The Professional Employees Award 2020 has long been a modern award with some controversy and ambiguity around classification. A recent Full Bench decision has now paved the way for anyone performing the following duties to be covered by the Professional Employees Award 2020:
- Engineering duties
- Scientific duties
- Information technology duties
- Quality auditing.
Along with some other changes proposed this could mean salaried employees covered by the Professional Employees Award 2020 (the Professionals Award), could be entitled to TOIL
The Full Bench of the Fair Work Commission (FWCFB) has recently proposed[1] several amendments to the Professionals Award partly as a result of its 4 yearly review of awards, and partly because of the FWCFB’s previous decision in Zheng v Poten & Partners[2](Zheng).
Award coverage of an employee is typically determined by the ‘principal purpose’ test, requiring an examination of the work performed by the employee and the circumstances of their employment. Nonetheless, observations made in the decision of Zheng suggested the ‘principal purpose’ test was:
- “ill suited” in determining whether an employee fell under the Professionals Award; and
- excessive litigation” in respect of employees claiming they are covered by the Professionals Award as part of unfair dismissal applications.
The Professionals Award generally
The Professionals Award is both an industry and occupational award.
It is an industry award for:
- the information technology industry,
- the quality auditing industry; and
- the telecommunications services industry.
This means an employer must fall within these industries (as defined by the Professionals Award), and their employees must also fall within the Professionals Award’s classifications, in order for the Professionals Award to apply to such employers and employees. It is also an industry award for employers engaged as medical research institutes.
The Professionals Award is, however, an occupational award for employees:
- performing professional engineering; and
- scientific duties.
For such employees, the industry of their employer is not necessarily determinative in respect of coverage under the Professionals Award.
That being said, the industry of their employer might be determinative where there is an industry specific award. As an example, the Manufacturing and Associated Industries and Occupations Award 2020 may cover engineering employees, if their employer is involved in manufacturing.
Changes in terms and conditions
The Professionals Award, in its present form, does not contain any prescribed overtime rates but rather required employers (in general terms) to compensate for:
- additional time worked,
- time spent on call-backs, or
- night & weekend work.
Employers could consider whether they would grant additional leave, pay additional remuneration, or fix an annual salary.
Of course, as a matter of commercial reality and in order to retain good talent, employers often paid above the minimum rates prescribed by the Professionals Award. There was, however, no strict obligation to do so.
In recognition of these matters, the FWCFB spoke of taking a “minimalist” approach to changing the Professionals Award, noting the need to allow “the degree of flexibility appropriate for professional salaried employment”. They proposed the following key additional provisions to the Professionals Award:
- an employee is to be paid the hourly rates prescribed by the Professionals Award (or receive TOIL) for hours worked in excess of 38 ordinary hours in a week;
- a new penalty rate of 125% to be applicable to all hours worked (whether ordinary or overtime hours) for work before 6:00am or after 10:00pm, Monday to Saturday;
- a new penalty rate of 150% to be applicable to all hours worked (whether ordinary or overtime hours) for work performed on a Sunday or public holiday; and
- new record keeping obligations on employers, requiring records to be kept of all hours worked by an employee in excess of 38 ordinary hours, or worked before 6:00am or after 10:00pm, Monday to Friday, or worked on a Sunday or public holiday.
The FWCFB considered it was appropriate to allow an exemption to the above provisions, if an employee has a contractual entitlement to a salary that is 25% or more in excess of the minimum entitlements under the Professionals Award. That is to say, if an employee is being paid at least 25% more than their relevant classification level under the Professionals Award requires, the employer is not necessarily obliged to pay additional remuneration or comply with its record keeping obligations.
Changes to classifying employees
The classification levels under the Professionals Award specific to information technology, engineering and scientific duties were noted by the FWCFB as functional in the sense they assist in determining which level an employee ought to be classified.
This is because, for example, the definition of professional engineering duties refers to “duties carried out….the adequate discharge of any portion of which duties requires qualifications….as (or at least equal to those of) of a graduate member of Engineers Australia”.
The definitions of professional information technology duties and professional scientific duties are couched in similar terms, in so far as they only require a portion of an employee’s duties to require the relevant professional qualifications. The balance of the employee’s duties could theoretically be layperson in nature. This means the duties requiring the professional qualifications do not necessarily need to be the principal purpose of the employee’s role in order for them to be considered, at least, a level 1 employee under the Professionals Award. It is therefore prudent for the FWCFB to observe that the principal purpose test has little value in assessing if an employee is covered by the Professionals Award.
In recognition of the specific wording already present within the Professionals Award, the FWCFB has proposed the following amendment into Schedule A of the Professionals Award:
An employee performing professional engineering duties, professional scientific duties, professional information technology duties or quality auditing must be classified in one of the following classifications provided that the employee is not employed in a wholly or principally managerial position.
