09 Aug Professional Employees Award 2020: Navigating Upcoming Changes to Overtime and Penalty Rates
Earlier this year, the Fair Work Commission (“FWC”) announced significant revisions to the Professional Employees Award 2020 (“the Award”), including changes to penalty rates and overtime, as well as clarification to the Award’s coverage.
The changes to coverage came into effect on 23 March 2023, while the introduction of overtime and penalty rates will take effect from 16 September 2023. The FWC’s amendments regarding overtime and penalty rates aim to provide fair compensation to employees who work extended hours or outside normal work schedules.
Who does the Award apply to?
This industry and occupational Award covers employers throughout Australia as follows:
- with respect to their employees performing professional engineering and professional scientific duties who are covered by the classifications in Schedule A—Classification Structure and Definitions of the Award and those employees.
- principally engaged in the information technology industry, the quality auditing industry or the telecommunications services industry and their employees who are covered by the classifications in Schedule A—Classification Structure and Definitions of the Award.
- principally engaged as medical research institutes with respect to their employees performing professional medical research duties who are covered by the classifications in Schedule B—Medical Research Employees of the Award and those employees.
Current Overtime and Penalty Rate Provisions
Currently, whilst the Award requires an employer to compensate an employee for working additional hours, the Award does not prescribe fixed penalty rates for work performed regularly in excess of ordinary hours.
Instead, the Award leaves it to the employer’s discretion to determine how this work will be compensated, for example, through additional leave or remuneration, the granting of special allowances of loadings, or taking these hours of work into account in fixing an employee’s annual rate of remuneration.
Anticipated Changes and Their Implications
Effective from 16 September 2023, the following changes will apply:
- Overtime Compensation: Employees who work beyond 38 hours per week will be entitled to overtime pay or time off in lieu of overtime.
- Penalty Rates: Different penalty rates will be applicable based on work hours.
- A 125% penalty rate will be implemented for work before 6.00am and after 10.00pm on Monday to Saturday (150% for casual employees).
- A 150% penalty rate will be in place for work on Sundays and public holidays (175% for casual employees).
- Record Keeping: Employers must maintain accurate records of employees’ hours worked beyond 38 hours per week or during times when the new penalty rates apply.
- Exemptions: Employees with a contractual entitlement to an annual salary at least 25% or more above the minimum wage for their classification under the Award will be exempt from these provisions.
Preparing for Compliance
Employers falling under the purview of the Award should take proactive steps to ensure compliance with the impending changes:
- Assess Coverage: Assess whether your business falls within the revised Award’s scope.
- Review Remuneration: Evaluate employee salaries and remuneration packages to ensure alignment with the new penalty rates and overtime entitlements.
- Update Contracts: Where required, update employment contracts to reflect the revised Award terms and integrate the updated entitlements.
- Update Payroll Systems: Modify payroll systems to incorporate the new penalty rates and overtime calculations.
Employers should act promptly to review and adjust their employment arrangements and payroll systems, to avoid any potential issues come 16 September 2023. If your business needs assistance or further information regarding the changes, contact HR Law today.
- To view the Award, click here.
- To view the Fair Work Commission’s Decision- FWCFB 13 of 5 February 2023, click here.
- To view the Fair Work Commission’s Decision  FWCFB 58 of 17 March 2023, click here.
- To view the Fair Work Commission’s Determination Professional Employees Award 2020 PR760322 of 17 March 2023, click here.
- To view the Fair Work Commission’s Statement  FWCFB 118 of 6 July 2023, click here.
- To view the Fair Work Commission’s Correction determination – Professional Employees Award 2020 – PR764002 of 11 July 2023, click here.