Fair Work gives green light to pubs and hotels to offer loaded pay instead of penalty rates

Hotels and pubs paying senior full-time staff award wages can now offer a higher rate of pay instead of penalty rates such as weekend loading.

A Fair Work Commission full bench decision led by tribunal president Iain Ross supported an industry proposal to introduce “loaded rates” into the award, which would see workers receive a higher rate of pay instead of most entitlements.

The loaded rates will apply to full-time workers paid at level three and above rates and include five tiers of rates ranging from 10.2% to 31.5% above the award rate.

Employers paying these new loaded rates will not be required to pay some staff leave entitlements such as weekend penalty rates but must still pay overtime.

The decision is a response to the Australian Hotels Association’s (AHA) proposal to introduce single-loaded rates to help make the awards system simpler for businesses.

But unions have criticised the industry’s proposal, opposing the changes to the awards on the basis that workers would be worse off.

In its decision, the full bench said it disagreed with the unions, saying that it was “satisfied” workers would either receive the same pay or better pay under the changes.

“Contrary to the submissions advanced by the ACTU and UWU we are satisfied that the quantum of loaded rates and the loaded rate parameters ensure that workers on loaded rates arrangements are paid the same or more than they would have been paid if the loaded rate did not apply,” the full bench said.

The AHA has welcomed the decision, saying it is an “excellent outcome for Australia’s hotels and hospitality businesses”.

Stephen Ferguson, AHA chief executive, said the overwhelming majority of hospitality employers do the right thing but not all businesses have the resources to employ dedicated workplace relations teams.

“Initiatives such as loaded rates are critical in preventing unintended breaches of workplace laws,” he said.

Ferguson said about 65% of Australian hotels are family–owned and operated and those businesses will benefit most from loaded rates.

“They won’t have to spend days labouring over complex pay rates to ensure they are compliant,” he said.

The variation to the Hospitality Award came into effect last Friday.