Penalty rates and allowances are extra payments made on top of your regular wage. They are intended to make sure that you are being compensated for working at inconvenient times or under dangerous or unpleasant conditions.
There are many different reasons why you might be entitled to be paid either penalty rates, allowances, or both.
Penalty Rates
Penalty rates are extra payments that you receive on top of your regular wage. They are intended to compensate you for hours that you spend working at inconvenient times, like when you work overtime, at night, on the weekend or on a public holiday.
Penalty rates are usually calculated as a percentage of your regular wage. Terms like ‘time and a half’ are common. This means that you are being paid at 150% of your regular wage.
Exactly what rates apply to you depends on the award or agreement that covers your workplace.
Penalty rates were introduced in Australia after the union movement campaigned for them back in the 1940s. In recent years, successive governments have attacked penalty rates, doing everything they can to reduce the amount that employees get paid for working at inconvenient times.
Allowances
Allowances are special payments that you receive on top of your regular wage. They exist to make sure that you are not footing the bill for the things you need to do your job, like tools, transport or extra training.
Allowances can cover the costs of things like:
- Tools and other equipment you need to do your job
- Work-related travel
- A car you use for work
- Uniforms
- A phone that you use at work
- Extra training or qualifications you need for work
If you need to work in dangerous or unpleasant conditions, like at a height or in the dirt, you might also be paid an allowance.
Funding for this factsheet was provided by:
- the Victorian Government as part of the uTech project; and
- the Fair Work Ombudsman.
Please note that the information given here is general information only and is not legal advice. For further assistance, it is recommended you speak to your union.