Hospitality and Restaurant industry award flexibility changes

Background:

In December of 2020, the Federal IR minister wrote to the Fair Work Commission asking the FWC to utilise its powers under the Fair Work Act 2009 to amend key awards covering industries most impacted by COVID-19 and measures implemented by governments throughout the pandemic. The FWC responded to the letter by inviting interested parties to commence applications to vary the awards referenced in the letter, and in return applications were made by relevant parties to vary the following awards: 

  • The Restaurant Industry Award 2020 
  • Hospitality Industry (General) Award 2020 
  • The General Retail Industry Award 2020 

The applications centred around proposed changes suggested by the IR Minister, including –

  • the inclusion of loaded rates for employees in specific classifications,
  • exemption rate provisions, and
  • simplified classification structures.   

Whilst the changes to the Hospitality Industry (General) Award 2020, which have now been approved, are set to be a permanent alteration to the award, the changes to the Restaurant Industry Award 2020 will be subject to further review in 2022. 

Restaurant Industry Award 2020: 

The three flexibilities introduced into the Restaurant Industry Award 2020 include: – 

1. New classifications – simplified classifications to capture employees working in multiple areas of the restaurant or cafe; 

2. Exemption Rates for Full-time employees classified as Level 5 or 6 under the Award, with “all-in” rates for full-time employees working up to 57 hours per week;

3. Substitute allowances – to replace individual allowances for certain employees, if agreed.  These provisions operate on an opt-in basis and are not mandatory for employers to implement as a result of the review.  

New classification structures:

As part of this review process, a new classification structure has been included into the Award (Schedule AA – Classification Structure and Definitions) to provide simplified classification of employees working across multiple roles/streams in a restaurant or café. These classifications allow for a variety of tasks to be performed by employees at each level ranging from front of house and back of house duties, reflecting the more commonplace practices in cafes and restaurants. Employers may elect to apply the new classification structure to all relevant employees in the workplace, however, that is not a requirement. 

Minimum rates for the new classifications will be found in the award and will take effect from the first full pay period on or after 11 August 2021 

Exemption Rates: 

The review has also introduced ‘all-in’ or ‘exemption’ rates for full-time employees classified as Level 5 or Level 6 under the Award. These rates can only be applied by mutual agreement and must be equivalent to paying no less that 170% of the relevant rate applicable to the employee under clause 18 of the Award.  

The flexibility of these rates is that if there is an agreement in place to pay these rates, the following provisions will no longer apply: 

  • clauses 16.5 and 16.6 (meal break); 
  • clause 21 (allowances); 
  • clause 23 (overtime rates), but not clause 23.2 (break after working OT); and 
  • clause 24 (penalty rates). 

The new exemption rate would be paid for all hours up to 57 hours per week. If an employee was to work in excess of this, overtime payments would apply to the extra hours in the following way: 

  • 150% of the exemption rate, for the first two weekly hours; 
  • 200% of the exemption rate thereafter, for the rest of the week. 

The exemption rate would also be applicable for all payments of annual leave and personal leave hours. 

The exemption rate provisions do not apply to employees classified under the Administrative and General stream.

These provisions are designed to simplify the way senior staff are paid, whilst ensuring all minimum entitlements are satisfied. Whilst ER Strategies does not believe this will be utilised by many of our clients, we recommend that all employers in the industry assess their suitability to use these provisions. Client employers can get more information about the mutual agreement arrangements for these provisions to apply from 11 August 2021, when these provisions start to take effect.  

Information on exemption rates is found in Schedule R of the Award.  

Substitute Allowances:

To simplify allowances under the Award, the Review introduced a substitute allowance arrangement, which would be paid on all hours of work. Employers and individual employees, or the majority via a vote with agreement from at least 75% of the workforce, can enter into this arrangement.  

Where an agreement to pay the Substitute Allowance has been made, the following clauses of this award shall not apply: 

  • clauses 16.5 and 16.6 (meal breaks); 
  • clause 21.2 (meal allowance); 
  • clause 21.3 (split shift allowance); 
  • clause 21.4 (tool and equipment allowance); 
  • clause 21.5 (special clothing allowance); and 
  • clause 21.6 (distance work allowance). 

The dollar figure for the substitute allowance is different for each classification level and can also be found in Schedule R of the Award. Allowances are to be reviewed in line with the Annual Wage Review.  

Hospitality Industry (General) Award:  

Changes have been proposed to the Hospitality Industry (General) Award 2020 to increase flexibility, but are yet to take effect. The new Schedule K will allow for loaded rate arrangements for full-time staff, based on different percentages for different patterns of work.  

Each Loaded Rate percentage is to be accompanied by a pattern of hours that can be worked under the arrangement, and has restrictions as to which categories of employees it can apply to. Loaded rates under this schedule cannot apply to part-time or casual employees or to employees:

  • classified at Introductory level, Level 1 or Level 2 
  • paid in accordance with Clause 18.4 – Junior Rates; 
  • paid in accordance with Schedule E.4 – Supported Wage Rates; 
  • engaged in accordance with Clause 15.3 – Catering in remote locations; and 
  • rostered in accordance with Clause 15.1(b)(vii) of the Award (i.e. rostered day off each 4 week period). 

To apply the loaded rates, employers must ensure that their roster cycle operates weekly, commencing on a Monday, and that the maximum daily hours provisions as per clause K.9 in the schedule are adhered to.  

For the specific rate arrangements, please see the draft determination here. 

These loaded rate arrangements do not require an employee’s consent. However, an employer must issue a loaded rates arrangement form to the employee outlining the specifics of the arrangement, including the range of days the employee will work, the maximum weekly hours and the employee’s wage level based on this information. The employer and employee can terminate this arrangement by agreement at anytime, or an employer can initiate termination of this agreement by giving 2 weeks’ written notice.  

Under these arrangements, the employer must also keep detailed time and attendance records, which must be signed and acknowledged as correct by the employee in each pay period or roster cycle.  

There is no commencement date for Schedule K at the time of publishing this article, however ER Strategies will keep clients and subscribers updated with details of this change as it progresses.  

Have a question? Clients of ER Strategies can contact the team on 1300 55 66 37 during standard business hours AEST. If you aren’t a client of ER Strategies, please give us a call to see how we can best assist your business.   

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