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Home/Blog/Work Rights/What are penalty rates and are you entitled to them in Australia?
Work Rights·7 April 2025·2 min read

What are penalty rates and are you entitled to them in Australia?

Penalty rates are higher pay rates for working weekends, public holidays, and unsociable hours. Here is what they are and whether they apply to you.

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Quick answer

Penalty rates are higher pay rates that apply when employees work outside ordinary hours, including weekends, public holidays, evenings, and early mornings.

Why do penalty rates exist?

Penalty rates compensate workers for the inconvenience and social cost of working at less desirable times:

  • Long-established feature of Australian employment law
  • Enforced by the Fair Work Commission
  • Set out in modern awards covering each industry
  • Cannot be paid below the award minimum (no opt-out)

The principle: working on a Saturday night or Christmas Day is worth more than working on a Tuesday afternoon.

What are common penalty rates in hospitality?

The Hospitality Industry (General) Award covers cafes, restaurants, hotels, and pubs. Typical rates for full-time and part-time employees:

  • Weekday after 7pm: 110-115% of ordinary rate
  • Saturday: 125% of ordinary rate
  • Sunday: 175% of ordinary rate
  • Public holiday: 225% of ordinary rate
  • Overnight work (specific definitions apply): higher rates

Casual employees also receive a 25% casual loading on top of these rates. The exact figures depend on classification level and shift pattern.

What are common penalty rates in retail?

The General Retail Industry Award covers most retail roles:

  • Saturday: 125% of ordinary rate
  • Sunday: 150% of ordinary rate
  • Public holiday: 225% of ordinary rate
  • Late nights: penalty depends on store closing times

How do you work out what penalty rates apply to you?

The penalty rates depend on:

  1. Which award or enterprise agreement covers your role (ask your employer or check your contract)
  2. Your employment classification within that award
  3. Whether you are casual, part-time, or full-time
  4. The specific day, time, and shift length

If you are unsure about any of these, get in touch with our team. We work out the correct rate for your shifts and check your payslips against what should have been paid.

What should you do if you are not being paid penalty rates?

If you worked weekends or public holidays without receiving penalty rates, you have been underpaid:

  1. Identify the correct rate for the shift (we can help calculate this)
  2. Calculate the underpayment across all affected shifts
  3. Raise the issue with your employer first (it may be a payroll error)
  4. If unresolved, get in touch with our team and we will help recover the unpaid amounts

The same protections apply to working holiday makers as to Australian workers. There is no visa-based barrier to claiming penalty rates you are owed.

Any additional income earned through penalty rates is still subject to the 15% working holiday maker rate and must be declared in your tax return.

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