Hospitality Penalty Rates 2026: A Complete Guide

Penalty rates are one of the most misunderstood — and most litigated — aspects of employing staff in the Australian hospitality industry. Get them wrong and you are underpaying your workers. Underpay enough, and under Australia's wage theft laws, you are potentially facing criminal prosecution.

This guide covers the penalty rates that apply to hospitality workers in 2026 under the Hospitality Industry (General) Award 2020 (MA000009), which covers the vast majority of café, restaurant, bar, hotel, and accommodation workers in Australia.

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What Are Penalty Rates?

Penalty rates are higher rates of pay required when employees work at times or on days that are less desirable — evenings, weekends, and public holidays. They are not bonuses or discretionary loadings; they are legally mandated under Modern Awards.

Failure to pay penalty rates is wage underpayment, which is now treated as wage theft under the Fair Work Legislation Amendment (Closing Loopholes) Act 2024. From 1 January 2025, deliberate underpayment of wages (including penalty rates) became a criminal offence carrying penalties of up to 10 years imprisonment for individuals and $7.825 million for businesses.

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Who Is Covered by the Hospitality Award?

The Hospitality Industry (General) Award 2020 covers employees in:

• Restaurants, cafés, and fast food operations
• Hotels, motels, and accommodation businesses
• Bars, pubs, and licensed venues
• Catering operations
• Clubs

Important exceptions:

• Senior management who are paid significantly above the award may be award-free if their pay satisfies the Award exemption threshold
• Employees covered by an enterprise agreement are not directly covered by the Award, but their agreement must provide overall better conditions than the Award (the "Better Off Overall Test")
• Retail fast food employees may be covered by the Fast Food Industry Award instead

If you are unsure which award applies, use the Fair Work Commission's Award Finder tool.

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2026 Minimum Hourly Rates

The minimum rates under the Hospitality Award were last increased on 1 July 2025 following the 2025 Annual Wage Review. The Fair Work Commission's 2025 decision increased minimum wages by 3.5%.

Adult Full-Time and Part-Time Employees

Note: These figures are indicative based on the 2025 wage review. Confirm current minimum rates via the Fair Work Commission's Pay and Conditions Tool (PACT) or the Fair Work Ombudsman pay guides for the most current rates. Always verify before relying on these figures for payroll purposes.

Casual Loading

Casual employees receive a 25% loading on top of their base rate of pay. This loading is intended to compensate for not receiving annual leave, personal leave, and other permanent employee entitlements.

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Penalty Rates by Day and Time

The following penalty rates apply to the base rate (before the casual loading for casuals). For casual employees, the casual loading and applicable penalty rate are calculated cumulatively.

Weekday Evening Penalty Rates

Saturday Rates

Sunday Rates

Public Holiday Rates

The 225% public holiday rate is one of the highest in any award and is a significant cost for venues that operate on public holidays. It applies to all gazetted public holidays, including national public holidays (New Year's Day, Australia Day, Good Friday, Easter Saturday, Easter Monday, ANZAC Day, Queen's Birthday, Christmas Day, Boxing Day) and state-specific public holidays (such as Melbourne Cup Day in VIC, Royal Queensland Show in Brisbane, etc.).

Substitute Public Holidays

If a public holiday falls on a weekend and a substitute public holiday is gazetted, the penalty rate applies on the substitute day, not the actual calendar date (unless the employee also works on the original day, which may also attract public holiday rates depending on how your state gazette the substitution).

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Overtime Rates

Overtime applies when a full-time employee works beyond their ordinary hours (usually 38 hours per week) or a shift extends beyond 10 hours.

Casuals are generally paid overtime at the same rate without the additional casual loading on top (the loading is deemed included).

Part-time employees working additional agreed hours that do not exceed 38 per week are generally paid at their ordinary rate. Hours beyond 38 in a week, or beyond agreed part-time hours (depending on the enterprise agreement or award interpretation), attract overtime.

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Junior Employees

Employees under 21 years old in the hospitality industry attract junior rates, calculated as a percentage of the adult rate:

Junior penalty rates: Junior employees are still entitled to penalty rates at the same percentage loadings as adults — the junior rate simply changes the base rate, not the loading percentage.

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Allowances Under the Hospitality Award

In addition to base rates and penalty rates, the Hospitality Award requires certain allowances:

Meal Allowance

If an employee works more than two hours of overtime, they are entitled to a meal allowance (2026 rate: approximately $17.47 per meal break) unless the employer provides a meal.

Uniform and Clothing Allowance

If the employer requires the employee to purchase and maintain a uniform, a weekly uniform allowance applies. If the employer provides a uniform, they are responsible for laundering costs unless adequate laundry facilities are provided on-site.

Split Shift Allowance

If an employee works a broken or split shift (two work periods separated by an unpaid break greater than ordinary meal break allowances), a split shift allowance is payable.

Vehicle/Travel Allowance

Employees required to use their own vehicle for work purposes are entitled to a cents-per-kilometre allowance.

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Enterprise Agreements and Award Variations

Many larger hospitality groups operate under enterprise agreements rather than the Award. An enterprise agreement must satisfy the Better Off Overall Test (BOOT): it must leave employees better off overall compared to the Award at the time the agreement is approved.

However, individual agreements cannot reduce penalty rates below the Award rates. An individual flexibility arrangement (IFA) can modify some Award conditions, but only if the employee is genuinely better off overall.

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Wage Theft Risk in Hospitality

Hospitality is consistently the highest-underpayment industry identified in Fair Work Ombudsman investigations. Common underpayment patterns include:

• Paying a flat rate that fails to account for weekend and evening penalty rates
• Paying all staff at a junior rate regardless of age
• Failing to pay the 25% casual loading on penalty rate shifts
• Misclassifying employees as casuals to avoid leave entitlements while paying no casual loading

The Fair Work Ombudsman has made hospitality a compliance priority. In 2023–24, the Ombudsman recovered over $473 million in underpayments across all industries, with hospitality consistently in the top five most-investigated sectors.

With criminal wage theft offences now in force, the compliance risk is not just financial — it is personal.

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Public Holiday Compliance Checklist

• Identify all gazetted public holidays in your state/territory for the year
• Check whether substitute public holidays apply for any that fall on weekends
• Ensure your payroll system automatically applies 225% for public holiday shifts
• Confirm your roster distinguishes between public holiday and ordinary shifts
• Review enterprise agreement or Award applicability for each employee classification
• Keep records of all shifts worked on public holidays for at least 7 years

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Managing Hospitality Pay Compliance

Keeping up with award rate changes, penalty rate calculations, and pay review timing is an ongoing obligation for every hospitality employer. The 2026 annual wage review results (effective 1 July 2026) will change minimum rates again — your payroll system or pay guide needs to be updated when those rates take effect.

Reguladar tracks employment law compliance obligations for Australian hospitality businesses, including award update deadlines, Fair Work notice requirements, and STP obligations. See your full hospitality compliance checklist for the complete picture.

Start your free Reguladar compliance check and make sure your employment obligations are covered — before the Fair Work Ombudsman checks for you.