Can You Charge a Public Holiday Surcharge in Australia? Legality & Limits
This article explores everything you need to know about holiday surcharge Australia, addressing key questions for Australian businesses: is a public holiday surcharge legal?
11 Apr 2025
Contents
Is a Public Holiday Surcharge Legal in Australia?
For businesses operating in Australia, particularly those in fast-paced sectors like hospitality, managing operating costs during public holidays is a key challenge. A frequent question arises: is applying a public holiday surcharge actually permitted by law? Generally, the answer is yes. Businesses are legally allowed to charge a surcharge on public holidays across all of Australia.
However, this legal permission comes with important conditions. The surcharge is intended to offset the increased operational expenses incurred on these days, primarily related to higher wage regulations and the mandated public holiday pay and penalty rates for staff working. It isn’t meant to be an arbitrary price increase.
While there’s no nationally prescribed percentage limit on a public holiday surcharge, the Australian Competition and Consumer Commission (ACCC) guidelines emphasize that surcharges must be justifiable and not excessive. The surcharge should accurately reflect the genuine increase in costs, predominantly stemming from employment law requirements for employee remuneration.
It’s important to remember that while federal law provides the overarching legality, slight variations or interpretations may exist under state or territory fair trading legislation. However, the core principle of justification remains consistent across jurisdictions. The fundamental obligation is to ensure transparent and linked application to actual cost increases, especially penalty rates.
Complying with Fair Work Ombudsman Guidelines for Display
While charging a public holiday surcharge is legal, how you communicate this to your customers is critical for compliance and retaining their goodwill. A lack of transparency is a major cause of customer dissatisfaction; studies and industry feedback consistently show that many customers are frustrated by surcharges that are unexpected or poorly communicated. Transparency isn’t just best practice—it’s a legal requirement.
The Fair Work Ombudsman and ACCC offer clear guidelines for disclosing surcharges. Non-compliance can result in scrutiny and potential penalties for misleading conduct. To ensure compliance, businesses across all sectors – especially within the hospitality industry, retail, and even healthcare – must:
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Provide Clear Signage: Display notices indicating the public holiday surcharge amount (usually as a percentage) prominently at all entrances to your premises. Customers should be aware before entering or ordering.
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Ensure Conspicuous Menu or Price List Display: The surcharge information must be clearly stated on menus, price lists, or at the point of sale. Avoid hiding it in fine print or on the back page where it might be easily missed. It should be easily visible when a customer is making a purchasing decision. This extends to all customer touchpoints, from physical menus to digital displays managed by your POS system, and even online ordering platforms.
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State the Exact Percentage or Calculation: Clearly specify the percentage of the surcharge (e.g., "A 15% surcharge applies on public holidays") or explain how it’s calculated. Ambiguity is unacceptable.
Examples of Surcharge Display
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Good Practice:
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A professionally printed sign at the door stating: "Please note: A 15% surcharge applies on all gazetted public holidays to cover increased staff costs."
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A clear note at the beginning of the menu stating: "A 15% public holiday surcharge applies today."
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A visible notification on a digital ordering kiosk clearly stating the surcharge.
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Bad Practice:
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Only mentioning the surcharge in tiny font at the bottom of the last page of the menu.
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Having no signage at the entrance regarding the surcharge.
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Verbally informing customers about the surcharge only at the point of payment.
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Failure to adequately disclose a public holiday surcharge can trigger investigations by the ACCC and potential legal action under the Australian Consumer Law for misleading or deceptive conduct. Prioritising clear menu display, digital notifications, and entry signage is essential.
Calculating Your Public Holiday Levy
The justification for a public holiday surcharge is directly linked to increased labour costs governed by modern award wages and associated penalty rates. The Fair Work Act 2009 mandates that employees working on a public holiday are generally entitled to public holiday pay, often calculated at a higher penalty rate (e.g., double time and a half) compared to their standard rate.
This rate depends on factors like employment type (full-time, part-time, casual) and the specific industry award applicable to the employee, such as the Hospitality Industry (General) Award 2020, the Clerks – Retail Award, or even awards in healthcare.
