The Albanese Government has introduced legislation to permanently protect penalty and overtime rates for hospitality workers and other award-dependent employees, setting up a potential clash with business groups who warn the changes could stifle job growth and wage flexibility.
The Fair Work Amendment (Protecting Penalty and Overtime Rates) Bill 2025 would prevent any future variations to modern awards that reduce or remove penalty rates for weekend, public holiday, and after-hours work. The legislation aims to protect around 2.6 million workers who rely on the award safety net.
Prime Minister Anthony Albanese framed the move as essential cost-of-living relief, saying the government wants Australians to “earn more and keep more of what they earn.”
Employment Minister Amanda Rishworth emphasised that workers who depend on penalty rates to “keep their heads above water” deserve wage protection.
Higher base salaries could be at risk, says ACCI
However, the Australian Chamber of Commerce and Industry (ACCI) criticised the bill, arguing it will prevent employers and employees from negotiating arrangements that could exchange penalty rates for higher base salaries.
“This change is a backwards step and out of touch with the realities of a modern economy,” said ACCI acting CEO David Alexander. “Employees want choice and flexibility, and that needs to be at the heart of any workplace proposals.”
Alexander warned that the legislation would harm small businesses already struggling with complexity. “Business needs that agility to survive, especially small businesses who already struggle with a complex and archaic system underpinned by an Act which is over 1600 pages long,” he said.
“Tying Australian businesses up in knots around workplace systems has the effect of strangling growth – and that means fewer jobs and lower wages,” Alexander added, describing the bill as “at odds with the Government’s plans to improve productivity.”
ACCI also claimed the bill undermines the Fair Work Commission’s independence, with Alexander calling it “…essentially a vote of no-confidence in the ability of the industrial umpire to do its job.”
For hospitality operators, the legislation could significantly impact workforce planning and wage structures, particularly for businesses that have previously negotiated penalty rate trade-offs in exchange for higher base pay or other benefits.
The industry, which heavily relies on weekend and evening work, employs many award-dependent workers who the protections would cover.
The bill now faces parliamentary scrutiny, with business groups calling for a detailed examination of its potential economic impacts on small businesses and workplace flexibility.
