Further Award update: Engineers, scientists and IT professionals will be entitled to paid overtime and penalty rates from September 2023 

On 17 February 2023, HWL Ebsworth Lawyers published an article about the changes the Fair Work Commission (Commission) proposed to make to the The Professional Employees Award 2020 (Award) in a decision dated 20 January 2023 (January Decision). Click here to read article.

The January Decision proposed to introduce a provision that specified ordinary hours of work and introduced overtime pay and penalty rates for employees covered by the Award. A draft determination was published with the January Decision and the Commission invited interested parties to file submissions on the draft determination.

As anticipated, the majority of the draft determination from the January Decision has been upheld, with two additions, and will come into effect on 16 September 2023. The change to the Award clarifying that it does not apply to managerial employees takes immediate effect from 16 March 2023.

What will the Award look like from September 2023?

The Commission has maintained its previous proposed amendments from the January Decision and introduced a specification of ordinary hours of work as well as introducing overtime pay and penalty rates, as well as making two further changes to the Award.

As outlined in our previous article, only employees earning less than 25% above the Award minimum rate will be affected by most of the amendments, which are 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 to Saturday.
4. A penalty rate of 150% will be payable to employees that work on a Sunday or public holiday.
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, Monday to Saturday.
• On a Sunday or public holiday.

In addition to these changes, the Commission made the following changes to the Award:

1. Employers may agree with employees that the employee’s ordinary hours of work will be averaged over a period of up to 13 weeks.
2. Employees who perform remote work outside of ordinary hours must maintain and provide time sheets to their employer, specifying the time at which they commenced and finished the remote work as well as describing the work they undertook. These time sheets are to be providing to the employer ‘within a reasonable period of time after the remote work is performed‘.

Submissions in response to the draft determination

Four interested parties filed submissions in response to the draft determination, with their submissions including concerns about:

1. The significant administrative burden on employers due to the requirement for record keeping and calculating penalty rates.
2. The likely prohibition on employees enjoying the previous flexibility within their roles due to the introduction of penalty rates for unsociable hours.
3. There should be an insertion ‘in respect of hours worked at the direction of the employer‘ for overtime and penalty rates to avoid employees working unsociable hours when not directed to.
4. There should be a provision to average the ordinary hours worked by employees over a 12 month period.
5. The financial burden on employers will be significant by increasing graduate salaries to 25% more than the minimum Award rate, and thus, needing to increase more senior employee’s salaries to reflect their experience and avoid pay disputes.
6. The proposed amendments if introduced, should not be introduced for 6 – 12 months to allow employers to prepare for the new requirements imposed on them.

The Commission considered the submission from the interested parties, rejecting the majority of them, preferring an approach that protects lower paid and junior employees covered by the Award.

Preparing for the changes

Since our previous article, we have been working with employers to prepare for the proposed changes to the Award and how their businesses can ensure its compliance when the changes come into effect.

Employers should start looking now at how their business will respond to these amendments to ensure compliance before 16 September 2023. If you are concerned about what alterations your business needs to introduce, please get in touch with us and we will assist you with this.

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