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New Overtime and Time-Recording Obligations for Employers
Employers have new overtime and time-recording obligations in respect of employees covered by the Professional Employees Award 2020 (the “Award”), which came into effect on 16 September 2023 (more specifically, an employee’s full pay period on or after this date).
Earlier this year, the Fair Work Commission announced changes to the Award to address concerns that the employees covered by the Award were required to work excessive or unsociable hours with no express guarantee of additional pay.
The Award covers the professional employees of employers in the information technology, medical research, quality auditing or telecommunications services industries, as well as employees who perform professional engineering and scientific duties, provided that the employee is not employed in a wholly or principally managerial position.
Previously, there was no clear guidance for employers on how employees under the Award should be compensated for overtime work. Although the Award stated that employees were required to be compensated for a range of additional hours, the Award did not specify what the compensation must specifically be. Employers have often chosen to compensate employees who are covered by the Award by way of annualised salary arrangements.
Employees covered by the Award will now be specifically entitled to overtime or penalty rates if they work over 38 hours per week or an average of 38 hours per week. This includes work on or in connection with call-backs, work performed on electronic devices and remote work in general. Ultimately, this means that subject to the exception noted below, an employer cannot avoid overtime rates if an employee works reasonable additional hours over 38 hours per week.
An employer and employee will also be able to agree to the employee taking time off in lieu of payment for a particular amount of overtime worked.
The Award includes new penalty rates for employees covered by the Award. The penalty rates for full-time/part-time employees are:
- for work performed before 6:00am or after 10:00pm from Monday to Saturday: 125%.
- for work performed on a Sunday or public holiday: 150%.
In support of the new overtime and penalty provisions, employers are also required to record the hours of an employee who works:
- more than 38 hours per week;
- before 6am or after 10pm Monday to Saturday; or
- on a Sunday or public holiday.
In addition, employees have a responsibility to provide their employer with a record of non-ordinary hours of work performed remotely.
However, employers are not required comply with these new obligations for employees who contractually earn an annual salary that is at least 25% above the relevant minimum annual wage in the Award. The relevant minimum annual wage will depend on the employee’s classification.
It is critical that employers review their Award-covered employees’ remuneration packages and work practices to consider how they engage such employees. If an employee contractually has an annual salary less than 25% above the relevant minimum annual wage in the Award, the new provisions regarding overtime, time in lieu, penalty rates and record keeping will apply. Employers should also review their current operational processes and consider if any changes are needed to their record-keeping and timesheet practices to ensure compliance with the new obligations under the Award.
Vanessa Yol, Associate