On 30 October 2020, the Fair Work Commission (FWC) published a 4 year review concerning overtime for casuals under modern awards. [1]
In this review, the FWC outlined changes to wording to clarify whether the compounding or cumulative approach to calculating penalty rates for casual employees applies to particular awards.
The compounding approach means overtime penalty rates are applied to the casual rate inclusive of the casual loading, e.g. hourly rate x 125% casual loading x 150% overtime loading. This may increase the rate payable as interpreted by many employers.
The cumulative approach means casual loading and the overtime penalty rate are added separately to the minimum hourly rate. This is the lower rate.
On 20 November 2020, the following changes will take effect (unless otherwise stated):
- Aged Care Award 2010 – amendment to clarify that the compounding rate applies. Due to the disproportionate effect of the COVID-19 pandemic on the aged care sector, 1 March 2021 will be the operative date of the variation.
- Building and Construction General On-site Award 2010 – amendment to clarify that the cumulative rate applies.
- Electrical, Electronic, Communications and Contracting Award 2010 – an amendment to clarify that the compounding rate applies.
- Health Professionals and Support Services Award 2020 – an amendment to clarify that the compounding rate applies.
- Pastoral Award 2020 – an amendment to clarify that the cumulative approach applies. This change will take effect from 6 November 2020.
The FWC will also change wording to make it clear that a full hour need not be worked to attract payment for overtime for casuals under the Labour Market Assistance Industry Award 2020, Miscellaneous Award 2020 and the Textile, Clothing, Footwear and Associated Industries Award 2010.
The Miscellaneous Award 2020 will be amended to specify that casual employees have an entitlement to overtime, however, casual loading will not be paid for overtime hours.
If you have any concerns about how these changes may affect your employment or business, please contact Matt Bell on 1300 068 736.
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[1] [2020] FWCFB 5636; (AM2017/51)
