- New Fair Work decision – overtime for casuals
Do you employ casual workers?
If you do, you should keep reading… A decision has recently been made by the Fair Work Commission that overtime for casuals should be calculated using the casual ordinary rate (inclusive of the 25% casual loading). This ruling comes as part of the four yearly review of Modern Awards.
Summary of the changes
- New overtime penalty rates for casual employees will be inserted into 97 Modern Awards.
- These changes will take effect from 1 March 2021 for the Aged Care Award and 20 November 2020 for all other affected Modern Awards.
- The changes will not impact enterprise agreements that operate to the exclusion of a Modern Award; however, they will apply to businesses covered by enterprise agreements that incorporate or are read in conjunction with the terms of a Modern Award.
Where your business utilises casuals you should check the requirement to pay overtime. Keep in mind, there may be other circumstances apart from working over 38 hours per week that overtime for casuals may apply. Modern award rate tables will be updated in due course.
The full decision can be found here.
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- Should I be paying my casuals overtime?
Q: I have some casual employees who sometimes work more than 38 hours per week. Do I need to pay them overtime?
A: Whether you need to pay a casual employee overtime is dependent on the overtime and ordinary hours provisions that are stipulated in the applicable modern award or enterprise agreement.
The short answer is that modern awards and enterprise agreements can be complex documents and without understanding the full situation, a simple yes or no answer is not possible. However, there is some likelihood that you would need to pay these employees overtime.
Let’s take the Banking, Finance and Insurance Award 2010 (the Award) as a general example and look at what should be considered. Ordinary hours (Section 22) in the Award are from 7:00am to 7:00pm Monday to Friday and from 8:00am to 12noon on Saturday (plus a provision where the employer can ask the employee in advance to work up to 9:00pm on one evening per week). Employees under the Award can work an average of 38 hours per week, with a number of variances to how the 38 hours per week may be calculated.
Following on from the ordinary hours provisions, section 23 of the Award outlines that all time worked at the direction of the employer outside of the above ordinary hours should be paid for by the employer, at the rates stipulated in the Award (I.e. overtime rates).
In summary, in determining overtime for this example it will depend on when the hours are worked and if any of these are outside of ordinary hours, how many are worked and when, and how these are arranged over a specified period of time. Further, there are often subclauses in modern awards and enterprise agreements that may have an impact on interpretation therefore these should also be carefully considered prior to making a determination.
Errors in the interpretation of modern awards and enterprise agreements often lead to small businesses being ordered to pay out thousands of dollars in back payments. Therefore, it is recommended that small business owners always consult an employment relations specialist to ensure compliance.
Industryus HR offers a telephone based HR advice service for employers where questions just like this one can be put to an expert. It’s like having your own HR Manager, but without the associated costs. Call us on 07 5655 4047 or message us for more info.