Q A number of our employees worked on the Australia Day public holiday on Monday 27th January. While most worked their normal hours that day, several employees worked two hours after their normal finishing time. The applicable award (Clerks – Private Sector Award 2020) provides a penalty rate for work on a public holiday while the appropriate overtime penalty rate applies to any work performed in excess of the employee’s ordinary hours on the day. 
 
The employees ordinarily work eight hours on a Monday. Would the last two hours overtime worked on the public holiday attract both the public holiday penalty rate (double time and a half) and the overtime penalty rate (time and a half)? 


  
A It is generally implied when interpreting the terms of a modern award or an enterprise agreement that an employee is not entitled to the calculation of a “penalty on a penalty”. The more specific penalty rate will prevail over the more general penalty rate. The Award (cl 24.4) has a specific penalty rate that applies to all work performed on a public holiday, which is double time and a half. This means overtime is not relevant as the Award considers the extra two hours as work on a public holiday rather than overtime.   

 

Casual loading 

As a general rule, in the case of casual employees where a penalty applies, the penalty and the casual loading are both to be calculated on the casual’s ordinary time rate. In determining payment, the penalty rate is calculated separately from the casual loading based on the employee’s ordinary rate for the appropriate classification. 
 
For example, where a modern award prescribes a casual loading of 25% and a public holiday penalty rate of double time and a half (250%), this will result in an “all-up” casual rate on the public holiday of the equivalent of 275%. This interpretation was determined by the (then) Australian Industrial Relations Commission in their decision Award Modernisation decision – Priority Awards – [2008] AIRCFB 1000.
  
However, the general rule may not apply in every case. Reference should be made to the applicable modern award or enterprise agreement to determine whether a penalty is calculated on the casual hourly rate, rather than the ordinary rate. For example, the Manufacturing and Associated Industries and Occupations Award 2020 provides that the casual loading is payable for ‘all purposes of the award’. This means any penalty prescribed by the award is calculated on the loaded casual hourly rate.   
 

Shift work 

Likewise, in the case of shift work, shift allowances only apply during ordinary time – they do not apply during overtime. For example, an employee on a permanent night shift who works a period of overtime at the end of the shift, the overtime penalty rate of (say) time and a half and double time will not be calculated on the hourly rate including the permanent night shift penalty (say 30%), unless otherwise specified by the applicable modern award or enterprise agreement. 

 

Bottom line 

Generally, the more specific penalty rate overrides a general penalty rate unless otherwise specified by the applicable modern award or enterprise agreement.