For payroll professionals in the IT and engineering industries, it is important to be aware of a recent decision made by the Fair Work Commission (FWC) that will require employers to pay overtime and penalty rates to employees covered by the Professional Employees Award. The decision proposed significant amendments to existing clauses in the award, which the FWC claims do not meet the modern awards objective. The main amendment removes uncertainty over what classifies as ‘ordinary hours’ for employees covered by the award, eliminating the need for employers to take those hours into account when setting annual remuneration.
The FWC has defined 38 hours per week as the standard for ‘ordinary hours’, which means employers will be responsible for paying overtime for hours worked outside of that window, at standard hourly rates. Additionally, penalty rates have been established for work conducted before 6am or after 10pm on any day Monday to Saturday, at 125% of the standard rate, and 150% for work conducted on Sundays or public holidays. Employers will need to keep records of all hours worked outside of the 38-hour workweek, before 6am or after 10pm between Monday and Saturday, and on Sundays and public holidays.
It is important to note that these requirements will not apply to employees who earn 25% or more of the minimum wage for their relevant classification under the award. Additionally, the FWC acknowledges that these amendments may increase wage expenses and compliance costs for employers, however, it is possible that the enhanced entitlements will increase workforce participation.
Australian Payroll Association regularly provides specialist training on Understanding Modern Awards. Members with specific questions relating to to this, please contact the payroll helpdesk.
