Hair Dressers – do not subject your business to a penalty by not paying penalty rates correctly

Important Changes to the Hair and Beauty Industry Commencing 3 November 2021

KEY TAKE-OUTS:

• Every 4 years, the Fair Work Commission carries out a 4 yearly review of the modern awards
• Along with the multiple amendments made to the various awards due to the impacts of COVID-19, the 4 yearly review of the Hair and Beauty Industry Award 2010 has recently been carried out, with changes being made to the penalty rates provided under this award. It is crucial for employers to pay their employees correctly, which includes paying penalty rates in accordance with the applicable Modern Award.
• Employers should be aware of recent changes that affect their Modern Award as a breach of the Award could give rise to unpaid wages claims.
• A snapshot of recent changes to the Hair and Beauty Industry Award 2010 has been provided for those in the applicable industry.
• These changes apply to the first full pay period that starts on or after 3 November 2021.

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What are Penalty Rates?

In the 1940s, the union movements and state regulatory bodies in Australia campaigned for penalty rates. Penalty rates were introduced as unions advocated for employees to be compensated for the inconvenience of working outside their usual working hours. Penalty rates are an increase in payments made on top of a person’s regular wage and are commonly calculated as a percentage of an individual’s regular wage.

Employees in some industries obtain higher pay rates when working:

• Weekends
• Public holidays
• Overtime
• Late-night shifts
• Early morning shifts

Penalty rates can be complex and confusing as each industry and its subsequent entitlements are different. An individual’s penalty rate entitlements are set out in an Enterprise Agreement or the applicable Modern Award. An employer must ensure that the payment corresponds with the employee’s level or classification under the Award.

Employers must pay their employees correctly, with failure to do so being a breach of the award, giving rise to unpaid wages or entitlements claim, fines to the business, and further potential claims on the business from the employee. Employers can choose to pay the minimum rate as encompassed in the Award, or they can pay above the Award. The Fair Work Ombudsman can investigate a business if they are notified that an employer has failed to comply with paying their employees the correct penalty rate under their relevant Award. If an employer has underpaid their staff, they will be required to pay the relevant back pay and any extra penalties, in addition to fines that the Fair Work Ombudsman can choose to issue, at their discretion.

A serious contravention is when the Court determines that an individual knew they were contravening an obligation under workplace laws and the contravention was part of a systematic pattern conducted by the business. If a breach is found to be ‘serious contravention’, the Fair Work Ombudsman can take the company directors, human resources, accountants, other businesses in the supply chain and other managers to Court if they were involved in the contravention. These are very serious consequences for employers, and as such, we highly recommend regularly checking your payment rates and ensuring they are in accordance with the current minimum rates under the applicable Award.

Recent changes to the Hair and Beauty Industry Award 2010

Pursuant to the Fair Work Act, modern awards must have a 4-yearly review. The most recent determination has made changes to penalty rates in the hair and beauty industry and the penalty rates for Saturday and Sunday workers. The Full Bench of the Fair Work Commission made the following determination on 7 October 2021:

Saturday Penalty Rates: full-time and part-time employees will be paid at 133% of their ordinary hourly rate. Casual employees will be paid at 158% of the ordinary hourly rate (inclusive of casual loading).

Sunday Penalty Rates: full-time and part-time employees will be paid at 200% of their ordinary hourly rate. Casual employees will be paid at 225% of the ordinary hourly rate (inclusive of casual loading).

The determination comes into operation on 3 November 2021, which means employers that have a full pay period that starts on or after 3 November 2021 must pay the above new penalty rates in this pay period.

Further to this, the Fair Work Commission introduced a phased-in implementation of the new penalty rates for casuals, starting from 3 November 2021. This means that from 3 November 2021 the phased-in implementation of the new penalty rate will apply as follows:

Date	Saturday Penalty Rates	Sunday Penalty Rates
3 November 2021 to 30 January 2022	133%	200%
31 January 2022 to 29 April 2022	138%	205%
30 April 2022 to 30 December 2022	143%	210%
31 December 2022 to 29 April 2023	148%	215%
30 April 2023 to 30 December 2023	153%	220%
From 31 December 2023	158%	225%

Actions required for employers

The new penalty rates apply from 3 November 2021. As such, Coutts highly recommends that employers urgently:

1. Review their employees status to ascertain full-time, part-time and casual staff;
2. Update employment records and pay rates to encompass the new penalty rates for full time and part-time employees, with the pay change, starting the first full pay cycle on or after 3 November 2021;
3. Update employment records and pay rates to encompass the new penalty rates for casual employees, with the pay change starting the first full pay cycle on or after 3 November 2021; and
4. Diarise the dates of the “phased-in” increases for casual employees, noted above.

Coutts have an experienced employment law team who are able to advise both employers and employee of the rights and entitlements in relation to penalty rates. If an employment law dispute arises regarding overtime and penalty rates our employment lawyers can assist in providing you with accurate legal advice without the legal jargon, and with a solution-focused view.