‘Fundamentally flawed, backward step’: Advocates push back on penalty rates bill

Business advocacy group ACCI has called the government’s penalty rates legislation a “backwards step” following its passing in the Senate last week.

On 28 August, the Parliament passed the Fair Work Amendment (Protecting Penalty and Overtime Rates) Act 2025, ensuring the penalty and overtime rates of 2.6 million Aussies who work public holidays, weekends, late nights and early mornings are protected by law.

The Labor government proposed the new legislation to preserve penalty and overtime rates as “fundamental entitlements” within the modern awards safety net by ensuring the rates couldn’t be reduced or substituted in a way where workers could lose out on their take-home pay.

The legislation was introduced in a move to help Australians tackle the cost of living; however, the Australian Chamber of Commerce and Industry (ACCI) spoke out and said the passing of it in the Senate to lock in penalty rates was a “backward step”, which would result in less flexible arrangements.

Andrew McKellar, ACCI CEO, said the legislation was the opposite of what employers and employees demanded and wanted from a modern workplace.

“This will restrict the ability for businesses to provide the flexibility that employees increasingly demand, such as the ability to work from home or other hybrid arrangements which are mutually agreeable to employers and employees,” he said.

“Worse, the bill opens the door to remove a range of flexibility terms that already exist in modern awards that have delivered for both employees and business for many decades.”

According to the government, employees who relied on modern awards were 60 per cent women, 66.7 per cent worked part-time, 57.3 per cent were under the age of 35, and 48.3 per cent were employed on a casual basis.

Amanda Rishworth, Minister for Employment and Workplace Relations, said every modern award-reliant worker deserved protection of their penalty and overtime rates as part of a fair and relevant minimum safety net.

“If you work during hours when most Australians are spending time with family, you deserve fair compensation for the sacrifice you make to keep the country running,” she said.

“Penalty and overtime rates are not a bonus or a luxury. They are a core entitlement to help those important workers in our society who work weekends and overtime hours. For many Australians, penalty and overtime rates mean the difference between getting by and falling behind. This legislation guarantees their earnings are no longer at risk.”

Though Labor has taken a positive outlook on the legislation and what it could potentially provide employees who relied on modern awards, McKellar said the bill was “fundamentally flawed” as its provisions were “completely at odds with the needs of contemporary Australian workplaces”.

Prior to the passing of the bill, ACCI made a submission to the Senate education and employment legislation committee, urging it to recommend against passing the bill into law, which proved unsuccessful.

ACCI had argued that the bill exceeded the original election commitment to protect penalty rates, and extending its scope to include overtime rates and rolled-up pay arrangements was not part of the initial promise.

“The bill creates rigidity in workplace arrangements, hindering flexibility, productivity, and simplicity, while increasing complexity for employers and employees alike,” said McKellar.

“By locking in practices of the past and removing the ability to deal with challenges of the future, this bill fails to recognise that the broader community debate has moved on and embraced the reality that flexibility and adaptability are key to business viability and job creation.”