The Fair Work Commission (FWC) has recently announced some significant changes to the Professional Employees Award 2020, which applies to employers (including labour hire businesses):
- that are principally engaged in the IT industry, the telecommunications services industry or the quality auditing industry;
- that are engaged as medical research institutes in relation to their employees performing professional medical duties; and
- in relation to their employees performing professional engineering and professional scientific duties;
- providing their relevant employees fall within the Award classifications (and are not employed in a wholly or principally managerial position).
These new changes, particularly in relation to overtime payments, will have a significant impact on employers and the way they pay these employees.
Key Changes
Hourly Rates
The minimum hourly rates were increased, and the new rates apply as of 1 July 2023.
Coverage
The Coverage provisions were rewritten to more clearly outline the circumstances in which an employee will be covered by any of the classifications (without either expanding or contracting the coverage of the Award). The Fair Work Commission (FWC) noted the highest classification within the Award covers a person performing professional work at a senior or leading level, but there is no indication it is intended to cover a managerial position (the former may exercise supervisory authority and control in respect of professional/technical matters, but is not a manager, even if the manager role in some respects require engineering, scientific or IT qualifications).
These amendments came into operation on 23 March 2023, though essentially there is really no material change for employers to worry about (unless they previously misinterpreted the provisions/misclassified workers). Ultimately, the aim of this variation was to remove need to apply the principal purpose test and thus resolve the difficulty identified in Zheng v Poten & Partners [2021] FWCFB 3478 (being that the well-established principal purpose test is “singularly ill-suited” to determine the application of those classifications, and the uncertainty this has caused has led to excessive litigation about the coverage of the award in individual cases”).
Overtime
The following changes relating to overtime come into effect on 16 September 2023, and apply to all employees except those who are paid at least 25% above Award rates:
- An employer may request or require that a full-time employee work in excess of 38 hours per week, provided that such additional hours are reasonable.
- Employees will be paid the appropriate hourly rate for all hours worked in excess of 38 per week. This includes work on or in connection with call-backs and work performed on electronic devices or otherwise remotely.
- A penalty rate of 125% will be payable for all hours worked before 6am or after 10pm Monday to Saturday (for casual employees, this is in addition to their casual loading).
- A penalty rate of 150% will be payable for rostered hours (whether ordinary or overtime) worked on a Sunday or Public Holiday (again, for casual employees, this is in addition to their casual loading).
- An employer and employee may agree that the employee’s ordinary hours be averaged over a period of up to 13 weeks, and/or to the employee taking TOIL instead of being paid for a particular amount of overtime. There are strict stipulations in this respect, including (but not limited to) the agreement needing to be in writing (with an agreement form provided within the Award) and that if TOIL isn’t taken within 6 months of the overtime being worked it must be paid out.
- An employee who performs remote work outside of ordinary hours must maintain/provide to their employer a time sheet (or other record acceptable to the employer) specifying start/finish times and a description of the work undertaken. Employers must keep records of all hours worked by an employee in excess of 38 per week, or worked before 6am or after 10pm Monday to Saturday, or time worked on Sunday or Public Holiday.
The FWC stated that while it may be accepted, with a “high level of generality”, that it is not industrially appropriate for an award applying to highly-paid professional salaried employees to provide for a prescriptive regime of overtime and weekend penalty rates and shift allowances, this cannot be fully applied to professional employees who are “award-reliant” (i.e. afforded only the minimum rates and conditions for which the Award provides, or only slightly above). The lower-level salary rates in the Award may actually have rendered an employee in the category of “low paid” if they were to work significant additional hours (as is common practice in such lines of work). The FWC was of the view that the minimum salaries prescribed by the Award were never intended to constitute the full measure of remuneration for hours worked in excess of 38 hours per week, or for unsociable hours. There was also a “major disparity” between part-time and casual employees and full-time employees under the Award, with only the former two being entitled to be paid for any hours worked in excess of 38 per week. Ultimately, these changes aim to provide additional remuneration for unsociable hours worked while maintaining “the degree of flexibility appropriate for professional salaried employment”.
For more information on these changes and how they affect your business, contact Emplawyer.
