The Albanese government is pushing ahead with new legislation to protect penalty rates and overtime for about 2.6 million workers under the award system. Those workers are more likely to be female, younger and work casual or part-time.

Penalty rates are higher rates of pay to compensate for working overtime or at unsociable hours, such as weekends, late nights or public holidays.

Australia is not unique in having penalty rates. Other countries, especially in Europe, have similar arrangements. It’s less common in the United States and the United Kingdom.

But while penalty rates and overtime may be good for workers, they’re bad for business – right?

Surprisingly, it’s not that simple. Past experience in Australia and overseas shows that when workers’ pay or conditions get worse, it can end up creating headaches for business – especially those facing worker shortages.

The Albanese government’s Protecting Penalty and Overtime Rates bill would enshrine a new “high-level principle” into the Fair Work Act.

It’s designed to override cases currently before Australia’s workplace relations regulator, the Fair Work Commission, where industry is pushing for greater flexibility on penalty rates and overtime.

If passed, the bill would stop the Fair Work Commission from allowing penalty or overtime rates to be “rolled up” into a single rate of pay “where it leaves any individual employee worse off”.

The Coalition says

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