IT and engineering employers will soon be on the hook for overtime and penalty rates thanks to a new Fair Work decision

Tech workers, engineers, and medical researchers on the Professional Employees Award will soon be granted penalty rates for work conducted outside of ordinary hours, thanks to new amendments likely to impact entry-level staff and their employers.

In a decision published Friday, the full bench of the Fair Work Commission (FWC) proposed significant amendments to existing clauses in the award, which it claims do not meet the modern awards objective.

Primarily, the amendments erase uncertainty over what classifies as ‘ordinary hours’ for those covered by the award, doing away with a reliance on employers to take those hours into account when setting annual remuneration.

Statements presented to the FWC by trade union Professionals Australia contended that many workers on award rates operate well outside of standard business hours, and that it is “common” for some construction industry engineers “to work 60 to 70 hours a week”.

Many graduate engineers operate on annual salaries, the union added, meaning their real hourly rate is actually below the minimum wages set by the award.

Those views were largely supported by the FWC.

“The minimum annual wages for which the award provides cannot be regarded as high enough to compensate any employee, even a professional employee, for all the incidents of their employment, and were never intended to do so,” it said.

To solve that problem, the FWC has moved to define, exactly, what constitutes normal hours for award-reliant workers.

Instead of allowing employers to average weekly hours worked over a period of months to define each worker’s ‘ordinary’ hours, the FWC has taken a “minimalist” approach by declaring 38 hours a week as the standard.

Thanks to that new guideline, employers will be on the hook for overtime payments for work conducted outside of that 38-hour window, payable at standard hourly rates.

“This shall include work on or in connection with call-backs and work performed on electronic devices or otherwise remotely,” the FWC said.

New penalty rates are on the way, too.

“A penalty rate of 125% shall be payable for all hours worked (whether ordinary or overtime hours) before 6am or after 10pm on any day Monday to Saturday,” the FWC said.

“For casual employees, this is in addition to their casual loading.”

“A penalty rate of 150% shall be payable for rostered hours (whether ordinary or overtime hours) worked on a Sunday or public holiday,” the full bench added.

“Again, for casual employees, this is in addition to their casual loading.”

The new penalty rates come below the maximum sought by Professionals Australia, which called for 250% loadings on public holidays.

To keep tabs on those extra wage obligations, employers will need to keep records of all hours worked outside of the 38-hour work week, before 6am or after 10pm between Monday and Saturday, and on Sunday and public holidays.

Some leniency does exist for workplaces staring at a barrage of new wage obligations, as those requirements will not cover employees who earn 25% or more of the minimum wage for their relevant classification under the award.

With senior tech workers and engineers among those most likely to benefit from elevated salaries in the post-lockdown labour market squeeze, the amendments, for the near future, appear likely to impact the conditions of early-career workers more than senior staff who can command higher salaries.

The potential impact on employers was noted by the FWC.

It said the amendments are likely to increase the wage expenses for some employers and add compliance costs through the need to maintain timesheets for out-of-hours work.

Nevertheless, the variations are likely to have a net benefit elsewhere, the FWC contended.

“It is possible, although we cannot put it any higher than this, that the enhanced entitlements we intend to provide will increase workforce participation,” the full bench said.

“This weighs to a minor degree in favour of the variations.”

The tweaks may “conceivably constitute workplace conditions that facilitate women’s full economic participation,” it added.

While the draft determination is in effect, interested parties have until February 10 to submit their views before the changes are formally adopted.