Australia Update: Upcoming changes to the Professional Employees Award 2020 regarding overtime

Australia’s Fair Work Commission has recently decided to introduce changes to the Professional Employees Award 2020, applicable from 16 September 2023. The most significant of those changes is the introduction of fixed penalty rates for overtime hours.  Employers may need to update their payroll systems and processes to satisfy these new requirements.

 

Modern Awards are statutory instruments which, in addition to legislation, govern the minimum conditions and rates of pay enjoyed by Australian workers in certain types of employment. There are over 100 occupation or industry-focused modern awards currently in place. The Professional Employees Award 2020 (Award) applies to employees who work in information technology, medical research, quality auditing, engineering and telecommunications industry roles. 

The current Award provisions regarding overtime

It is not unusual for employees in the professional services sector to be required, from time to time, to perform work outside of their ordinary working hours. This is particularly common in roles that involve customer support at various times of day.

The Award, as it currently stands, does not prescribe fixed penalty rates for work performed regularly in excess of ordinary hours, including ‘on-call’ work or work performed on afternoon, night or weekend shifts.

Instead, the Award (whilst still requiring an employer to ‘compensate’ an employee for this work) leaves it to the employer’s discretion to determine how this work will be compensated, be it with special additional leave or remuneration, the granting of special allowances of loadings, or merely by taking these hours of work into account in fixing an employee’s annual rate of remuneration. 

This will soon change.

Upcoming changes to the Award

In a recent decision, the Fair Work Commission has introduced changes to the Award which will take effect from 16 September 2023. These changes include, in brief summary:

  1. the introduction of fixed penalty rates for hours worked:

    1. before 6:00am and after 10:00pm between Monday and Saturday; and
    2. on Sundays and public holidays generally

    (“Overtime hours”);

  2. in addition to record keeping obligations that apply under statute, additional employer record keeping requirements in respect of employees’ worked hours.

Note that the changes do not apply to employees whose salaries are at least 25% higher than the minimum rates in the Award.

Key takeaway

If you are an employer with employees whose employment is covered by the Award, you will need to ensure that, from 16 September 2023, your business has processes in place to comply with these new Award requirements.

In particular, affected employers need to ensure that:

  • in auditing pay rates/salaries, for any employees who are on salaries that are not 25% higher than minimum Award rates, payroll systems are updated to account for changes to minimum rates of pay that apply when those employees work Overtime hours; and
  • they have an appropriate record keeping system in place to monitor actual hours worked by employees.

If you are unsure about your obligations under the Award or how the upcoming changes described above may impact your business, feel free to get in touch with our Sydney-based employment team.


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