Earlier this year, the Fair Work Commission (FWC) announced its intention to make significant changes to the Professional Employees Award 2020 (Award) to deal with overtime and penalty rates, and clarify its coverage.
The Award covers:
- employers with respect of their employees who perform professional engineering and professional scientific duties where another industry award does not apply;
- employers principally engaged in the information technology industry, quality auditing industry or the telecommunications services industry and their employees who are covered by the classifications in the Award; and
- employers principally engaged as medical research institutes with respect to employees performing professional medical research duties and their employees who are covered by the classifications in the Award.
Currently, the Award only requires employers to pay employees ‘compensation’ for hours of work which would ordinarily attract specific penalty rates or overtime pay in other industries. While the Award provides that employees who work in excess of ordinary hours of work may be compensated though special additional leave or special additional remuneration, there are no clear or enforceable overtime or penalty rate entitlements.
From 16 September 2023:
- Employees will be entitled to be paid overtime or receive time off in lieu of overtime for working in excess of 38 hours per week;
- A penalty rate of 25% will apply for any hours worked before 6 am or after 10 pm, Monday to Saturday. A penalty rate of 50% will apply for Sunday or public holiday work. For casual employees, these penalty rates apply in addition to the 25% casual loading;
- Employers will be required to keep records of all hours worked by an employee in excess of 38 hours per week or at times which the new penalty rates will apply; and
- Where an employee has a contractual entitlement to an annual salary which is 25% or more above the minimum annual wage for their classification, the above requirements will not apply.
Further, the FWC has broadened the coverage of the Award and clarified that the Award does not apply to employees who are in wholly or principally managerial positions. This took effect on 23 March 2023.
While these changes may appear substantial, the FWC considered they are unlikely to impact the majority of employees covered by this Award given typically such employees are sought after and highly-paid. Instead, the changes are intended to ensure that any employees who are paid at or close to the Award minimums are adequately compensated where they work in excess of 38 hours per week or outside of ordinary hours.
What next for employers?
Employers with staff covered by the Award should consider reviewing their employment arrangements and remuneration of staff to prepare for compliance with these new provisions, including to:
- Consider the broadened scope of the Award to determine whether it applies to your business;
- Review employee remuneration and salaries to ensure that they meet the new penalty rate and overtime entitlements under the Award; and
- Update employment contracts to reflect the changes to the Award and refer to the new entitlements where required.
Please contact us at email@example.com should you require any assistance or clarification regarding these Award changes.