The effect of the amendment is that, provided the employee is performing the duties prescribed by the Professionals Award (that is, some aspect of their duties require professional qualifications), they will be at least a level 1 employee under the Professionals Award. Whether or not they should be classified at a higher classification level will depend on their responsibilities and functions. The principal purpose test is still somewhat ingrained, in the sense that an employee principally responsible for managerial responsibilities (i.e. managing staff, operations or budgets) will be excluded from coverage under the Professionals Award (even if some of their duties require professional qualifications).
What can an employer and HR do to account for the amendments?
The FWCFB has allowed interested parties until 10 February 2023 to provide their views in respect of the proposed changes. It is possible the FWCFB may deviate from its proposed changes. We consider, however, the FWCFB will proceed with some (if not all) of the changes given the “excessive litigation” it has dealt with and the need to resolve ambiguities in the Professionals Award.
Accordingly, instead of waiting for the FWCFB to hand down its final decision, we would suggest employers who are covered under the Professionals Award to begin making some preliminary assessments. In particular, we would suggest undertaking the following steps:
- Review operations of the business
The penalty rates proposed to be introduced for the Professionals Award are intended to reflect work that is being performed at unsociable hours. Businesses with ‘normal’ trading hours (say 9:00am to 5:00pm) may not necessarily be affected by the new penalty rates. Nonetheless, businesses which operate after hours or have 24/7 services (such as afterhours IT support or emergency maintenance performed by engineers) may need to budget for the introduction of penalty rates.
In addition to the penalty rates, staff will now receive additional wages if they are required to work beyond 38 ordinary hours in a week. This can be compensated by way of additional hourly pay, or as Time Off In Lieu entitlements. An employer should review whether their staff are regularly working in excess of 38 ordinary hours to determine their increase in wage liability.
2. Review existing record keeping arrangements
The introduction of prescribed penalty rates and ‘overtime pay’ into the Professionals Award is supported by additional record keeping obligations. An employer which employs salaried staff who fall under the Professionals Award may not necessarily have implemented a system for keeping track of hours worked, given the nature of professional work. Consideration needs to be given as to whether the existing record keeping for employees covered by the Professionals Award is adequate.
3. Decide whether the salary arrangements are adequate (or should be implemented)
An employer may be excused from paying the penalty rates (and record keeping obligations) if they choose to pay a salary that is at least 25% above the pay rates prescribed by the Professionals Award. As a result of the ongoing labour shortage, many businesses have offered competitive salaries to attract and retain talent, which may well already meet this criteria. Other businesses should, after reviewing their operations, determine whether introducing salary arrangements would be more commercial than having a payroll team keep track of hours worked.
4. Revisit the award coverage of employees
Even if the proposed amendment to Schedule A of the Professionals Award is not adopted, we consider the comments made by the FWCFB in two (2) separate decisions to be very persuasive in guiding the correct approach to determining whether an employee is covered by the Professionals Award. It seems to be quite clear that, provided some aspect of an employee’s duties requires them to hold professional qualifications in their field, they will likely be covered by the Professionals Award.
Determining whether professional qualifications are required to perform aspects of a role may need to be closely reviewed by employers. The requirement to hold certain qualifications may be guided by industry practices, regulatory requirements, or a requirement in order to lawfully engage in a profession or provide certain advice. It might simply be a desirable trait of an employee which assists them with their role, as opposed to being a requirement. An employer might also need to review their workforce as a whole, in order to determine whether laypersons could be trained up into the role, without being required to hold any professional qualifications.
We make the observation that the FWCFB was assisted during its review of the Professionals Award by submissions from Professionals Australia, being the relevant trade union representing engineers, IT professionals and other categories of employees typically covered by the Professionals Award.
Concerns were expressed regarding limitations of the evidence adduced by Professionals Australia, although it was generally helpful to the FWCFB’s tasks. It is possible that, with more detailed evidence, there could be further changes to the Professionals Award provided the FWCFB is satisfied they are required to meet the modern awards objective.
If you are an employer covered by the Professionals Award or believe the proposed amendments to the Professionals Award may affect your business reach out to NB Employment Law we offer an obligation-free consultation and are happy to help. Reach out via [email protected] or +61 (07) 3876 5111 to book an appointment.
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[1] [2023] FWCFB 13.
[2] [2021] FWCFB 3478.
Written By
Principal
Assisted By
Associate
About the Authors
Jonathan Mamaril leads a team of handpicked experts in the area of employment law who focus on educating clients to avoid headaches, provide advice on issues before they fester and when action needs to be taken and there is a problem mitigate risk and liability. With a core value of helping first and providing practical advice, Jonathan is a sought after advisor to a number of Employers and as a speaker for forums and seminars where his expertise is invaluable as a leader in this area as a lawyer for employers.
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Dan Chen is an Associate and rusted expert in employment law. Dan is passionate about assisting business owners, small and large understand their obligations under Australia’s complex workplace relations system.
