Penalty rates are additional pay rates that apply when employees work outside standard hours — on weekends, public holidays, or late at night. They exist to compensate workers for the inconvenience and social cost of working when most people are not. But navigating Australia's award system to know exactly what you're entitled to can be genuinely confusing, with different rates applying across hundreds of modern awards. This guide covers the key awards and rates, recent Fair Work decisions, and how to check your entitlements.
Who Gets Penalty Rates?
Penalty rates apply to employees covered by a modern award or enterprise agreement that includes them. Most casual and part-time workers in hospitality, retail, healthcare, transport, and cleaning industries are covered. Full-time employees on above-award salaries may have their penalties "absorbed" into their total package — but only if the contract is properly structured and the total remuneration genuinely exceeds what the award requires.
Employees classified as managers (with genuine managerial responsibilities) are sometimes excluded from penalty rate provisions. If you're unsure of your classification, the Fair Work Ombudsman's Pay and Conditions Tool (pay.gov.au) can confirm your award and applicable rates. Use our Penalty Rates Calculator to estimate your earnings for any shift.
Penalty Rate Comparison Across Major Awards (2025–26 Minimum Wage Base: $24.10/hr)
| Award | Monday–Friday (Ordinary) | Saturday | Sunday | Public Holiday |
|---|---|---|---|---|
| General Retail Industry Award | 100% | 125% | 200% | 225% |
| Restaurant Industry Award | 100% | 125% | 175% | 250% |
| Hospitality Industry (General) Award | 100% | 125% | 175% | 250% |
| Nurses Award | 100% | 150% | 175% | 250% |
| Fast Food Industry Award | 100% | 125% | 150% | 225% |
| Cleaning Services Award | 100% | 150% | 200% | 250% |
| Security Services Industry Award | 100% | 125% | 150% | 250% |
All percentages are of the ordinary hourly rate. A Level 1 retail worker at the minimum wage ($24.10/hr) earns $48.20/hr on a Sunday and $54.23/hr on a public holiday under the General Retail Award.
Public Holiday Rates: Days by State
| State / Territory | Public Holidays per Year | Additional State-Specific Holidays |
|---|---|---|
| NSW | 11 | Bank Holiday (August) |
| VIC | 12 | AFL Grand Final Friday, Melbourne Cup Day |
| QLD | 11 | Royal Queensland Show (Brisbane only) |
| SA | 12 | Adelaide Cup, Proclamation Day |
| WA | 12 | WA Day, Queen's Birthday (different date) |
| TAS | 12 | Eight Hours Day, Hobart Regatta Day |
| NT | 12 | Picnic Day (August), Alice Springs Show Day |
| ACT | 11 | Family & Community Day / ACT Reconciliation Day |
Recent Fair Work Decisions on Penalty Rates
The most significant penalty rate change in recent years was the 2017 Fair Work Commission decision to reduce Sunday and public holiday rates for the retail and hospitality sectors. Sunday rates were reduced from 200% to 150% for hospitality casual workers, phased in over several years. Full implementation was completed by 2020.
In 2023–24, the Fair Work Commission's Annual Wage Review increased the minimum wage by 5.75% and 3.75% respectively, which flowed on to all award rates including the base rate on which penalties are calculated. The minimum wage for 2025–26 is $24.10/hour ($915.90/week), following a 3.5% increase from July 2025.
There have been ongoing FWC proceedings regarding overtime arrangements and the definition of "broken shift" penalties in healthcare awards — particularly relevant for aged care workers following the significant wage increases in that sector.
Enterprise Agreements and Penalty Rate Trade-Offs
Enterprise agreements (EAs) can modify penalty rate structures, but the Fair Work Act requires that employees be "better off overall" under an EA compared to the relevant award — the "Better Off Overall Test" (BOOT). This means an employer can offer a higher base rate in exchange for reduced penalty rates, but only if the total package is demonstrably better when modelled across realistic shift patterns.
In practice, many hospitality and retail EAs offer a flat loaded rate of 115–130% of the award base rate in exchange for no additional weekend penalties. Whether this is better for a specific employee depends entirely on how many weekend shifts they work. An employee who works primarily Monday–Friday evenings will typically benefit from a loaded rate. An employee working predominantly Saturday/Sunday will almost always be worse off.
How to Check If You're Being Paid Correctly
The three-step process to verify your pay:
- Identify your modern award using the Fair Work Ombudsman's tool at fairwork.gov.au/pay-and-conditions
- Find your classification level within that award (Level 1, Level 2, etc.) based on your duties
- Check the current pay rates for your classification at your applicable penalty level
If you believe you're being underpaid, you can lodge a complaint with the Fair Work Ombudsman online. The FWO can investigate and recover unpaid wages, and has significantly increased enforcement activity in the hospitality, retail, and cleaning sectors since 2022. Employers can face penalties of up to $16,500 per breach for underpayment of award entitlements.