Let me start with a simple principle. If you are working weekends, public holidays, early mornings or late nights, you deserve to be paid fairly. That time matters to workers, to families and to our communities. That's what penalty rates are all about—making sure working Australians are properly paid for giving up their precious time that could be spent with family or friends. This legislation, the Fair Work Amendment (Protecting Penalty and Overtime Rates) Bill 2025, delivers on a clear promise we made to Australians to protect the penalty rates and overtime pay of those covered by modern awards. It delivers on this straightaway, not after delays, as proposed by those opposite.
I would like to take a moment to reject the comments of the previous speaker, the member for Goldstein. He asked, 'How many small businesses will be impacted by this legislation?' None. This legislation doesn't change current penalty rates; it enshrines and protects them. But what it does do is stop the bartering away of workers' rights and their penalty rates. Workers deserve certainty now, and that's what this bill delivers.
The bill makes a straightforward but powerful change to the Fair Work Act. It says the independent umpire, the Fair Work Commission, must not make changes to awards that reduce penalty rates or overtime entitlements or roll them out into other arrangements that leave workers worse off. This bill is all about fairness. It's about decency. It's about standing up for the people who often have the least power in the workplace but who give so much of their time and energy to keeping our country running.
We know that workers who rely on modern awards are more likely to be younger, more likely to be women and more likely to be casual, part time or in insecure work. Many of them work in sectors like retail, hospitality, aged care and health care, and many of them live in communities like mine in Corangamite. They rely on the fairness that is at the heart of penalty rates. Right now, that fairness is under threat. There's a loophole in the system, one that allows employers to propose terms that roll out penalty and overtime rates into a single rate of pay, even when that means workers are left worse off. Some employers are using that loophole. They are applying to the commission to reduce what low-paid workers are entitled to by replacing penalty rates with flat pay structures. Let me be clear. These are not high-flying executives we are talking about. These are workers on modest incomes, the very people the award system is meant to protect. It is happening right now. The Fair Work Commission is currently dealing with cases where employers are trying to lock in these kinds of arrangements.
The opposition have made it clear they won't stand in the way of these employers. Their leader says without hesitation, 'We don't propose to depart from the current arrangements.' Well, we do, because we believe the award system should act as a safety net, not a ceiling. We believe a full weekend of retail work shouldn't leave you short on rent and we believe that, if you're asked to give up your nights, your holidays or your family time, your pay shouldn't quietly go backwards. The bottom line is that a worker should not be asked to barter away their rights and conditions of work that we, the great labour movement and unions, have fought so hard for. That's why this legislation matters and that's what we're doing; we're acting.
This bill builds on the strong workplace reforms we've already delivered. Since forming government, we've made it our mission to get wages moving again and to restore fairness to our workplace laws. We've backed every increase to the minimum wage, including a 3.5 per cent increase from 1 July. We've closed loopholes that kept wages low, with same job, same pay laws now delivering up to $60,000 extra to some workers. We've made gender equality a key principle of workplace law, helping drive the gender pay gap to its lowest level ever. We've introduced the right to disconnect, making it clear that workers have a right to switch off at the end of the day, and we're reinvigorating enterprise bargaining.
Since our reforms, more than 9,800 entrepreneur agreements have been approved, covering more than nearly 2.5 million workers. As of March this year, almost 2.7 million Australians are covered by an active enterprise agreement—the highest number on record since enterprise bargaining began in 1991. The average wage increase under those agreements is 3.8 per cent, well above the five-year average before our reforms and higher than inflation. These are real outcomes for real people. This bill strengthens that progress and locks in protections for workers on modern awards.
Let me explain exactly how the bill works. It amends the Fair Work Act to introduce a new section, 135A. It requires the Fair Work Commission to make sure that penalty and overtime rates in awards aren't reduced and that awards don't include terms that substitute those entitlements in a way that cuts take-home pay. This means the commission will still have flexibility to do its work but it will have a clear principle it must follow: protect the pay of workers who rely on penalty and overtime rates. This change is carefully designed. It targets the kinds of changes that would reduce the percentage of pay a worker receives for penalty hours or roll those penalties up into a flat rate that's worth less overall. It doesn't impact individual contracts, it doesn't apply to enterprise agreements and it doesn't stop good faith efforts to modernise awards. It stops pay quietly being cut for the people who can least afford it.
This bill doesn't impose anything new. Employers already have a legal obligation to pay their workers according to the award. If the award says a casual worker gets an extra 25 per cent for working Saturday nights, that's what they should be paid. This bill doesn't change that obligation; it reinforces it. It gives certainty to employers who are doing the right thing, and it stops the race to the bottom for a handful who aren't. We've consulted widely to make sure these changes are fair, balanced and workable. I thank the minister for the work that has been done on this bill.
Importantly, this bill respects the independence of the Fair Work Commission. The commission will continue to apply the law in a careful, consultative way, taking into account the views of workers, unions, employers and other stakeholders. This is not about heavy-handed interference; it's about giving the commission a clear mandate to protect core entitlements and give workers confidence that their penalty rates are not up for grabs.
Just as importantly, this bill supports the continued success of enterprise bargaining. We want to see more enterprise agreements—agreements that deliver better pay, better conditions and more productive workplaces. That's why we've reformed the system, making bargaining more accessible and more meaningful for workers and employers alike. This bill does not interfere with that. It preserves the better off overall test, which ensures that workers are in fact better off under enterprise agreements, and it continues to support the idea that genuine negotiations, with safeguards in place, can lead to win-win outcomes for business and workers alike.
What this bill does is protect the floor so no-one falls below it. For many workers in Corangamite, this is personal. I've had people come up to me in the street stalls in Belmont and Leopold and tell me: 'I work weekends because I have to, not because I want to. Penalty rates are the reason I can keep up with my rent. Without them, I'd be in real trouble.' These are workers we rely on in aged care, in child care, in food service, in our regional health centres and in our small business. They're not asking for more than they deserve. They're asking for the bare minimum to not go backwards, and that is exactly what this bill guarantees.
As I said at the beginning of my speech, this is a matter of principle. If we value people's time, we should show it. If we ask people to work when others rest, we need to reward that. If we believe in fairness, in dignity and in decency, we can't stand by while the wages of our lowest-paid workers are quietly eroded. This bill draws a line. It says: 'Enough. No more hiding pay cuts in the fine print. No more trading away penalty rates without scrutiny. No more quiet reductions to the pay of people who already earn the least.' This bill protects what's fair. It protects what's right. It protects the thousands of Australians who keep our economy running, our shops open, our hospitals staffed and our communities cared for. I want to thank unions and workers who have fought tirelessly for these protections. You have made your voices heard, you have stood up for your mates and we have listened.
In closing, let me say that this is a government that stands with working people. It is a government that believes penalty rates are a right, not a privilege, and it's a government that will keep fighting for fairness, respect and better pay for all Australians. I commend the bill to the House.
