Fair Work Commission decision spurred changes to award
On 16 September 2023, key changes to the Professional Employees Award 2020 will come into operation. These changes follow a decision of the Fair Work Commission (FWC) earlier this year to vary the Professional Employees Award and will take effect from an employee’s first full pay period on or after 16 September 2023.
The key changes include new obligations for the payment of overtime and penalty rates and record-keeping requirements for employees covered by the Professional Employees Award. This is a significant change for the Award which previously has not expressly provided for overtime and penalty rate entitlements.
This article sets out the key changes to the Professional Employees Award and steps employers can take to prepare for the changes.
Key changes
The following key changes will take effect from an employee’s first full pay period on or after 16 September 2023:
Averaging of ordinary hours of work: The FWC has re-drafted provisions regarding “ordinary hours of work” (clause 13). While ordinary hours of work remain at 38 hours per week, the variations clarify that the ordinary hours may be averaged over a period of up to 13 weeks (Ordinary Hours of Work).
Overtime and penalty rates: The FWC has introduced new provisions regarding overtime and penalty rates (clause 18). These provisions clarify the minimum pay entitlements for employees who work additional hours exceeding the Ordinary Hours of Work or at certain unsociable times (including Sundays, Public Holidays and before 6am or after 10pm Monday to Saturday). Notably:
- Overtime will be payable at the appropriate minimum hourly rate under the Professional Employees Award for all hours exceeding 38 hours per week (or exceeding an averaging arrangement), including work performed on call back, on an electronic device or remotely. In addition to overtime hours that an employer has expressly directed an employee to work, an entitlement to overtime may also arise when additional hours are worked without an express direction to do so. The new provisions also permit the employer and employee to reach an agreement for the employee to take time off instead of an overtime payment.
- Penalty rates will be payable for hours directed to be worked on Sundays, Public Holidays and before 6am or after 10pm Monday to Saturday.
Record keeping: The FWC has introduced new record keeping obligations for employers intended to support the penalty and overtime provisions.
Importantly, the key changes listed above will not apply to any employee with a contractual entitlement to an annual salary of 25 per cent or more than the applicable minimum wage under the Professional Employees Award. The changes will also not impact employers and their employees who are subject to a guarantee of annual earnings made in accordance with Division 3 of Part 2-9 of the Fair Work Act 2009 (Cth).
Who will be impacted?
The changes will impact employers and their employees covered by the Professional Employees Award, which has both occupational and industry-based coverage in various professional streams (subject to a number of express exemptions), including:
- Employees performing professional engineering and scientific duties who are covered by the relevant classifications in the Professional Employees Award.
- Employers in the information technology industry, the quality auditing industry or the telecommunications services industry and their employees who are covered by the relevant classifications in the Professional Employees Award.
- Employers engaged as medical research institutes with respect to their employees performing professional medical research duties who are covered by the relevant classifications in the Professional Employees Award.
Steps for employers
In preparation for these new provisions, employers can take the following steps:
- Assess whether the Professional Employees Award applies to any of their employees and whether these changes will apply to those employees (Impacted Employees)
- Review and evaluate current remuneration arrangements of Impacted Employees and whether the arrangements will comply with the changes. This may include considering the entitlement to additional pay for overtime and penalty rates and reviewing over-award payments and the effectiveness of contractual set-off provisions to cover the entitlements to overtime and penalty rates.
- Confirm systems are in place to maintain records of hours worked by Impacted Employees and any necessary improvements are made to ensure compliance.
Megan Cant is a Special Counsel at Holding Redlich in Sydney. Natasha Jones is a Senior Associate at Holding Redlich in Canberra.
