Calculating penalty rates will depend on the applicable modern award. Read here for an explanation of the process to follow to determine the correct rate.
As a general rule, where the modern award is silent on this point, where penalties apply such as overtime, shift penalty, weekend work, work on a public holiday, etc., the penalties and the casual loading are calculated based on the employee’s ordinary time rate. This means the penalties are calculated on the employee’s ordinary hourly rate exclusive of the casual loading. For example, this applies under the Clerks – Private Sector Award 2020.
The above is the general rule, but an award or enterprise agreement may contain different provisions and each one needs to be checked.
An alternative example is the Manufacturing and Associated Industries and Occupations Award 2020.
Clause 11.2 of this award states that the casual loading prescribed by the award constitutes part of a casual employee’s all-purpose rate. The term “all-purpose” means the casual loading is included in any calculation made under the award, including penalty rates. Consequently, casual production employees receive the appropriate overtime penalty rate calculated on the loaded casual hourly rate, inclusive of the 25% loading.
Other modern awards and enterprise agreements may contain terms that include the casual loading for the purposes of calculating various penalties and other entitlements prescribed by the relevant industrial instrument.
Examples of other modern awards that regard the casual loading as “all-purpose” include the Food, Beverage and Tobacco Manufacturing Award 2020 (Clause 10.2 and 10.3) and the Graphic Arts, Printing and Publishing Award 2020 (Clause 11.2 and 28.2).
