The Fair Work Commission (FWC) has announced many changes this year, and one you may have missed or forgotten about was its intention to make significant changes to the Professional Employees Award 2020 (Award).

For absolute clarity on the Award’s coverage:

• 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.

Historically, this Award has been a very simple underpinning instrument to follow. It’s ambiguous wording and loose terms meant employers had to ensure ‘compensation’ for hours worked was paid.

These hours worked, in other Awards would ordinarily attract specific penalty rates or overtime pay – not in the Professional Employees Award.

Simply put, the Award provided that employees who worked in excess of ordinary hours of work were lawfully compensated though special additional leave or special additional remuneration – and this was largely able to be determined by the Employer.

The Award had no clear or enforceable overtime or penalty rate entitlements.

However – The Commission have now confirmed the changes

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 on top of 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

Exclusions:

• 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.

Additionally, the Commission has confirmed the Award does not apply to employees who are in wholly or principally managerial positions. This took effect on 23 March 2023.

The Commission confirms its intention of the changes are 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 should you do if you’re covered by the Award?

Employers should run a check to separate their employees covered by the Award, by those excluded and those included with regard to the changes.

Those excluded from these changes are employees who have a contractual entitlement to an annualised salary which is 25% or more above the minimum annual wage set by their classification in the Award.

Next, employers should establish a plan for all employees below the line of exclusion:

• Are they so close to the line, that a slight increase in salary will exclude the employee? Is this beneficial for Parties to agree to?
• Do the managers of the employees require training on the changes in order to know how rostering and work demands might impact entitlements and costs?
• Are these employees recording their hours? Do you need to implement a mechanism for recording all hours worked?
• Review remuneration records and understand where you will be required to pay penalties in the future; and
• Update employment contracts to reflect the changes to the Award and refer to the new entitlements where required.

As always, reach out to us should you require any assistance or clarification regarding these Award changes, or any of the various changes rolled out by the Commission this year.