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The Full Bench of the Fair Work Commission (FWC) has determined that it is appropriate to vary the Professional Employees Award 2020 (the Award) to better deal with the hours of work and overtime as well as clarify the coverage for employees.

In 2020, in the course of the 4-yearly review of modern awards, the Association of Professional Engineers, Scientists and Managers, Australia (APESMA) highlighted a number of deficiencies in relation to the Award’s ordinary hours of work clause. In particular it was noted that the Award provided no mechanism for the compensation for working additional hours, call-back and for working unsociable hours.

Further, in June 2021, in an appeal against an unfair dismissal application, the coverage clause of the Award came into issue. The Full Bench noted that the “principal purpose test” seemed to be unsuitable to determine whether an employee fell within one of the classifications. This was because the classifications were expressed in generic terms and did not adequately describe the job functions required to be performed at each level.

As a result, the Full Bench, acting on its own motion, sought to deal with both of these issues. Under section 134 of the Fair Work Act 2009 (Cth), the FWC must ensure that the modern awards provide a fair and relevant safety net of terms and conditions.

After hearing submissions from interested industry groups, the Full Bench considered that the minimum rates of pay could not be deemed to be high enough to compensate an employee for all incidences of their employment and they were never intended to do so. In particular, the Full Bench identified that:

1. the rates of pay in the Award did not appear to be properly fixed with Australian Qualifications Framework;
2. the lower-level salary rates may actually make an employee low-paid if they work additional hours; and
3. the Award provisions (which require employers to compensate for additional time or time worked outside of ordinary hours) indicate that the minimum rates of pay were never intended to be the full remuneration for hours worked in excess of38 hours per week or for unsociable hours.

Accordingly, the Full Bench determined that in order to meet the modern award objectives, the Award needed to prescribe rates for additional hours of work and for work performed at unsociable hours. It has proposed amending the Award to provide that:

1. the ordinary hours of work are 38 hours per week;
2. an employer may require a full-time employee to work reasonable additional hours;
3. an employee is entitled to be paid the appropriate hourly rate for hours (including work associated with call backs, performed on electronic devices or performed remotely) worked in excess of 38 hours per week;
4. the employer and employee can agree to take time off instead of payment for overtime;
5. penalty rates for work performed before 6am or after 10pm Monday to Saturday, and on Sundays or public holidays will be payable;
6. employers must keep records of overtime hours performed and worked outside of 6am to 10pm Monday to Saturday, and on Sundays or public holidays; and
7. exemptions will apply for employees who have a contractual entitlement to an annual salary which is 25% or more than the minimum annual wage for the appropriate classification.

In relation to the coverage issue, the Full Bench considered that Schedule A required modification in order to clarify that the classifications would apply to all employees who performed professional engineering duties, professional scientific duties, professional information technology duties or quality auditing unless the employee holds a position which is principally managerial in nature. It determined that there should be a variation to Schedule A to reflect this.

The Full Bench has issued a draft determination reflecting these proposed variations.  

Lessons for employers

The proposed changes to the Award confirm that employers must pay covered employees for overtime worked and penalty rates for work performed at unsociable hours, Sundays and public holidays. Employers will also be required to keep records of these hours worked by employees.

In addition, there will be an exemption to some of the new Award provisions where the employee’s annual salary exceeds the minimum annual wage by 25%.

For employers who have employees covered by this Award, they should take the time now to review the remuneration provided to employees and recording keeping requirements to prepare for the new Award terms.

Information provided in this blog is not legal advice and should not be relied upon as such. Workplace Law does not accept liability for any loss or damage arising from reliance on the content of this blog, or from links on this website to any external website. Where applicable, liability is limited by a scheme approved under Professional Standards Legislation.