The Albanese Government has kicked off the new parliamentary term by introducing a workplace Bill that would lock in penalty and overtime rates for 2.6 million Aussie workers. While unions are cheering it on, some retail groups reckon it’s another blow to small businesses already doing it tough.

So what’s this all about and what’s the real impact on small business owners?

What’s in the Bill?

The Fair Work Amendment (Protecting Penalty and Overtime Rates) Bill 2025 aims to prevent any future changes to modern awards that would reduce or remove penalty and overtime pay for employees. In short, it’s about protecting the existing award safety net, especially for low-paid, award-reliant workers.

Prime Minister Anthony Albanese says it’s part of a broader push to deliver cost-of-living relief.

“Our number one focus is continuing to deliver cost of living relief to Australians,” he said.
“Protecting penalty rates for millions of workers is an important part of that, making sure Australians can earn more and keep more of what they earn.”

Workplace Relations Minister Amanda Rishworth was in agreement, suggesting the award protected the most vulnerable.

“If you rely on the modern award safety net and work weekends, public holidays, early mornings or late nights, you deserve to have your wages protected.

“This legislation will prevent award variations from reducing or removing penalty and overtime rates. It will ensure the wages of around 2.6 million modern award-reliant workers are protected,” Rishworth said.

She called on all political parties to back the Bill, which she says will help Australians who “rely on penalty rates and overtime rates to keep their heads above water.”

Retailers say Bill kills workplace flexibility

Not everyone is on board. The Australian Retailers Association (ARA) and the National Retail Association (NRA) say the Bill removes flexibility from the workplace and prevents retailers from negotiating pay arrangements that benefit both staff and business owners.

ARA CEO Chris Rodwell said the legislation would effectively block employers and employees from agreeing to “salary absorption”, where higher base pay replaces individual penalty rate payments.

“The Federal Government’s proposed bill effectively forbids businesses and their employees from negotiating the incorporation of penalty rates into base salary,” Rodwell said.

“It cancels out a choice for both employees and employers to come to a reasonable, mutually beneficial work arrangement.”

He added that the new rules are yet another layer of red tape for small businesses who are already struggling with rising costs.

“The Federal Government’s continued heavy-handed regulation of workplaces has the effect of tangling businesses, especially small retailers, in cost and compliance,” Rodwell said.

“To paraphrase the words of former Minister Tony Burke in September 2023, retailers need a system that is easy to understand and use, stable and sustainable. This legislation takes us further away from that objective.”

Rodwell also said enterprise bargaining isn’t practical for many smaller operators and flagged the ARA’s ongoing push for greater flexibility, including options like a 4-day work week.

Unions back the move as a win for fairness

The ACTU has thrown its full support behind the Bill, calling it a long-overdue protection for workers who can’t afford to lose penalty pay.

ACTU Secretary Sally McManus said the legislation delivers on a core election promise and protects the pay packets of some of Australia’s most vulnerable workers.

“Penalty rates are an essential part of millions of workers’ take-home pay,” she said.
“Fair protections like penalty rates matter most to the people who can least afford to lose out, including young workers, women, casual workers and those in part-time jobs.”

She urged all MPs and Senators to support the Bill, calling it “a vital step to stop employers cutting penalty rates and protect working people’s pay.”

What small businesses need to know

If your team is award-covered and works outside the usual 9-to-5, this Bill will cement their current penalty and overtime entitlements. You won’t be able to negotiate arrangements that bundle those extras into a higher base salary, at least not without navigating more complexity via enterprise bargaining.

The government says it’s about stability and fairness for workers. Retail groups say it’s another blow to business flexibility. Either way, it’s a shift that could impact how you manage rosters, pay rates, and staff expectations.

Keep an eye on parliament. If the Bill passes (which looks likely), it could reshape how weekend and after-hours work is paid across many industries.

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