Employees working a shift or working at a time when a penalty rate applies usually get paid one penalty rate or shift allowance at a time. This is what it means when an award says that penalties aren't cumulative.

Employees will usually get paid the highest penalty rate or shift allowance that applies to the hours that they’re working.

Example

Kane is an afternoon shift worker in a factory. He gets paid a 15% shift allowance for all his shifts.

When Kane works overtime, he gets paid overtime rates instead of the shift allowance. He doesn't get paid the overtime rate and the shift allowance at the same time.

Sometimes loadings or penalty rates may be calculated on rates that already include a loading or penalty. This is what it means when loadings and penalty rates are calculated on a compounding basis.

Example

The Graphic Arts Award says that overtime work on a Saturday or Sunday is paid at 200% of the overtime hourly rate.

The overtime hourly rate is defined as an employee’s ordinary hourly rate plus any applicable shift allowances.

This means that shiftworkers who work overtime on a weekend get paid a compounded rate, because the overtime penalty rate is calculated on a rate that already includes the shift allowance.

Casual loadings and penalties

The ways that penalties can be calculated for casuals include:

• the penalty rate and the casual loading are calculated separately and added to the minimum pay rate
• not paying the casual loading when penalty rates are paid
• including the casual loading in the casual pay rate and calculating the penalty rate on this combined amount.

Example:

Pothida is a casual employee. She’s entitled to a 25% casual loading.

Her award says that the casual loading is included in her ordinary hourly rate for all purposes.

All penalty rates or loadings that Pothida is entitled to will be calculated with the casual loading included as part of her ordinary rate.

Sometimes an award doesn’t say how to calculate penalty rates for casual employees. When this happens the casual loading and the penalty rate are both calculated on the minimum pay rate and paid at the same time.

Always check the award to see if there is a specific rule that must be followed.

Check your loadings, penalty rates and pay rate with our Pay and Conditions Tool.