Australia: Changes to Professional Employees Award 2020
Authors: Paul Lorraine, Callum Sirker, and Liz Baradan
The changes to the Professional Employees Award 2020 (PE Award) took effect on 16 September 2023.
The Award covers a wide range of employees who work in information technology, medical research, quality auditing, engineering, and telecommunications.
Arising from a full bench decision on 22 April 2020 as part of the four-yearly review of modern awards, in January 2023, the Fair Work Commission (FWC) decided on its own motion to address hours, overtime, and award coverage.
Variations to the PE Award were proposed in the Commission’s 16 March 2023 decision. The variations were introduced to address concerns of the Commission that the provisions of the Award failed to provide a fair and relevant safety net for PE Award-covered employees working additional or unsociable hours.
CHANGES TO THE AWARD
A penalty rate of 125% is now payable for all hours worked before 6:00 a.m. or after 10:00 p.m. between Monday and Saturday. A penalty rate of 150% is payable for all hours worked on Sundays or public holidays.
Time off in lieu of overtime (TOIL) by agreement
Employees are eligible to agree to take TOIL instead of receiving the additional payments set out above.
Employees are to be paid the appropriate minimum hourly rate for all hours worked in excess of 38 hours per week at the appropriate minimum hourly rate for the employee’s classification. These hours are to be paid in addition to the minimum annual wages paid.
To ensure compliance with the above matters, employers must keep records of all hours worked by an employee in excess of 38 hours per week before 6 a.m. or after 10 p.m. Monday to Saturday, and on a Sunday or a public holiday.
Exception where annual salary exceeds 25% of the minimum annual wage
Under the varied PE Award, if an employee has a contractual entitlement to receive an annual salary that exceeds the minimum annual wage prescribed under the PE Award for that employee’s classification by 25% or more, then the employer is not required to pay overtime (or provide time off in lieu), pay penalty rates, or keep records of hours worked by an employee in excess of 38 hours per week before 6 a.m. or after 10 p.m. Monday to Saturday, and on a Sunday or a public holiday.
The full bench decision in Zheng v. Poten & Partners identified an issue with the “principal purpose” test for determining Award coverage and the classifications in Schedule A of the PE Award. The Commission found the test was “singularly ill-suited” to determine the application of those classifications, causing uncertainty and excessive litigation about the coverage of the Award. Therefore, the FWC deemed it necessary to clarify the coverage of the PE Award without expanding or contracting its coverage.
The PE Award will now clearly cover employees performing:
- professional engineering duties;
- professional scientific duties; and
- professional information technology duties or
- quality auditing who are classified in one of the classifications at Schedule A, provided that the employee is not employed in a wholly or principally managerial position.
Key Action Points for Human Resources and In-house Counsel
- Employers need to check that their rates and record-keeping comply with these new Award provisions.
- The new overtime and penalty rates are more prescriptive, but the rates are not excessive.
- They also apply to employees on call backs and working remotely.
- The Award now allows TOIL by agreement.
- The new record-keeping requirements are quite onerous.
- Paying 25% over the minimum rate provides an exemption.
- For employees who are not paid 25% above the minimum, there is no impact if the hours worked are 38 per week, Monday to Saturday, between 6 a.m. and 10 p.m.
- Coverage has not changed, but it is now very clear that managers are not covered.
- Employer obligations regarding hours of work, overtime, and penalty rates.