Shift Penalty Explained (System Default Pay Rate)

Aimee Slatter

Sep 25, 2024

1072

🎯 The reporting of payments for Shift Penalty has not changed per the Australian Taxation Office Single Touch Payroll Phase 1 guidance. Shift Penalty continues to be reported under Gross.

🎯 If you are unsure if this Pay Type applies to your circumstances, please refer to the Payee's Employment Contract or obtain advice from either the Australian Taxation Office or Fair Work Ombudsman.

Shift Penalty is applicable when the Payee is entitled to loading on their standard rate of pay as they are required to commence work early in the morning or late in the evening.

For example, under the General Retail Industry Award 2020 [MA000004]. A baking production Payee who begins a shift at or after 2.00 am and before 6.00 am is entitled to an early morning shift rate of 112.5% of the minimum hourly rate for full-time and part-time employees and 137.5% of the minimum hourly rate for casual employees, inclusive of the casual loading.

Shift Penalty uses a portion of the Rate Per Hour set in the Payee Master File (12.50%) and Leave Entitlements are not applicable. Payments with this pay type are considered to be W1 (Total of Salary, Wages & other payments), Taxable and Ordinary Time Earnings (OTE).