More than 350,000 casual retailer workers will be entitled to increased penalty rates following a landmark decision slammed by the retail sector this week.

Casual workers who clock on after 6pm on weeknights and  work on Saturdays will be entitled to increased penalty rates, with the first set of changes coming into effect on November 1 following a decision by the Fair Work Commission last Friday.

Under the changes, casual workers will be entitled to a pay rate increase of 15 per cent, with rates rising 5 per cent annually until March 2020.

The shake-up will also see shift workers’ penalty rates on Sunday reduced from 200 per cent to 175 per cent and from 225 per cent to 200 per cent for casual shift workers.

The Fair Work Commission decision follows a three-year call from the Shop, Distributive and Allied Employees Association for a penalty rate increase, with the Commission finding in favour of the call, saying the award “lack[ed] logic and merit.”

The changes come as a decision entitling casual workers to ask their managers for a permanent position if they have worked consistent hours for over a year following a decision last year came into effect on October 1.

Retailers hit back over changes

Retailers have hit back at the penalty rate shake-up, with the Australian Retailers Association’s Executive Director Russell Zimmerman warning the decision will hit retailers’ bottom line hard over Christmas.

“With this decision taking place from November 1 this year, we can be certain retailers will have to re-think their Christmas trading strategy,” Mr Zimmerman said.

The penalty rate increase could see retailer’s trading hours impacted, Mr Zimmerman warned.

“Christmas trade is the biggest trading season for retailers, and these increases to casual workers pay on Saturday’s and weekday evenings will certainly impact on trading hours around the country.”

The suite of changes come after industry leaders flagged concerns over the complex nature of the retail award, with Mr Zimmerman expressing concern the changes will only exacerbate non-compliance.

“The Modern Award system is already complex, and we are concerned the Australian Labor Party’s selective acceptance of Fair Work’s employment decisions will continue to jeopardise the Australian retail industry,” Mr Zimmerman said.

Senior Employment Relations Adviser at Employsure Alexandra Woods also warned the increased penalty rates will hit hard for small business this holiday season and could impact .

“Small business employers are feeling the pinch during the peak season and increasing consumer demand for longer operating hours before Christmas,” she said.

“Many retailers by now have already planned rosters and hired casuals before the busy wave of Christmas. Now, with this decision introduced, retailers are going to have to rethink their rostering arrangements and budgets.”