The Fair Work Commission has changed the Professional Employees Award 2020. How does it impact employers?

The Fair Work Commission has changed the Professional Employees Award 2020. How does it impact employers?

On 20 January 2023, the Fair Work Commission (FWC) decided that the Professional Employees Award 2020 (Award) will be amended to impose new obligations. The new obligations significantly change how employers pay their staff in IT, engineering, medical and scientific industries.

Key Changes

The FWC has proposed the following key changes to the Award:

1. Entitlements to paid overtime or time off in lieu of overtime for working more than 38 hours per week;
2. Penalty rates for employees who work “unsociable hours”, being before 6am or at 10pm on any day from Monday to Saturday;
3. Penalty rates for hours worked on a Sunday or public holiday; and
4. Impacted employers will have a regulatory burden to keep records of hours worked by employees that qualify for overtime or penalty rates.

The proposed penalty rates are:

[Source: https://asset.fwc.gov.au/documents/documents/awardmod/variations/2022/am20227-draft-det-200123.pdf]

These changes will not apply to employees whose annual salaries are 25% or greater than the minimum annual salary payable under the Award for their position.

Clarification of Employees Covered by the Award

The FWC has also proposed to modify Schedule A of the Award in order to more clearly elucidate the circumstances in which an employee will be covered by a classification, without expanding or narrowing the coverage of the Award. Employees performing professional engineering duties, professional scientific duties, professional information technology duties or quality auditing must be classified in one of the Award classifications provided that the employee is not employed in a wholly or principally managerial position.

Who Do the Changes Effect?

Broadly speaking, the changes effect those covered by the Award.

The Award applies to employers:

• with respect to their employees performing professional engineering and professional scientific duties who are covered by the classifications in Schedule A of the Award;
• principally engaged in the IT industry, the quality auditing industry or the telecommunications services industry and their employees who are covered by the classifications in Schedule A of the Award; and
• engaged as medical research institutes with respect to their employees performing professional medical duties who are covered by the classifications in Schedule B of the Award.

Following the upcoming variation to the Award, Schedule A classifications will apply to the same employees provided that the employee is not employed in a wholly or principally managerial position.

For labour hire businesses, the Award coverage applies the same to employers which supply labour on an on-hire basis.

What Prompted the Change?

The decision was made off the back of the FWC’s own motion to deal with two issues:

1. an increase in hours of employment and overtime, arising from a Full Bench decision issued on 22 April 2020 as part of the 4 yearly review of modern awards. The FWC considered other comparable modern employment awards and survey data from the Association of Professional Engineers, Scientists and Managers, Australia; and
2. the difficulties in applying the “principal purpose” test to determine whether an employee is covered by the Award (namely, in Schedule A), highlighted by a separate decision by the FWC in Zheng v Poten & Partners [2021] FWCFB 3478.

You can access the FWC decision here and the FWC draft determination here. We anticipate that changes to the Award will be finalised and implemented in March 2023.

If you would like to know more about the upcoming changes and how your business may be impacted, please contact one of our expert employment lawyers at Taurus Legal Management on (03) 9481 2000 or info@tauruslawyers.com.au.