On the 23 January 2023, a Full Bench of the Fair Work Commission (Commission) issued a Draft Determination to vary the Professional Employees Award 2020 (Award) which will affect employees who work in the engineering, IT, medical research, auditing and science sectors.
What are the key changes?
The Draft Determination sets out details of how the Commission plans to address two issues.
- The hours of employment and overtime for employees covered by the Award; and
- Clarifying the coverage of the Award.
Hours of employment and overtime
Currently the Award only includes general statements regarding hours of employment and overtime. It requires employers to compensate employees for work outside of their “ordinary hours”, however it is currently silent about how this compensation will be calculated.
The Commission is proposing to vary the Award to include:
- a specific provision that all hours worked in excess of 38 hours per week for a full-time employee must be paid at the applicable minimal hourly rate (including call backs and work performed on electronic devices or otherwise remotely)
- a 25% loading on hours worked, Monday to Saturday that are before 6:00am or after 10:00pm
- a 50% loading on hours worked on Sunday or a public holiday
- the requirement for employers to keep records of all hours worked by an employee:
- in excess of 38 hours per week
- before 6:00am or after 10pm from Monday – Saturday; and
- on a Sunday or Public Holiday.
- specific provisions that need to be followed by an employer and employee if an employee wishes to utilise time off in lieu (TOIL), rather than being paid for a particular period of over time.
Importantly, the Draft Determination also includes a provision to exclude the requirement for overtime, TOIL, penalty rates and record keeping where an employee is entitled to an annual salary which exceeds their applicable minimum annual wage (under the Award) by at least 25%. This is an interesting development given the push for “exemption rates” by employers in other modern awards.
There has been much litigation concerning the extent to which the Award covers employees. This has had a particular focus on determining if an employee is eligible to lodge an unfair dismissal claim. The Commission is proposing to amend the Award to clarify the coverage of the Award. In the Draft Determination the Commission proposes to add the following provision:
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.
This makes it clear that an employee who is wholly or principally employed in a managerial position is not covered by the Award. This proposed amendment is a point of clarification which restates the law as it has been applied by the Commission and is unlikely to have a significant impact on employers. Whether a position is wholly or principally managerial will ultimately turn on the quality of evidence presented by employers.
What does this mean?
The proposed variations to the Award haven’t been enacted yet. The Commission has invited parties to make submissions on the Draft Determination by 4:00pm Friday 10 February 2023. As such, the exact date these changes come into effect will be known after this date.
Before the introduction of the changes to the Award, employers should:
- take the opportunity to re-evaluate whether employees who work in an engineering, scientist, IT or medical research capacity are correctly classified under the Award;
- review working arrangements to determine what impact the changes could have on payment and record keeping obligations;
- consider whether the annual salaries of relevant employees could exempt the new provisions; and
- put in place a strategy to make the necessary operational and contractual adjustments before the new provisions have an impact.
As always, the team at Kingston Reid will continue to keep you informed on the progression of these changes. We are well placed to support organisations in reviewing current practices and developing strategies for managing the change.