Is It Illegal To Not Pay Public Holiday Rates In Australia?

Public holidays are a big part of Australia’s work calendar, and for many industries they’re also some of the busiest trading days of the year.

If you roster staff on a public holiday, can you pay the same as a normal day? Or do you have to pay more?

As a small business owner, it’s important to get this right. Paying the wrong rate can lead to underpayments, backpay claims and penalties - but overpaying without a clear basis can also erode margins unnecessarily.

In this guide, we’ll explain when public holiday rates apply, when they don’t, and the practical steps you can take to stay compliant while keeping your rosters and payroll under control.

What Are Public Holiday Rates In Australia?

“Public holiday rates” (often called “public holiday penalty rates”) are higher pay rates that apply when an employee works on a public holiday.

In Australia, these rates usually come from:

• A Modern Award that covers your industry or roles
• An Enterprise Agreement (EA) that applies to your business
• Your Employment Contract if it promises specific public holiday loadings

By default, the National Employment Standards (NES) under the Fair Work Act give employees the right to be absent on a public holiday (unless it’s reasonable for you to request they work and unreasonable for them to refuse). The NES itself doesn’t set a higher public holiday pay rate - that uplift typically comes from an Award or an EA.

If you want a refresher on how uplifts generally work, it’s worth revisiting how Penalty Rates operate across different days and times.

Is It Illegal Not To Pay Public Holiday Rates?

The short answer: it depends on what instrument applies to your staff.

If Your Employees Are Award-Covered Or Under An EA

Most employees are covered by a Modern Award. If the relevant Award or EA prescribes a public holiday rate (for example, 225% or 250% of the base rate), you must pay it when they work on a public holiday. Failing to pay the prescribed rate is an unlawful underpayment.

Underpayments can snowball. Beyond backpay, you may face penalties and reputational damage. Having robust processes for Award Compliance helps prevent costly mistakes.

If Your Employees Are Award/Agreement-Free

If a role is genuinely award/agreement-free and there is no contractual promise of a public holiday loading, the Fair Work Act doesn’t automatically require a higher rate for hours worked on a public holiday.

However, the employee still has the NES right to reasonably refuse to work, and if a full-time or part-time employee does not work on a day they would normally work (because it’s a public holiday), they’re generally entitled to their base rate for their ordinary hours for that day.

In practice, many businesses choose to pay a higher rate on public holidays even for award-free staff, or offer an alternative arrangement (such as an extra day off), to support retention and fairness. If you do, make sure the entitlement is clearly documented in the Employment Contract.

Rostering And Reasonable Requests: What Can You Require?

There are two key questions here: can you ask an employee to work on a public holiday, and can they refuse?

Requesting Work On A Public Holiday

You can request an employee to work on a public holiday if the request is reasonable. Factors include your operational needs, the nature of the role, the employee’s personal circumstances and whether the employee could reasonably expect to be asked to work public holidays (for example, hospitality and retail roles often involve public holiday work).

Refusing A Public Holiday Shift

An employee can refuse a public holiday shift if your request is unreasonable or the refusal is reasonable. If you’re unsure, check the relevant Award or EA for rostering rules and consultation requirements. Some instruments have extra rules about minimum notice, staffing mixes and substitution of public holidays.

Pay For Not Working On A Public Holiday

If a full-time or part-time employee is not required to work on a public holiday and it falls on a day they would normally work, they’re generally paid their base rate for their ordinary hours for that day (no penalty applies because they’re not working). Casuals are usually paid only for hours actually worked (check your Award/EA for any variations).

Calculating The Right Pay And Managing Alternatives

The right calculation starts with identifying what applies to the role: the relevant Award, an EA, or an award-free arrangement. Then map the day, time and hours worked against the instrument’s public holiday rules.

Step 1: Identify The Coverage

• Modern Award: Confirm which Award applies (for example, Hospitality, Retail, Clerks, etc.). The title alone isn’t enough - check classifications and duties.
• Enterprise Agreement: If your business has a registered EA, follow its public holiday clause.
• Award-Free: Confirm the role is genuinely award-free and check the contract for any promises around public holidays.

If in doubt, get a coverage check. Many small businesses underestimate the complexity of Modern Awards and inadvertently misclassify roles.

Step 2: Find The Rate And Apply It

For Award/EA-covered staff, find the public holiday clause and any linked tables. Note whether the role is full-time, part-time or casual (casuals often receive their casual loading in addition to the public holiday loading, but it depends on the instrument).

