Upcoming Overtime and Penalty Rate Changes: A Guide for Professional Employees

Key Takeaways

Commencing 16 September 2023, employees covered by the Professional Employees Award 2020 2020 who are paid an annual salary of less than 25% above the annual salary for their classification will be entitled to:

• overtime pay for additional hours exceeding 38 hours per week (averaged over up to 13 weeks);
• penalty rates for hours worked outside the span of 6:00am and 10:00pm; and
• weekend and public holiday penalty rates.

The changes will also mean that core record-keeping obligations under the Fair Work Regulation 2009 will also start to apply to hours which attract overtime or penalty rates. The changes are yet another reason for employers to review their template contracts of employment at this time, including the offsetting clauses these contain.

In the ever-shifting industrial relations landscape, keeping abreast of regulatory amendments is paramount for employers and employees. One such imminent change is the impending alteration of overtime and penalty rates within the Professional Employees Award 2020, slated to be enforced from the first entire pay period commencing on or after 16 September 2023. This article delves into the intricacies of these pivotal revisions and outlines their impact on relevant stakeholders.

Overtime Pay: A Comprehensive Insight

Effective from 16 September 2023, employees covered by the Professional Employees Award 2020 will be entitled to be paid penalty rates for the hours worked beyond 38 hours per week, averaged over up to 13 weeks. The ability to average hours over 13 weeks provides some flexibility to account for project driven workloads which might peak and trough – providing the averaging arrangement complies with the new requirements. 

The amendments to the award also confirm the position that an employer may request or require an employee to work more than 38 hours per week, provided the additional hours are reasonable. Factors such as an employee’s remuneration or job role will be pivotal in assessing reasonability.

Previously the Professional Employees Award 2020 simply required employers to compensate for things like additional hours, but in most respects, left the precise mechanism and approach up to the employer.

Additionally, employers will be mandated to remunerate employees for any additional work beyond their regular hours, including call-backs and remote work conducted via electronic devices, such as laptops or smartphones.

Penalty Rates: Ensuring Equitable Compensation

The new regulations will usher in penalty rates for employees working during specific times and on particular days, all of which will become effective from 16 September 2023. The penalty rates are as follows:

Exceptions to the Rule

It is essential to note that employees receiving an annual salary exceeding 25% above the minimum award wage will not be eligible for overtime or penalty rates, underscoring the adaptability and diversity of the contemporary workforce.

The annual salary must be an entitlement under a contract. 

Employees who are on an annual salary that has been designed to compensate for reasonable additional hours, but is valued at less than 25% over the minimum award wage won’t be excluded – In these cases employers should carefully consider whether their contracts contain an effective offset provision.  

Record-Keeping Responsibilities: A Mutual Obligation

Both employees and employers bear specific record-keeping responsibilities to ensure transparency and compliance with the new regulations. Employees involved in remote work outside regular hours must maintain detailed records, encompassing start and end times of remote work and a comprehensive description of tasks performed. Employers, conversely, are obligated to document hours worked in excess of 38 hours per week, work before 6 am or after 10 pm from Monday to Saturday, and work undertaken on Sundays or public holidays. These records serve to facilitate adherence to the regulations and furnish a basis for resolving any disputes that may arise concerning overtime and penalty rates.

In conclusion, the upcoming changes represent a significant shift in the approach traditionally contained in the Professional Employees Award 2020 and a range of consequential obligations. Coupled with recent legislative reforms it is timely to review employment contracts and a range of compliance practices to avoid underpayments or civil penalties moving forward. The Fair Work Ombudsman has published some useful information for employers and employees on its website.