
  • late nights shifts or
  • early morning shifts.

Calculating penalty rates

The penalty rates that your employees are entitled to will depend on the award that applies.

If you’re employees are covered by an enterprise agreement or other registered agreement, your penalty rates will be in your agreement.

Workplace arrangements affecting penalty rates

Some workplace arrangements can affect the payment of penalty rates. These include:

  • Annualised salaries
  • Employment contracts
  • Individual flexibility arrangements (IFAs)
  • a guarantee of annual earnings.

The overall amount an employee is paid under one of these arrangements has to be at least the same as the amount they would be paid under their award or agreement.

The wages in salary payments, employment contracts, IFAs and guarantees of annual earnings need to compensate for other penalties and loadings in an applicable award.

Need help with employee award coverage and interpretation?

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