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

Penalty rates are higher pay rates that apply when employees work outside of ordinary hours, including on weekends, public holidays, evenings, and early mornings. They are set out in modern awards and enterprise agreements and apply to most employees in Australia, including working holiday makers.

Why penalty rates exist

Penalty rates compensate workers for the inconvenience and social cost of working at times that are generally less desirable, such as Saturday nights, Sundays, and public holidays. They are a long-established feature of Australian employment law and are enforced by the Fair Work Commission.

Common penalty rates in hospitality

In the hospitality industry, which employs a large number of working holiday makers, penalty rates under the Hospitality Industry (General) Award include higher rates for Saturday work, Sunday work (typically 175% of the ordinary rate for full-time and part-time employees), and public holidays (typically 225% of the ordinary rate). Casual employees receive an additional casual loading on top of these rates.

How to find out what penalty rates apply to you

Ask your employer which modern award or enterprise agreement covers your employment. Once you know the award, you can look up the specific penalty rates that apply to your role and working pattern on the Fair Work Ombudsman website. The website has a pay calculator that can help you work out your correct rate for any given shift.

What to do if you are not being paid penalty rates

If you are working weekends or public holidays and are not receiving penalty rates when they should apply, this is underpayment. You can raise it with your employer first, and if that does not resolve it, contact the Fair Work Ombudsman. Working holiday makers have the same rights as any other worker in Australia and are entitled to all award minimums including penalty rates.

Remember that any additional income you earn through penalty rates is still subject to tax at the 15% working holiday maker rate and should be declared in your tax return.

Need help?

Getting paid correctly? Make sure your tax is too.

We help working holiday makers make sure their tax is handled correctly so everything earned ends up in the right hands. Get in touch and we will sort it.