Public Holiday Penalty Rates in Australia (2023): What Businesses Must Know

Public holidays can be great for business (think: busy hospitality venues, retail sales events, or urgent service work), but they can also be a major payroll risk if you’re not across your obligations.

And in 2023, many small business owners were asking the same questions: What are the public holiday penalty rates? Who is entitled to them? Can we require staff to work? What if we’re paying a salary?

The key thing to remember is this: there isn’t one single “public holiday penalty rate” that applies to every business in Australia. Your obligations will depend on the employee’s industrial instrument (for example, a modern award or enterprise agreement), their classification, their employment type (full-time, part-time, casual), and what the public holiday rules say for your workplace.

It’s also important to remember that public holiday dates can vary between states and territories (and sometimes even by region), so what counts as a “public holiday” for payroll purposes will depend on where the employee is based and the applicable rules for that location.

Below, we’ll walk you through how public holiday penalty rates work in practice, how to check what applies to your business, and how to avoid the most common compliance traps.

What Are Public Holiday Penalty Rates (And Why Do They Matter)?

Public holiday penalty rates are higher rates of pay that may apply when an employee works on a public holiday. These rates exist because public holidays are special days where many employees would otherwise have the day off.

From a small business perspective, penalty rates matter because they directly affect:

• Labour costs (often your biggest variable expense for the day)
• Rostering decisions (who you schedule, what hours you offer, and whether you open at all)
• Compliance risk (underpaying penalty rates can lead to backpay and penalties)
• Customer commitments (if you’ve promised delivery, service, or opening hours)

Importantly, the right public holiday penalty rate in 2023 can’t be answered with one number, because the applicable rate is usually set by:

• a modern award (common for retail, hospitality, clerical/admin, cleaning and many other industries), or
• an enterprise agreement, or
• an employment contract for award-free employees (but this must still meet minimum legal standards).

Public Holiday Pay vs Public Holiday Penalty Rates

It also helps to separate two concepts:

• Public holiday pay: what an eligible employee is paid when they don’t work but the day would ordinarily be a working day for them.
• Public holiday penalty rates: what an employee is paid when they do work on the public holiday (often a higher rate).

If you’re trying to budget or audit payroll, you’ll want to look at both.

Which Rules Apply To Your Business In 2023?

To work out the right public holiday penalty rates in 2023, the first job is identifying which workplace rules cover your team.

Start by confirming which public holidays apply where the employee works (public holiday dates and “substitute days” can differ between states and territories). Then work through the employee’s industrial instrument (award, enterprise agreement, or award-free arrangement) to find the pay rules that apply.

1) Modern Awards

Modern awards set minimum pay rates and conditions for employees in specific industries and occupations. If your employees are covered by an award, the award usually contains:

• the definition of a public holiday
• who is entitled to have the day off
• what happens if they work
• the penalty rate or loading that applies
• minimum shift lengths or engagement rules for public holidays (in some awards)

A very common mistake is assuming a “standard” public holiday rate applies across all staff. In reality, two employees working side-by-side may have different public holiday entitlements if they are classified differently under an award.

2) Enterprise Agreements

If your business operates under an enterprise agreement, it may set its own public holiday rates and rules. These can be different from the award, but generally must leave employees “better off overall” than the relevant award.

In practice, you should follow the enterprise agreement first (if it applies), and only refer to the award where the agreement says to or where the agreement is silent.

3) Award-Free Employees And Contracts

Some employees are not covered by a modern award or enterprise agreement (they’re “award-free”). Even then, you still need to comply with the National Employment Standards (NES) under the Fair Work Act, including public holiday entitlements. Those entitlements operate alongside any state or territory public holiday declarations that apply to where the employee works.

This is where having a clear Employment Contract becomes important, because it can set expectations about ordinary hours, rostering, and how you manage public holiday work requests (while still meeting minimum standards).

