By Anthony El Salim
Did you know that the Fair Work Commission has the power the review every modern award? And that’s just what the regulatory body has done for the Professional Employees Award 2020 (Award).
Until now, businesses with employees covered by the Award have worked under a favourable set of employment entitlements compared to other current modern awards. However, a recent review and subsequent decision handed down by the Full Bench of the Fair Work Commission (FWC) means this is set to change from 16 September 2023.
This article will set out the details of this decision, the major provisions that are set to be added to the Award, and how your business can best prepare for them to come into place.
So, what were the previous entitlements?
The existing overtime and penalty provisions of the Award provided employers a great degree of flexibility when paying employees for additional hours worked or when penalties would otherwise apply. Specifically, the Award simply stated that employers must compensate for time worked regularly in excess of ordinary hours, on afternoons, nights, or weekends or on call-backs. This can include but isn’t limited to:
- Granting special additional leave;
- Granting special additional remuneration;
- Taking the factors into account in the fixation of annual remuneration; or
- Granting a special allowance or loading.
As long an employee was compensated in some way, this would generally be enough to satisfy the conditions of the Award. This will no longer be the case.
When reviewing the matter, the FWC was of the view that the Award failed to provide a fair and relevant safety net for employees working hours in the above circumstances. To resolve the perceived disadvantage compared to other employees, the FWC decided to vary the Award with effect from the first full pay period on or after 16 September 2023.
Avoiding the entitlements
Before moving to describe the additional entitlements being introduced, there will be an important exception to their application. Employees who are being paid at least 25 per cent above their classification level as an annual salary won’t receive the new entitlements.
Businesses should implement a yearly review when minimum award rates are increased in July to ensure that they satisfy this requirement. If so, they won’t be required to pay the additional penalty rates or follow the other provisions.
1. Overtime payment
As outlined above, if there was some compensation for additional hours, overtime wasn’t required to be paid in any specific way. This will now change.
Employers must pay a full-time employee their minimum hourly rate for their classification for all the hours worked. This includes hours worked on electronic devices, remotely, and in connection with call-backs. This was already required for part-time and casual employees under the Award.
Subject to the below provisions, there’s no extra penalty rate for general overtime hours.
2. Penalty rates
Employees under the Award will now be entitled to penalty rates according to the following table:
|Monday-Saturday before 6:00 am||125 per cent||150 per cent|
|Monday-Saturday after 10:00 pm||125 per cent||150 per cent|
|Sunday||150 per cent||175 per cent|
|Public holiday||150 per cent||175 per cent|
These rates are regardless of whether the hours directed to be worked are part of an employee’s ordinary hours.
3. Time off in lieu
In line with many other awards, overtime can now be dealt with through agreements to take extra time off instead of payment of overtime. This must be agreed in writing for each separate instance of overtime. The agreement must state:
- the number of hours worked;
- when those hours were worked; and
- that the employee can request at any time to be paid out the time, with such a payment being made out in the pay period following the request.
When taking time off in lieu (TOIL) the time taken off must be the same as the amount of overtime hours worked. For example, if three hours of overtime are worked, the employee would be provided three hours off.
TOIL must be taken within six months of the overtime being worked. If it has been more than six months since the overtime was worked, or if the employee has requested so at any time, the overtime must instead be paid. To avoid any doubt, the payment is at the employee’s base rate of pay for the overtime hours worked.
4. Record keeping
Businesses that are operating under this Award have been accustomed to allowing full-time employees to work without paying attention to the number of hours they’ve worked. Previously, businesses operating under the Award had no obligation to do so.
This is now set to change. To ensure that all new provisions are being met, employers must now keep records of all hours worked by employees that are:
- over 38 hours a week;
- before 6:00 am or after 10:00 pm Monday to Saturday;
- on a Sunday; and
- on a public holiday.
This is now an Award requirement like any other. Failure to comply with this new Award term is a breach of a civil remedy provision under s 45 of the Fair Work Act 2009 (Cth). This means businesses may face fines for not keeping track of full-time employees’ hours as outlined above.
If you have any questions about the content of this article and how to best prepare for these upcoming changes, clients can contact the 24/7 Telephone Advisory Service.
Not an HR Assured client? You can access a free advice call with HR Assured’s workplace relations experts – there are no obligations – just 30 minutes of tailored advice that will bring your business peace of mind.
Anthony El Salim is a Workplace Relations Consultant at HR Assured. He assists clients with a range of employment relations and compliance matters via the 24/7 Telephone Advisory Service. He is currently studying for a Juris Doctor.