Now lawWork & Super Introduced in the House of Representatives, 24 Jul 2025

Award penalty and overtime rates can no longer be cut

About three million workers on awards get extra pay for weekends, nights and overtime. This law stops the Fair Work Commission from cutting that extra pay. It also stops it swapping that pay for a flat rate that leaves anyone worse off.

Official name: Fair Work Amendment (Protecting Penalty and Overtime Rates) Bill 2025

Who it affects

• Award workers who do weekends, nights or overtime: The extra pay they get for those hours cannot be cut in their award.
• Retail, hospitality and office workers on awards: Bosses' groups asked to fold their extra pay into one higher flat rate. Those requests now face a much harder test.
• Employers, including small businesses: They lose one way to keep pay simple with an all-in rate in the award.
• The Fair Work Commission: It must follow a new rule each time it makes, changes or removes an award.

Weekend pay for award workers

Most low-paid workers in Australia rely on an award. An award is a legal paper. It sets the lowest pay and conditions for a job or industry. The Fair Work Commission writes and updates awards. It is the independent umpire for work rules.

Many awards pay extra when you work at hard times. A penalty rate is extra pay for nights, weekends or public holidays. An overtime rate is extra pay for hours past your normal hours. Say you work in a shop. You might get an extra 50% an hour on a Sunday.

People have fought over these rates for years. In 2017 the Commission cut Sunday rates in some awards. These included the shop and hospitality awards. In 2024 and 2025, groups of bosses asked for a change. They wanted some bosses to pay one higher flat rate that covers everything. Unions said some workers would end up with less.

Before the 2025 election, the Labor government made a promise. It said it would protect penalty rates for about three million workers. This bill keeps that promise. Employment Minister Amanda Rishworth brought it to Parliament in July 2025.

Penalty rates locked in

The bill adds a new part, called section 135A, to the Fair Work Act 2009. That is the main law about work. The new part tells the Commission what to do each time it makes, changes or removes an award.

First, the Commission must never lower a penalty rate or overtime rate in an award. Say an award pays 150% for Sunday work today. The Commission cannot change it to 130%.

The law does not force every award to have these rates. Some awards have none. The Commission still decides if a job needs extra pay. That covers overtime, odd hours, weekends, public holidays and shift work.

Flat rate loophole closed

Second, an award cannot swap penalty or overtime rates for something else if any worker would get less extra pay. People call this kind of deal a rolled up rate, a loaded rate or a yearly salary.

The test looks at each single worker. A swap might work for most staff. But if one person would lose money, the Commission cannot say yes.

The government gives an example. Someone asks to add a 120% flat rate to the Car Parking Award. It would be for senior car park officers. Officers on that rate would lose their overtime, weekend and shift rates. Some students work nights and weekends at car parks open 24 hours. The evidence shows they would earn less. So the Commission must say no, unless the plan changes so nobody loses.

What stays the same

One-on-one deals still work. A worker and their boss can agree to change some award terms to suit them. The law has safeguards for these deals. The Commission can also still fix mistakes or unclear words in an award.

Enterprise agreements do not change. An enterprise agreement is a pay deal a workplace makes for itself. The Commission must approve it. A business that wants different pay can still bargain for one.

During debate in the House of Representatives, Parliament's main house, the government added a change. It makes clear the Commission does not have to check every award. It does not have to start its own checks. It also does not have to act on parts outside the request it is looking at.

Cases already running

The new rule covers any request the Commission had not yet decided when the law started. That includes requests made earlier.

At the time, the Australian Retailers Association, a group of shop owners, had asked to add a salary option to the General Retail Industry Award. That is the award for shop workers. Other bosses' groups had asked for the same in the Clerks award, for office workers. Those requests now have to pass the new test.

Start date

The bill went into the House on 24 July 2025. The House passed it on 31 July 2025 with one change from the government. The Senate, Parliament's second house, passed it on 28 August 2025.

The Governor-General, who stands in for the King, signed it into law on 29 August 2025. It became Act No. 37 of 2025, its official law number. The new rule started the next day.

How they voted

Its journey through Parliament

Official sources

• Bill page on aph.gov.au
• Text of the bill
• Explanatory memorandum
• Bills Digest

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