To sense-check the numbers, the Fair Work Ombudsman’s Fair Work Pay Calculator can help you estimate rates based on role and hours (always confirm the result against the Award/EA text).

Step 3: Account For Overtime And Minimum Engagements

Working on a public holiday doesn’t erase overtime rules. If hours exceed the ordinary span or daily maximums, overtime may also apply. Make sure you’re layering the correct entitlements - it’s common for underpayments to arise from missing overtime on top of public holiday rates. If you need a refresher, review how Overtime Rates interact with ordinary and penalty hours.

Step 4: Consider Alternatives (Where Allowed)

Some Awards/EAs allow you to agree with an employee to substitute the public holiday for another day, or to take time off instead of being paid a penalty loading. These options can help you balance costs and employee preferences - but only if the instrument allows it and you follow the process (often requiring a written agreement before the hours are worked).

If your Award allows it, you might offer Time Off In Lieu (TOIL) instead of a monetary premium. Be careful: many Awards set strict rules for TOIL - for example, time for time vs time and a half, expiry windows and record-keeping.

Worked Examples (Illustrative Only)

• Retail Award Casual, 6 hours on a public holiday: Apply the public holiday rate for casuals as set by the Award, remembering the casual loading rules and any minimum engagement period.
• Professional Award-Free Employee, 8 hours on a public holiday: If truly award-free and the contract doesn’t promise a public holiday loading, you can pay the base hourly rate for the hours worked. Consider whether an alternative day off is appropriate for fairness and consistency with your policies.

Because each Award/EA is different, always confirm the precise wording before you finalise payroll.

Systems, Documents And Record-Keeping To Stay Compliant

Public holiday compliance isn’t just about one pay run - it’s about building a clear, repeatable system that stands up to scrutiny.

Essential Documents And Policies

• Employment Contract: Clearly state Award coverage (if any), classification, ordinary hours, rostering expectations, and any agreed public holiday substitution or benefits (where permitted).
• Award Compliance processes: Keep a current copy of applicable Awards/EAs, note relevant clauses, and build them into your rostering and payroll rules.
• Payroll Settings: Configure your payroll system to automatically apply public holiday rates, minimum engagements and overtime flags according to the Award/EA.
• Rostering Rules: Define internal practices for public holiday rosters, reasonable request criteria and consultation steps.
• Record-Keeping: Track hours worked, breaks, agreements for substitution/TOIL, and communications about public holiday shifts.

Practical Tips To Reduce Risk

• Confirm Public Holidays Early: Public holiday dates can vary by state and even region. Plan rosters early and communicate shifts in writing.
• Use Written Agreements For Alternatives: If substituting a day or using TOIL under your Award, get a written agreement before the hours are worked.
• Sense-Check Calculations: Use the Fair Work Pay Calculator as a sense-check, but rely on the Award/EA text for the final answer.
• Monitor Overtime And Breaks: Public holidays often bring long shifts - make sure breaks are lawful and overtime is captured correctly.
• Audit After Peak Periods: After Christmas, Easter or long-weekend peaks, run a spot audit to catch any anomalies while records are fresh.

When To Seek Advice

If you’re unsure which Award applies, whether a role is truly award-free, or how to structure a public holiday substitution arrangement, get guidance before you roster or pay. A short review now can prevent months of remediation later.

Key Takeaways

• It’s illegal not to pay public holiday rates where a Modern Award, Enterprise Agreement or contract requires them - underpaying can trigger backpay and penalties.
• The NES doesn’t set a default higher rate for working on public holidays; it provides the right to be absent unless a reasonable request to work is made. Public holiday penalty rates mainly come from Awards/EAs.
• Award/EA coverage is step one. Confirm coverage and classification, then apply the correct public holiday clause (and any overtime or minimum engagements).
• Alternatives like substitution or TOIL are only lawful if your Award/EA (or contract) allows them and you follow the required process, usually with a written agreement.
• Build compliance into your systems: clear Employment Contracts, configured payroll, documented Award rules, and strong record-keeping.
• Sense-check complex rosters and use trusted tools - for example, the Fair Work Pay Calculator - but always verify against the Award/EA text.
• When in doubt, get help with Award Compliance, Modern Awards coverage, and Overtime Rates interactions to avoid unintentional underpayments.

If you’d like a consultation about public holiday pay and Award compliance for your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.