FWC Addresses Overtime Loophole

The Fair Work Commission (“FWC”) has proposed changes to the modern award covering IT professionals, engineers, scientists, gaming sector employees due to underpayment of overtime entitlements and excessive litigation associated with the same.

The Association of Professional Engineers Scientists and Managers Australia (“APESMA”) have expressed concern over unrecorded overtime work for employees covered by the Professional Employees Award 2020 (“the Award”). Award covered employees in the sector claim to work well over 38 hours per week. However, the annual salary of award covered employees does not account for overtime hours. Instead, annual salaries are intended to cover all hours of work and often do not clearly define fixed hours of work.

The FWC’s Acting President Adam Hatcher, Deputy President Tony Saunders, and Commissioner Phillip Ryan noted that implementing a prescriptive regime of overtime and penalty rates is not commonly accepted as industrially appropriate in highly paid professional industries. In industries where workers’ specialised educational qualifications are highly educated and are “held accountable to ethical and performance standards”, annual salaries are generally seen as adequate to remunerate workers for all aspects of their employment.

However, employees in this industry that are being paid the minimum award annual salary or even slightly above are actually being paid significantly less than what they are entitled to if overtime penalty rates were applied. Workers are being as paid as little as $22 per hour under the minimum salary of $57,619 if they work 50 hours in a week.

Currently, the Award only requires part time and casual workers to be paid overtime penalty rates while full time workers do not have a prescribed rate of pay for additional hours worked beyond their agreed working hours.

In considering this, the FWC has said they will adopt a “minimal” approach to apply the same penalty rate entitlements to full time workers as they do to part-time and casual workers under the Award. This will exclude any worker making 25% or more above the minimum award salary. There will also be an enforceable entitlement to either remuneration or time in lieu leave for full-time employees working more than 38 hours per week and a baseline entitlement for additional remuneration for working in “unsociable hours”.

If you have any questions about overtime wages or modern award compliance please do not hesitate to contact Nick Stevens, Peter Hindeleh, Daphne Klianis or Josh Hoggett.