On 24th July 2025 the federal government introduced the Fair Work Amendment (Protecting Penalty and Overtime Rates) Bill 2025. The Bill provides that the Fair Work Commission "must ensure the specified penalty rate or overtime rate in modern awards that employees are entitled to receive are not reduced, and modern awards do not include terms that substitute employees' entitlements to receive penalty rates or overtime rates, where those terms would have had the effect of reducing that additional remuneration employees would otherwise receive”

Protection of Penalty and Overtime Rates

On 24^th July 2025 the federal government introduced the Fair Work Amendment (Protecting Penalty and Overtime Rates) Bill 2025.The Bill provides that the Fair Work Commission "must ensure the specified penalty rate or overtime rate in modern awards that employees are entitled to receive are not reduced, and modern awards do not include terms that substitute employees' entitlements to receive penalty rates or overtime rates, where those terms would have had the effect of reducing that additional remuneration employees would otherwise receive”

The Workplace Relations Minister Amanda Rishworth stated that under the present legislation penalty rates and overtime rates in modern awards can be rolled up into a single rate of pay that leaves employees worse off. If the legislation is passed it will mean that  proposals that aim to roll up an employee’s hourly rate to include penalty and overtime rates cannot be included in modern awards. Where applications are made to amend any award that impacts penalty and overtime, the Commission will now need to consider the new principle.