Calculating an appropriate public holiday levy requires understanding these costs. For illustration:
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Consider a casual employee covered by the Hospitality Award normally earning $30 per hour.
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On a public holiday, their penalty rate could be 250% (2.5 times) their base rate.
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Their public holiday hourly rate becomes $30 * 2.5 = $75 per hour.
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This $45 per hour increase significantly elevates the labour costs for that day, forming the foundation for calculating a justifiable surcharge public holidays.
Businesses must ensure business compliance by precisely calculating these increased wage costs based on the specific award wages applicable to their staff. Accurate calculation and application are vital, and modern restaurant POS or retail POS systems can be configured to automatically apply surcharges based on predefined rules, reducing manual errors and ensuring consistency across transactions. This level of automation is invaluable, especially in busy environments.
State-Specific Considerations
While wage regulations regarding minimum entitlements and penalty rates are primarily governed by the federal Fair Work system and modern awards, state employment law or fair trading authorities may have specific requirements, mainly concerning the display or transparency of surcharges, although the fundamental legality remains consistent across holiday surcharge Australia:
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NSW: Reference NSW Fair Trading guidelines alongside ACCC rules for state-specific requirements on surcharge display. Transparency remains the core obligation.
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VIC: Consumer Affairs Victoria provides guidance consistent with ACCC principles. Ensure menu pricing and signage meet both federal and state consumer law clarity expectations.
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QLD: The Office of Fair Trading Queensland enforces similar consumer protection laws regarding clear pricing and surcharge disclosure.
For definitive details on public holiday pay rates and specific award wages applicable to your employees, the Fair Work Ombudsman website (www.fairwork.gov.au) is the authoritative resource. Regularly reviewing the relevant award is crucial for accurate calculations and business compliance.
Minimising Risk & Maintaining Customer Goodwill
Ensuring compliance with regulations surrounding the public holiday surcharge extends beyond simply avoiding penalties; it's about building customer trust and fostering positive relationships. Non-compliance can result in disputes, negative online reviews, and investigations from regulatory bodies like the ACCC or the Fair Work Ombudsman. A proactive approach is key to avoiding these issues.
Here’s a simple checklist for businesses:
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Regularly Review Signage & Menu Display: Confirm your surcharge information is prominently displayed at entrances and on menus, and that it’s easy to understand. Is it unambiguous?
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Verify Surcharge Accuracy: Ensure the public holiday surcharge percentage accurately reflects the actual increase in operating costs, particularly increased wages due to penalty rates. Can you justify the amount if requested?
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Empower Your Staff: Equip your customer-facing staff with the knowledge to explain the surcharge politely and accurately if customers inquire.
If you're uncertain about any aspect of public holiday pay, award wages, or the correct application and display of a public holiday surcharge, seeking professional advice from an employment law specialist or a relevant industry association is highly recommended. They can provide tailored guidance based on your specific circumstances.
Ultimately, transparency is paramount. Being upfront and clear about the public holiday surcharge manages customer expectations and showcases responsible business practice, significantly contributing to business compliance and stronger customer relationships. Remember to consult the Fair Work Ombudsman website as your primary source for employment law obligations regarding pay and conditions.
Read more: The 2025 Guide to Restaurant Online Marketing (eats365pos.com)
Navigate Holiday Surcharges with Confidence
Proactive compliance isn’t simply about checking boxes; it's about protecting your business and nurturing customer trust. Ensuring your operational tools, like your POS system (consider a cloud-based POS for streamlined operations across multiple locations), are configured to handle and clearly communicate these surcharges accurately—whether on printed menus, digital displays, or through online ordering platforms—is essential. By prioritizing transparency and accuracy, you can navigate public holiday operations seamlessly and foster lasting customer loyalty.
If you’re seeking ways to optimize your business operations, manage pricing efficiently, and ensure clear communication with your customers, reach out to Eats365. Discover how our solutions can support your restaurant or retail business’s compliance and efficiency, particularly during peak periods like public holidays. We can help you integrate everything from kitchen display systems to robust reporting features to make managing your business simpler and more profitable.
