The Albanese Government has introduced the Fair Work Amendment (Protecting Penalty and Overtime Rates) Bill 2025, reinforcing its commitment to protecting penalty and overtime rates for around 2.6 million workers.
Key Principle:
Modern awards must not include terms that reduce penalty or overtime rates or roll them into a flat salary if that leaves any employee worse off.
Modern awards must not include terms that reduce penalty or overtime rates or roll them into a flat salary if that leaves any employee worse off.
This responds directly to recent cases where some employers sought Fair Work Commission approval to use flat salaries that bundle all entitlements, removing time tracking or reconciliations, potentially reducing take-home pay.
Key highlights:
- Introduces a new section (135A) to guide how the Fair Work Commission handles applications related to penalty and overtime rates.
- Applies only to modern awards, not enterprise agreements, IFAs, or individual contracts.
- Does not apply retrospectively—only future arrangements are covered.
- Allows the Commission to improve award usability without reducing base entitlements like penalty or overtime rates.
For those watching cases such as the retail award test case or ARA/SDA proposals, this legislation is the Government stepping in before any decisions that could undermine worker protections are made.
Prime Minister Anthony Albanese states:
“Our focus remains on delivering cost-of-living relief to Australians – protecting penalty rates is a vital part of that.”
“Our focus remains on delivering cost-of-living relief to Australians – protecting penalty rates is a vital part of that.”
Minister Amanda Rishworth adds:
“If you rely on the modern award safety net and work outside regular hours, your wages must be protected.”
“If you rely on the modern award safety net and work outside regular hours, your wages must be protected.”
This Bill will have significant implications for how flat salaries and award reliance are managed across industries.