Overtime changes to the Professional Employees Award 2020: The countdown is on!

Earlier this year, the Fair Work Commission Full Bench decided to amend the coverage and overtime provisions of the Professional Employees Award 2020 (PE Award).  The PE Award covers some employees who perform engineering, scientific, information technology, quality auditing, telecommunications and medical research work.

Some changes to coverage of the PE Award came into effect in March 2023.  Those changes had the effect of clarifying that the PE Award is not intended to apply to employees engaged wholly or principally at a managerial level.  

Further changes to overtime pay requirements will become effective on 16 September 2023.  At that time, many (but not all) PE Award-covered employees will become entitled to payment at specific rates of pay for additional hours of work.  Employers also need to be aware that, for affected employees, the employer will have new payment and record keeping obligations.  These changes are outlined further below.

What is the pre-16 September 2023 position under the PE Award in relation to overtime and penalty rates?

Historically, there has been no obligation to pay overtime or penalty rates to PE Award employees.  The PE Award simply requires that, where employees regularly work hours in excess of ordinary hours, work shift work, are on call, or work on call backs, the employer must provide them with some form of compensation for those hours of work.  That might be in the form of a higher rate of pay, special additional leave, special additional remuneration, or a special allowance or loading.

Which employees will be affected by the 16 September 2023 changes?

Employees who are employed under a contract of employment that entitles them to be paid 25% or more than the minimum annual wage prescribed for their classification are not entitled to the benefit of the overtime and penalty rate changes.  Other employees will be affected by the changes.

For those employees who are affected, what are the changes?

The new rules include:

• The employee's ordinary hours of work will be defined as 38 hours per week.  Ordinary hours may be averaged over a period of up to 13 weeks.  
• Full time employees who work in excess of 38 hours per week, or an average of 38 hours per week over a period of up to 13 weeks, must be paid at the applicable hourly rate of pay for those excess hours of work (which may include payment of penalty rates).   Part time and casual employees who work in excess of 38 hours per week must be paid at the applicable hourly rate of pay for those excess hours of work.  
• Employees may be granted time off in lieu instead of payment for overtime, subject to and in accordance with the requirements of the PE Award.  
• Record keeping requirements will apply to employees undertaking remote work (e.g. those who work from home).
• Employers must retain records of employee hours:

               (a) worked in excess of 38 hours per week;
               (b) worked before 6 am or after 10 pm on any day Monday to Saturday; or
               (c) on a Sunday or public holiday.

What next for employers?

Employers with PE Award-covered staff need to acquaint themselves with these obligations, update payroll and record keeping systems as required, and review their contracts of employment accordingly. Employers may wish to review contractual set off clauses, and potentially to consider whether other forms of payment arrangement (such as individual flexibility agreements or guarantees of annual earnings) may be appropriate.

If you would like further advice or assistance, please contact a member of our Employment, Workplace Relations and Safety team.

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