Loaded Rates Introduced within the Hospitality Award

The Hospitality Award has been amended to give employers the ability to choose to pay loaded rates to certain employees instead of paying overtime rates, penalty rates (except public holiday penalty rates) and the split shift allowance.

The Fair Work Commission’s decision came into effect on date 3 September 2021.

The new provisions only apply to full-time adult employees classified at Level 3 and above, subject to limited exceptions.

Though it is commonplace for employers in the hospitality industry to already play flat rates of pay with a view to cover off all entitlements that arise under the award, as the Fair Work Commission noted in the decision amending the Hospitality Award, employers frequently underestimate how high they have to set such rates of pay to sufficiently cover all entitlements.

The new provisions in the Hospitality Award therefore provide a level of certainty for employers. By choosing to pay the loaded rates stated in the Award, employers will know that will not be underpaying staff in respect of the relevant entitlements that the loaded rates cover. However, it should be borne in mind that the loaded rates do not cover all entitlements that arise. They do not, for example, cover annual leave loading (the 17.5% “uplift” payable to permanent employees when they take annual leave), or various allowances such as the special clothing allowance, etc.

Choosing to pay the loaded rates also comes with fairly onerous record-keeping requirements, as explained further below.

The loaded rates in detail

As stated above, the new provisions allow an employer to choose to pay a loaded rate instead of paying overtime rates, penalty rates (except public holiday penalty rates) and the split shift allowance. The loaded rate varies, according to the number of hours worked.

Employers do not have to obtain the agreement of employees to pay this loaded rate.

Paying a loaded rate will mean that most of the normal rules regarding overtime will not apply, however, an employee will still entitled to be paid overtime when they are required to work on a rostered day off or an accrued day off. Furthermore, the usual rules in respect of a minimum payment of 4 hours overtime on a rostered day off or accrued day off will continue to apply.

What must an employer do if it wants to pay a loaded rate?

If an employer elects to pay an employee a loaded rate, the employer must provide the employee with a written “loaded rate arrangement” in accordance with the form now set out in Schedule L to the Hospitality Award.

Who do loaded rates not apply to?

As noted above, the provisions relating to loaded rates only apply to full-time employees.

They also do not apply to employees:

(a) engaged in accordance with clause 15.3 of the Hospitality Award (“catering in remote locations”);

(b) rostered in accordance with clause 15.1(b)(vii) of the Hospitality Award (i.e. those rostered for160 hours over a 4 week period with a minimum of 8 days off each 4 week period plus an accrued day off).

Requirements when paying loaded rates

Paying a loaded rate under the new provisions is only possible where all the following points are satisfied:

(a) the roster cycle must operate weekly commencing on a Monday;

(b) on Monday to Friday: a maximum of 11.5 hours can be worked (excluding meal breaks) per day / shift rostered between 7:00am and 12:00am (midnight);

(c) on Saturday: a maximum of 10 hours can be worked (excluding meal breaks);

(d) on Sunday: a maximum of 10 hours can be worked (excluding meal breaks); and

(e) if the period between shifts is 3 hours or less, a split shift allowance must be paid.

How much are the loaded rates?

The applicable loaded rate percentages (to be added to the minimum ordinary hourly rate) are set out below, together with the range of days they apply to and the maximum weekly hours that can be worked.

It will be noted there are a range of different loaded rates, depending on the exact pattern worked.

The loaded rate in dollar value (for employees other than in casino gaming classifications), based on the loaded rate percentage above, is set out below (noting that these rates will increase on 1 November 2021 when the minimum wage under the Hospitality Award increases):

The loaded rates for casino gaming classifications in dollar value (noting that these rates will increase on 1 November 2021) are as follows:

When will other rates of pay apply?

Employees will be entitled to overtime rates and/or penalty rates in accordance with normal overtime and penalty rate rules for work which exceeds the daily and weekly maximum hours, and where work is performed in excess of the “loaded rate range of days” stated above.

Employees will be entitled to the relevant penalty rates and applicable entitlements for work completed on public holidays

Record keeping requirements

Employers must keep a record of the starting and finishing times of all work performed under a loaded rate, and any unpaid breaks taken. This record must be signed by the employee or acknowledged as correct in writing (which may by electronic means) by the employee, each pay period or roster cycle.

Base rates of pay for calculating leave and other NES entitlements

For the purposes of the NES, the base rate of pay of an employee receiving a loaded rate remains the employee’s ordinary hourly rate and excludes the additional loading.

Consultation and disputes

At least 7 days prior to introducing a loaded rate, an employer must consult with all employees affected by the proposed change and their representatives (if any).

The Hospitality Award also provides for the Fair Work Commission to deal with disputes about loaded rates.

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Disclaimer

The information provided in these blog articles is general in nature and is not intended to substitute for professional advice. If you are unsure about how this information applies to your specific situation we recommend you contact Employment Innovations for advice.