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The Fair Work Commission (FWC) has announced significant changes to the Professional Employees Award 2020 (PE Award), including coverage of employees, overtime, penalty rates, and record-keeping obligations. With some changes already in effect, the remaining updates are scheduled to commence on 16 September 2023.
In this blog post, we will explore the key changes to the Professional Employees Award and provide guidance to employers on how to prepare for these updates.
What are the specific changes in the Professional Employees Award?
The specific changes in the Professional Employees Award include the following:
Employees are entitled to overtime pay if they work more than 38 hours per week or an average of 38 hours per week. The employee’s ordinary hours can be averaged over a period of up to 13 weeks. Employers can request or require employees to work overtime if the additional hours are reasonable.
- Overtime Payment
Employees must be paid their minimum hourly rate for overtime work. If employees work overtime during times that attract penalty rates, they are entitled to the higher rate. Employers and employees can agree to time off instead of overtime pay, which must be recorded using the template in Schedule F of the award.
*For more information see Overtime pay.
- Penalty Rates
Penalty rates are provided to eligible employees who work during specific hours and on designated days. These rates are applied to the employee’s minimum hourly wage as defined in the award. The actual rates differ depending on the type of employment (full-time/part-time or casual) and the specific day or time of work.
The following outlines the penalty rates applicable to full-time and part-time employees, as well as casual employees:
Full-time and part-time employees
Monday to Saturday before 6am
Monday to Saturday — after 10pm
Example: Overtime and penalty rates
Tom is a full-time engineer employed by Emma’s engineering company. His regular working hours are from Monday to Friday, totaling 38 hours per week. Tom’s hours are not averaged over multiple weeks.
This week, Emma asks Tom to work an extra 6 hours on Sunday to finalise an important project. These additional hours are considered overtime.
Tom is entitled to receive payment for the extra 6 hours he worked. Since these hours were worked on a Sunday, he is eligible for a penalty rate of 150% of his minimum hourly wage for that specific time.
- Exemption from Overtime and Penalty Rates
Employees who receive an annual salary that is more than 25% above their minimum award wage are not entitled to overtime or penalty rates.
- Record-Keeping Requirements
Employees who perform remote work outside of ordinary hours must keep a timesheet or record that includes the start and finish times of the remote work, as well as a description of the work performed. This record must be provided to the employer within a reasonable time.
Employers need to record any hours worked that exceed 38 hours per week, occur before 6 am or after 10 pm on Monday to Saturday, or occur on a Sunday or public holiday. However, this record-keeping requirement does not apply to employees receiving an annual salary that is 25% more than the relevant minimum annual wage.
Why were these changes implemented, and who is affected?
The changes to the Professional Employees Award were implemented to address unclear rules and provide clarity for employers. The Fair Work Commission recognized the need to clarify the award’s provisions to reduce the number of cases and make employers aware of their obligations.
These changes affect employers who have staff covered under the Professional Employees Award. The award covers employees in industries such as information technology, medical research, quality auditing, and telecommunications services. It also includes employees performing professional engineering and scientific duties.
The aim of clarifying the rules is to reduce the workload of the Fair Work Commission and make it easier for employers to understand their responsibilities under the award. Many businesses covered by this award have salaried workers, which means they may not use time and attendance software.
Overall, the changes were made to provide guidance on working hours, entitlements, and other employment conditions to ensure compliance and fair treatment of employees in these industries.
Keeping Compliance: Three Steps to Consider
To keep compliance with workplace laws, particularly the Professional Employees Award, here are three steps to consider:
- Determine Employee Coverage
Review the summary of the Professional Employees Award provided by the Fair Work Commission to understand which roles and employees are covered by the award. Compare this information with the roles performed by employees in your organisation.
Keep in mind that employees earning over 25% higher than the minimum award rates may be exempt from certain penalty rates. If possible, consider paying all your staff at least 25% above the minimum award rate to simplify administration.
- Implement a Digital Time and Attendance System
Utilise a digital time and attendance system to accurately record employees’ working hours, including white-collar employees. This system should allow employees to clock in and out using unique passcodes, ensuring precise recording of their working hours.
By using a digital system, you can easily access and present employee records to demonstrate compliance with Fair Work requirements.
For instance, Workstem offers a digital time and attendance system with an integrated award interpretation to calculate pay and entitlements based on hours worked.
- Reconcile Entitlements with Salaries
For salaried employees, determine if they need to be paid additional compensation for overtime work. Compare their salary with the minimum annual wage prescribed under the Professional Employees Award.
Payroll software such as Workstem enables instant calculation of employees’ entitlements based on hours worked and penalty rates. This simplifies the process of determining back payments if additional compensation is required. Ensure that salary reviews in subsequent years align with minimum annual wage increases and changes in employee classifications under the award.
By following these steps, you can work towards compliance with the new rules set by the Fair Work Ombudsman and reduce the risk of fines or penalties for non-compliance. Remember to stay updated with any changes to workplace laws and adjust your practices accordingly.
How Can Workstem Help with Compliance of Updated Professional Employees Award?
Simplify your payroll process and ensure accurate pay rates with Workstem’s automated payroll system. Our pre-built modern award interpretation software covers 122+ awards and 34 EBAs, and keeps you up-to-date with penalty rates and other award entitlements.
Choose between our Standard and Advanced plans, and enjoy a range of benefits such as Fair Work compliance, an employee self-service App, and customised rule set.
Book a free demo with our payroll experts. Experience the efficiency and accuracy of Workstem today!