Hotels and pubs want a two-tiered system for public holidays that excludes workers from claiming higher penalty rates on events such as the Queen's Birthday, bank holidays and the eve of the AFL grand final.

However, the higher pay rates for holidays such as Christmas would remain.

The Australian Hotels Association believes people are willing to work for a lesser amount on less-important public holidays. Credit:Ken Irwin

The organisation representing pubs and clubs has urged the Fair Work Commission to consider reducing the number of public holidays as part of a review of modern wage awards.

In its proposal to the Fair Work Commission review, the Australian Hotels Association asked for a lower penalty rate to be set for public holidays introduced by the states, which are in addition to eight national public holidays.