Award update: Engineers, scientists and IT professionals to be entitled to paid overtime for the first time

22 February 2023

The Professional Employees Award 2020 (Award) covers engineers, scientists, data analysts and medical researchers in all industries, as well as information technology (IT) professionals working in the IT Industry. The Award has always contained minimal terms setting minimum annual salaries, the ability for employees to be required to work reasonable overtime hours and no obligation on employers to make additional payment for overtime hours.

On 20 January 2023, the Fair Work Commission (Commission) published a decision signalling that it will vary the Award and published a draft determination setting out the proposed changes to the Award. Once the proposed changes to the Award take effect, they will specify ordinary hours of work and introduce overtime pay and penalty rates for covered employees.

In addition, the Award’s coverage will be clarified to exclude management employees and some of the proposed Award variations will not apply to employees that are paid 25% or more above the minimum annual wage for their classification under the Award.

Outline of the key changes to the Award

The Commission has continued to take a minimalist approach when proposing variations to the Award, which can be summarised as follows:

  1. ordinary hours of work will be set at 38 hours per week with the right to request that full-time employees work overtime as long as the additional hours are reasonable (per section 62 of the Fair Work Act 2009 (Cth));
  2. an employer and employees will be able to agree to the accumulation of TOIL rather than pay overtime;
  3. a penalty rate of 125% will be payable to employees that work any hours before 6:00am or after 10:00pm Monday and Saturday;
  4. a penalty rate of 150% will be payable to employees that work on a Sunday or public holiday; and
  5. employers will be required to keep records of hours worked by certain employees:
    • in excess of 38 hours per week;
    • before 6:00am and after 10:00pm between Monday and Saturday; and
    • on a Sunday or public holiday.

These changes will not apply to management employees and employees paid in excess of 25% above the Award minimum rate will not be entitled to payment for overtime, penalty rates or to accrue time off in lieu and employers will not be required to keep time and wages records for them.

Implications for employers – preparing for the changes

The Fair Work Commission ordered that submissions on the draft determination to vary the Award be filed with the Commission by Friday, 10 February 2023. At least 5 submissions have been filed with the Commission on the proposed changes. The changes to the Award will take effect after those submissions have been considered.

However, employers should take proactive steps now to review their employment arrangements with covered employees to:

  1. make sure that management employees are properly designated as such in their contracts and that their duties reflect the managerial nature of their work;
  2. ascertain which employees are not currently paid 25% above the minimum annual wage for their classification in the Award and consider whether the remuneration of those employees should be increased so as to avoid the costly and time-consuming changes that will be introduced by the Award variations;
  3. determine if the relevant contracts contain set off clauses and if those set off clauses are effective; and
  4. ensure they have a mechanism to record non-standard work hours and overtime hours.

HWL Ebsworth’s Workplace Relations and Safety team is experienced in advising employers and on all aspects of the employment relationship. If you require our assistance with advice on award updates or employment matters in general, please contact the Workplace Relations and Safety team.

This article was written by Erica Hartley, Partner, Danielle Flint, Special Counsel and Kayne Vague, Associate.

Danielle Flint

Special Counsel | Perth

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