How Public Holiday Penalty Rates Are Usually Calculated

While the exact numbers differ by award/agreement, most public holiday pay rules follow similar building blocks.

Step 1: Identify The Employee’s “Base Rate” (And What Counts As Ordinary Hours)

Public holiday penalty rates are typically calculated as a percentage or multiple of an employee’s base rate (or ordinary hourly rate). Before you apply any penalty, you need to confirm:

• their classification level under the award (if applicable)
• whether they are full-time, part-time, or casual
• what their ordinary hours are (as opposed to overtime hours)

If your payroll system uses the wrong classification or assumes the wrong “ordinary hours”, your public holiday penalties can be wrong even if the multiplier looks right.

Step 2: Apply The Public Holiday Rate Set By The Award/Agreement

Many awards provide a special public holiday rate, such as time-and-a-half, double time, or another prescribed rate. Some awards also have separate rules for:

• permanent employees vs casual employees
• shiftworkers
• employees working outside particular hours

Because public holiday rates can interact with overtime, you also need to check the specific award clause to ensure you’re not applying the wrong rule when an employee works long hours on the day.

Step 3: Check Minimum Engagement And Rostering Requirements

Some awards include minimum shift lengths or minimum payments for certain types of employees (often casuals) on public holidays.

This is where rostering becomes as much a legal compliance issue as it is an operational one. Having a clear process for employee rostering can reduce disputes and help you document who agreed to what, and when.

Step 4: Confirm Any Extra Allowances Or Loadings

Depending on your workplace rules, additional amounts may apply, such as:

• shift allowances
• split shift allowances
• meal allowances
• laundry/uniform allowances

These are not “public holiday penalty rates” themselves, but they can still affect the final amount payable.

Common Public Holiday Scenarios Small Businesses Run Into

Public holidays often cause payroll issues not because business owners are trying to do the wrong thing, but because the real-life scenarios don’t fit neatly into a simple rule.

Here are some common situations that come up in 2023-style trading patterns (including increased casualisation and flexible rosters).

Do You Have To Pay A Part-Time Employee For A Public Holiday They Don’t Work?

Often, part-time employees are entitled to be paid for a public holiday if the public holiday falls on a day they would ordinarily work.

This becomes tricky when rosters vary. If you have a genuinely irregular roster, you may need to look carefully at:

• what their “ordinary hours” are
• any part-time hours agreement/guarantee
• how rosters are set and communicated

If you’re unsure, it’s worth tightening your contract and rostering documentation to avoid accidental underpayments.

What About Casual Employees?

Casual employees generally don’t get paid for public holidays they don’t work.

However, if a casual employee does work on a public holiday, the relevant award or agreement may apply a public holiday penalty rate (and in some cases that rate is expressed as a casual-loaded public holiday rate).

Also, keep in mind that casual shift management is a frequent source of disputes. If you sometimes need to cancel shifts around quieter public holiday periods, your shift cancellation policy and minimum notice requirements should be consistent with the applicable award and any contractual promises.

If Your Employee Is On A Salary, Do You Still Owe Public Holiday Penalty Rates?

Potentially, yes.

A salary arrangement doesn’t automatically cancel award penalty rates. If your employee is award-covered, you generally need to ensure their salary is high enough to cover (or compensate for) what they would have earned under the award, including public holiday penalties, overtime and other entitlements.

In many workplaces, this is managed through an annualised wage clause in the award, or a carefully drafted set-off clause in the contract. The details matter: annualised wage clauses often have strict requirements (for example, conditions around what the salary is intended to cover, record-keeping of hours, and doing regular reconciliation/top-ups if the employee would have been better off under the award). The risk is that a salary that looks generous on paper still ends up being an underpayment once you factor in public holiday work across the year.

Can You Ask Employees To Work On A Public Holiday?

