Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Hansard source

I'd like to thank senators for their contributions to the debate on the Fair Work Amendment (Protecting Penalty and Overtime Rates) Bill 2025. This bill is a clear, simple and practical amendment to protect penalty and overtime rates as fundamental entitlements relied on by millions of award reliant Australian workers.

The Albanese government is committed to delivering workplace relations reforms with a clear goal insight: to get wages moving for Australian workers. We've heard strong support for this bill and the fundamental importance of penalty and overtime rates for employees, particularly from some of the lowest-paid workers in our country—those who keep Australia running on weekends, public holidays, early mornings and late nights.

We prioritised this bill as one of the first legislative acts of this government because we will always act to protect the pay and conditions of Australian workers. Currently, penalty and overtime rates in modern awards can be rolled up into a single rate of pay, leaving some employees worse off. And, in fact, we're actually seeing attempts by some employer groups to do that at this very moment in time, particularly in the retail, banking and clerical industries. This should not be possible to do. Award reliant employees, who rely on their penalty and overtime rates deserve steadfast protection of those entitlements in the minimum safety net.

This bill introduces a new principle into the Fair Work Act to protect penalty and overtime rates in modern awards. It specifically ensures that these rates cannot be reduced or substituted in ways that do not fairly compensate employees for the penalty and overtime rates that they would otherwise receive. This bill enshrines protections for penalty and overtime rates in modern awards while not affecting individual flexibility arrangements, the bargaining framework or the Fair Work Commission's ability to correct errors or clarify award terms.

This amendment sets out the important principle that penalty and overtime rates cannot be reduced. It does this by adding a new section to the Fair Work Act which says that, when exercising its powers, the Fair Work Commission must ensure that, firstly, the specified penalty rate or overtime rate in modern awards is not reduced and, secondly, modern awards do not include terms that allow employers to roll up penalty or overtime rates into a single pay rate that does not fairly compensate employees for the penalty and overtime rates they would otherwise receive. This bill introduces a simple amendment to ensure that penalty and overtime rates in the modern awards safety net are protected.

I'd like to thank the Senate Education and Employment Legislation Committee for their report on the bill. I know that recommendation 1—the only recommendation of the committee—is that the bill be passed. The committee process provided stakeholders with an opportunity to share their views publicly and it clearly demonstrated the importance of the bill and the strong support it has received.

I thank the Australian Greens for the support of the chair's report, the intent of the bill and the recommendation from the committee to pass the legislation. I note the Australian Greens' additional recommendation 1, which was that the Australian government consider amending regulation 3.34 of the Fair Work Regulations 2009 to make it an explicit requirement of employers to keep time and wage records, even if exemption rates or an equivalent is in effect. The government's view is that an amendment of this nature is not necessary. The new principle requires the commission to ensure that any rolled-up pay arrangement must fairly compensate employees for the penalty and overtime rates they would otherwise receive. It will be a matter for the independent commission to satisfy itself that this new standard is met.

In contemporary considerations of terms that substitute penalty and overtime rates, the commission has required recordkeeping as a means of assessing whether an employee is left worse off. Annualised wage arrangements, for example, contain a recordkeeping requirement to ensure an employee receives their full entitlements for their actual hours worked. If an employer does not meet their recordkeeping obligations under the Fair Work Act or applicable modern-award term, the Fair Work Ombudsman is there to take enforcement action.

In relation to the coalition's dissenting recommendations, recommendation 1 from the coalition mentioned that the Australian government should be required to prepare a comprehensive regulatory impact statement assessing the costs, benefits and productivity effects of the bill before its passage. Let me be clear—the government is firmly committed to evidence based policy development and decision-making. This reform, as is the case with all reforms, was assessed to determine the appropriate level of impact analysis required. The Office of Impact Analysis determined that an impact analysis was not required for this reform, because it does not impose new obligations on employers, nor does it introduce any new regulation or processes for them to comply with. It's actually about sticking with things as they currently stand rather than imposing new obligations.

To address concerns about the bill's impact on productivity, it has never been and never will be the solution—at least for this government—to make workers do more for less. This government is committed to improving productivity and enhancing economic resilience, but we do not accept that sending hardworking award-covered workers backwards through reductions to their penalty and overtime rates is the way to do this. The path to achieving flexibility and productivity gains can be found in cooperative and good-faith enterprise bargaining rather than by undermining award entitlements.

Our bargaining reforms increased access for workers and employers, including small business, to negotiate agreements with their employees and unions. This includes greater access to multi-employer bargaining, reducing the cost and effort of the bargaining, and changes to improve clarity and certainty for agreement approval. We're now seeing record enterprise agreement coverage with significantly improved wages outcomes for workers. A number of points have been made about the role of the Fair Work Commission. We respect the commission's role as the independent industrial tribunal. The commission will continue to interpret and apply the Fair Work Act, including the new principle introduced by this bill. This process will be guided by its usual consultative approach, ensuring all interested parties have the opportunity to present their views.

This bill also preserves the commission's existing powers to remove an ambiguity or uncertainty or to correct an error in a modern award. We've listened to concerns raised following its introduction that this bill could require the commission to review all modern awards for compliance with the new principle or to review penalty and overtime rates even beyond the scope of a specific application. This has never been the intent of this bill. We are confident the bill as introduced would not have operated in this way; however, this government is committed to genuine consultation, including with employer representatives and unions, and we amended the bill in the House for the avoidance of doubt and to further provide certainty to stakeholders. The bill is unequivocally clear. It will not require the commission to undertake a review of all modern awards, initiate a review of any award terms outside the scope of an application before the commission or exercise its powers under parts 2 to 3 of the Fair Work Act to make, vary or revoke modern awards.

In conclusion, for many award-reliant employees, penalty and overtime rates are a critical part of their take-home pay. As we know, it's low-paid workers, women and young people—as well as those working in retail and hospitality, who often work unsociable and irregular hours—who are more likely to be reliant on awards. This bill is about fairness. It's about respecting the millions of Australians who work public holidays, weekends, late nights and early mornings. If you get your penalty rates, you deserve them. This bill is about making sure the safety net does what it's meant to do—protect those who need it most. On that basis, I commend the bill to the Senate.