Upcoming Changes to the Professional Employees Award 2020
On 20 January 2023, the Fair Work Commission (FWC) handed down a decision[1] which will see amendments made to the Professional Employees Award 2020 (the Award).
At its own motion, the FWC has undertaken a review of the Award and decided to make significant changes, including the introduction of penalty rates, overtime and time off in lieu (TOIL).
Employers should be aware that there will also be changes to the coverage provisions of the Award.
Generally speaking, the Award applies to employers working in the information technology, telecommunications services and quality auditing industries, as well as employers of professional engineers, professional scientists and medical researchers. In this regard, the Award is unique as it applies to highly qualified employees who in other fields, would often fall outside modern-award coverage.
Overtime and Penalty Rates
Currently, the Award does not prescribe specific rates of pay for employees who work overtime or “unsociable hours” as is the case in most other modern awards. Rather, the Award simply requires employers to ensure that they “compensate” employees for such hours. This has given employers far greater flexibility in terms of hours of work and remuneration than other modern awards.
However, the FWC has determined that the current provisions of the Award do not meet the objective of modern awards, which is “to provide a fair and relevant safety net” and as such, it has decided to make the following changes to the Award:
employees will be entitled to either overtime payments or TOIL where an employee works in excess of 38 hours in a week, including call-back work, remote work and work performed on electronic devices;
a penalty rate of 125% will be payable for all hours worked (whether ordinary or overtime hours) before 6:00am or after 10:00pm on any day Monday to Saturday (for casual employees, this penalty rate is in addition to casual loading);
a penalty rate of 150% will be payable for rostered hours (whether ordinary or overtime) worked on a Sunday or public holiday (again, in addition to casual loading for casuals);
the employer must keep records of all hours worked by an employee in excess of 38 hours per week, or worked before 6:00 am or after 10:00pm on any day Monday to Saturday, or worked at any time on a Sunday or public holiday.
However, the FWC has also confirmed that overtime and penalty rate provisions will not apply where employees covered by the Award have a contractual entitlement to an annual salary that is 25% or more in excess of minimum annual wage for the appropriate classification in clause 14 of the Award.
Coverage
In addition to reviewing hours of work and pay, the FWC also considered the coverage of the Award and decided to expressly exclude managerial positions.
The coverage clause in the Award is to be varied to read as follows:
“An employee performing professional engineering duties, professional scientific duties, professional information technology duties, or quality auditing must be classified in one of the following classifications provided that the employee is not employed in a wholly or principally managerial position.”
The effect of this variation is to make clear that the Award applies to “all employees who perform professional engineering duties, professional scientific duties, professional information technology duties or quality auditing unless the person holds a position which is principally managerial in nature.”
The operation of the changes to the Award are imminent, with the FWC having released a draft determination of the varied Award. Submissions in respect of the draft determination closed in respect of the changes closed on 10 February 2023.
In response to the changes, employers should review:
if any employees are covered by the Award;
the remuneration and hours of work of any employees who are covered by the Award;
employment contracts;
recording keeping processes.
Employers must be aware of which employees come under the Award and ensure that the new minimum entitlements are met.
[1] [2023] FWCFB 13.
