How to calculate penalty rates
A complete guide to calculating weekend, public holiday, and evening penalty rates under Australian Modern Awards. Includes formulas, examples, and links to current award rates.
Written by
Georgia Morgan
General information only – not legal advice
This guide provides general information about calculating penalty rates under Australian Modern Awards. It does not constitute legal, HR, or professional advice and should not be relied on as a substitute for advice specific to your business, workforce, or circumstances.
What are penalty rates?
Penalty rates are higher pay rates that apply when employees work at particular times, such as weekends, public holidays, or late evenings. They compensate employees for working outside standard hours.
Under Australian workplace law, employees covered by a Modern Award or enterprise agreement are entitled to penalty rates as specified in that document. The rates vary significantly between awards.
Penalty rate calculation example
Here's how to calculate penalty rates for a retail employee working on Sunday.
Sunday penalty calculation
General Retail Industry Award
Step 1: Find the base rate
Retail Employee Level 1: $25.43/hour (as of 1 July 2024)
Step 2: Find the Sunday penalty rate
General Retail Award Sunday penalty: 200% (full-time/part-time)
Step 3: Calculate
$25.43 × 2.00 = $50.86/hour
For a 6-hour Sunday shift:
$50.86 × 6 hours = $305.16
Note: Casual employees under the Retail Award receive 175% on Sundays (this includes their casual loading). Always check the specific rate for the employee type.
6 steps to penalty rates calculation
Follow these steps to correctly calculate penalty rates for any Modern Award.
Identify the applicable Modern Award
Find which award covers your employees as penalty rates vary significantly between awards.
Tips:
- Use Fair Work's "Find my award" tool at fairwork.gov.au
- Check the employee's contract for award references
- Common awards: Hospitality, General Retail, Fast Food, SCHADS
- Some employees may be award-free (check minimum wage instead)
Determine the base hourly rate
Find the ordinary hourly rate for the employee's classification level before penalties apply.
Tips:
- Check the award pay guide for the correct classification level
- Full-time/part-time: Use the ordinary hourly rate
- Casual: Include casual loading (usually 25%) in the base rate first
- RosterElf award guides list current rates by classification
Identify when penalties apply
Check which time periods attract penalty rates under the relevant award.
Tips:
- Saturdays: Usually 125-150% depending on the award
- Sundays: Usually 150-200% depending on the award
- Public holidays: Usually 200-250% depending on the award
- Evening/night work: May attract additional loadings (e.g., 15% after 7pm)
Apply the penalty rate multiplier
Multiply the base hourly rate by the penalty percentage to calculate the penalty rate.
Tips:
- Formula: Base hourly rate × Penalty percentage = Penalty rate
- Example: $25.00 × 150% = $37.50 per hour (Saturday)
- Example: $25.00 × 200% = $50.00 per hour (Sunday)
- Some awards cap penalties or have different rates for different hours
Calculate casual penalties correctly
Understand how casual loading interacts with penalty rates (this varies by award).
Tips:
- Check if penalties are "inclusive" or "in addition to" casual loading
- Most awards: Casual loading is built into the penalty rate
- Some awards: Add casual loading first, then apply penalty multiplier
- The award wording determines the correct calculation method
Verify overtime vs penalty interaction
Check if overtime rates or penalty rates apply when both conditions are met.
Tips:
- Most awards: The higher rate applies, not both
- Overtime worked on a public holiday may have specific rates
- Check the award's "overtime" and "penalty rates" clauses
- When in doubt, use Fair Work's Pay Calculator (PACT)
Automate penalty rate calculations
RosterElf applies the correct penalty rates automatically based on your industry award and shift times. Built for Australian small businesses.
Penalty rates by award
Common penalty rates for popular Modern Awards. Click to view full award details.
| Award | Saturday | Sunday | Public Holiday | Evening |
|---|---|---|---|---|
| Hospitality Industry (General) | 125% | 150% | 225% | 10% after 7pm |
| General Retail Industry | 125% | 200% | 250% | Varies by state |
| Fast Food Industry | 125% | 150% | 225% | 10% after 9pm |
| SCHADS (Disability/Community) | 150% | 200% | 250% | 15% after 8pm |
| Aged Care | 150% | 175% | 250% | 15% after 6pm |
| Restaurant Industry | 125% | 150% | 225% | 10% after 7pm |
Rates shown are for full-time and part-time employees. Casual rates may differ. View all award guides.
Common penalty rate mistakes
These errors can lead to underpayment claims and Fair Work penalties.
Using the wrong award
Consequence: Applying incorrect penalty rates, leading to underpayment or overpayment
Solution: Use Fair Work's "Find my award" tool or check our award rates guides .
Forgetting casual loading interaction
Consequence: Double-counting or missing casual loading when calculating penalties
Solution: Check the specific award wording for how casual penalties are calculated. Use award interpretation software .
Applying multiple penalties
Consequence: Overpaying by stacking penalties that shouldn't combine
Solution: Most awards specify only the highest rate applies. Check the award or use automated payroll integration .
Missing evening/night loadings
Consequence: Underpaying staff who work after-hours shifts
Solution: Check for time-of-day loadings in addition to weekend penalties. Track with time and attendance software .
Using outdated rates
Consequence: Pay rates change annually (usually 1 July). Old rates mean underpayment
Solution: Check Fair Work for current rates or use our regularly updated award rate guides .
Tips for accurate penalty calculations
Follow these practices to support compliance and avoid underpayment.
Use Fair Work PACT
The Pay and Conditions Tool provides award-specific calculations and is free.
Automate calculations
Use payroll software with built-in award interpretation to reduce errors.
Check rates annually
Award rates typically increase on 1 July each year. Update your systems.
Document your method
Keep records of how you calculated rates in case of a Fair Work audit.
Train managers
Ensure rostering managers understand when penalties apply before scheduling.
Review timesheets
Check that penalty hours are correctly recorded before processing payroll.
Frequently asked questions
- Multiply the employee's base hourly rate by the penalty percentage. For example, if the base rate is $25/hour and the Sunday penalty is 150%, the penalty rate is $25 × 1.5 = $37.50/hour. Check the relevant award for the correct percentages.
- Yes, but the calculation varies by award. Most awards have specific casual penalty rates that include the casual loading. Some awards require adding casual loading first, then applying the penalty. Always check the specific award wording.
- Penalty rates apply based on WHEN work is performed (weekends, public holidays, evenings). Overtime applies to EXTRA hours beyond ordinary hours. When both apply, most awards specify only the higher rate is paid, not both. Check the award interpretation guide.
- Employees covered by a Modern Award or enterprise agreement are entitled to penalty rates as specified. Award-free employees (typically earning above the high-income threshold) may not receive penalties unless their contract specifies them.
Regulatory sources
This guide is aligned with official Australian workplace regulations.
Automate award compliance
Join thousands of Australian businesses using RosterElf to calculate pay rates and support your compliance efforts. Built for Australian small businesses.