In many cases, you can request employees to work on a public holiday, but employees may be able to refuse if the refusal is reasonable (and likewise your request must be reasonable). What is “reasonable” depends on factors like:

• the nature of your business and staffing needs
• the employee’s role and personal circumstances
• how much notice you gave
• whether the employee would receive penalty rates or other compensation

This is another reason your rostering processes and employment documents should be consistent, clear, and practical for your day-to-day operations.

Can You Substitute A Public Holiday Or Offer Time Off Instead?

Some awards and enterprise agreements allow substitution arrangements (for example, swapping the public holiday for another day off). This is not a universal rule, and it usually requires agreement and proper documentation.

If your team sometimes prefers flexibility (for example, taking a different day off rather than public holiday penalties), it’s important to confirm the relevant award/enterprise agreement rules before implementing a blanket approach.

How To Stay Compliant (And Avoid Underpayment Issues) In 2023

If you’re trying to manage public holiday penalty rates in 2023 without losing time (or sleep), a systems approach is your best friend.

1) Audit Your Coverage: Who Is Covered By Which Award?

Start with a simple internal checklist:

• Which award (if any) covers each role?
• Are classifications up to date?
• Do you have any employees on individual flexibility arrangements or annualised wages?

If you discover roles that are being paid “market rates” without award mapping, this is often where risk lives.

2) Check Your Payroll Settings For Public Holidays

Even if you know the correct rate, payroll errors happen when:

• the public holiday is not correctly flagged in the system (including state/territory variations and substitute days)
• the wrong pay code is applied
• the employee’s classification or employment type is wrong
• ordinary hours are not recorded accurately

It can help to run a “public holiday test” in advance (before a major holiday trading day) to see what the payslip will look like.

3) Use Clear Rosters And Keep Records Of Agreements

Public holiday disputes often aren’t just about money. They’re about what was agreed, what notice was given, and whether the employee felt pressured.

Clear written rosters and good record-keeping reduce misunderstandings, especially when staffing is changing fast or you use a mix of full-time, part-time and casual staff.

If you use annualised wages or set-off arrangements, keeping accurate time records and doing periodic “better off overall” checks (and paying any top-ups required) is often a key compliance step, not just a nice-to-have.

4) Align Your Employment Documents With Your Pay Practices

If your contracts and policies don’t match your real-world operations, you can end up with avoidable risk.

For example, if you regularly require staff to work public holidays (like many hospitality, healthcare, transport, and essential services businesses), your Employment Contract should be consistent with how you roster, how you make requests, and what compensation applies.

5) Budget For The True Cost Of Trading On Public Holidays

Public holiday staffing costs can be significantly higher than a standard weekday.

Before you commit to opening, it can help to model:

• expected revenue for the day
• minimum staffing levels (safely and operationally)
• the public holiday pay outcome for each roster option

As part of that planning, using a public holiday pay calculator as a starting point can help you sense-check costs (but you’ll still want to cross-check against your specific award or agreement).

And if you’re comparing different trading days, it can also be useful to understand how other penalties work across the week, such as weekend pay rates, because public holiday staffing decisions often sit alongside weekend and late-night trading decisions.

Key Takeaways

• There isn’t one universal answer to “public holiday penalty rates 2023” - the rate depends on the relevant modern award, enterprise agreement, and the employee’s classification and employment type (and on which public holidays apply in the employee’s state or territory).
• Public holiday pay issues often come from practical scenarios (irregular rosters, casual engagements, salary set-offs and annualised wage requirements), not from obvious mistakes - so your systems and documentation matter.
• Your rostering process should be consistent, recorded, and aligned with award rules and any workplace policies, particularly when requesting employees to work public holidays.
• Salaried employees may still be entitled to public holiday penalty rates if they are award-covered, unless the salary arrangement properly compensates them for those entitlements and any award compliance steps (like record-keeping and reconciliation) are followed.
• Doing a quick pre-holiday audit of award coverage, payroll settings and contracts can help you avoid underpayments and disputes.

If you’d like help reviewing your public holiday pay obligations, employment contracts, or rostering practices, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.