Changes to Casual Overtime Calculations

Overview:

The Fair Work Commission (FWC) has reviewed all awards in relation to what casual employees should be paid when working overtime.

The FWC has made changes to 97 Awards, confirming the way casual employee’s overtime should be calculated – there are three (3) methods of calculating overtime for casual employees:

1. The Substitution Method
2. The Cumulative Method
3. The Compounding Method

Overtime is calculation on the permanent base rate, and it excludes the casual loading: $20 (base rate) x 150% (overtime penalty) = $30 The overtime entitlement and the casual loading are applied to the permanent base rate: $20 (base rate) x 175% (overtime penalty + 25% (casual loading)) = $35.00 The overtime entitlement is calculated on the casual loaded rate of pay: $25 (base rate + 25% casual loading) x 150% (overtime rate) = $37.50 Previously, there have been various interpretations as to which method should be applied. This recent decision by the FWC provides clarity for employers on how to pay casual employees for overtime worked, under their specific Award. These changes are effective from the first full pay period on or after 20 November 2020. As an employer, you will be affected by these changes if you:  

• You have any casual employees; &
• Your casual employees are covered by any of the Award(s) listed in Appendix 1 to this article; &
• Your casual employees work overtime.

So, if the above applies to you this may mean you need to pay your casual employees more, less or the same pay when they work overtime from 20 November 2020 onwards.

What do you need to do next?

1. Review your casual employee to determine which Awards they fall under and check this against the list provided in Appendix 1;
2. If your casual employees are covered by an Award listed in Appendix 1., apply the most suitable overtime pay calculation method (see 1,2 or 3 above). Compare the rate resulted from the calculation against the one you are currently using to pay overtime for your casual employees. Has the rate changed to result in a greater or lesser rate or stayed the same?
3. If there is a change to the way your business has been calculating your casual employees overtime, you will need to change this in your payroll system and notify your casual employees how they will be paid for overtime from the first full pay period on or after 20 November 2020.

If you need any assistance ascertaining if you are affected by this change in calculating overtime for your casual employees, get in touch with Cecilia White, Director, Perks People Solutions

Appendix 1 (Awards affected in alphabetical order)

AwardOvertime Rates for Casual increasing, decreasing, or staying the same? Aboriginal Community Controlled Health Services Award 2020Remains the sameAged Care Award 2010 (from the first full pay period on or after 01 March 2021)IncreasingAirline Operations-Ground Staff Award 2020Remains the sameAirport Employees Award 2020No casual loading paid on OT hours workedAlpine Resorts Award 2020Casual loading in incorporated into the penalty rates in the AwardAmbulance and Patient Transport Industry Award 2020DecreasingAmusement, Events and Recreation Award 2020DecreasingAnimal Care and Veterinary Services Award 2020Remains the sameArchitects Award 2020Remains the sameAsphalt Industry Award 2020Remains the sameBanking, Finance and Insurance Award 2020Remains the sameBlack Coal Mining Industry Award 2010IncreasingBroadcasting, Recorded Entertainment and Cinemas Award 2010IncreasingBuilding and Construction General On-site Award 2020Remains the sameBusiness Equipment Award 2020IncreasingCar Parking AwardRemains the sameCemetery Industry Award 2020Remains the sameChildren’s Services Award 2010OT rates include the casual loading (using the cumulative method)Cleaning Services Award 2020Remains the sameClerks—Private Sector Award 2020Remains the sameCoal Export Terminals Award 2020Remains the sameCommercial Sales Award 2020Remains the sameConcrete Products Award 2020IncreasingContract Call Centres Award 2020IncreasingCorrections and Detention (Private Sector) Award 2020No casual loading paid on OT hours workedCotton Ginning Award 2020No casual loading paid on OT hours workedDredging Industry Award 2020No casual loading paid on OT hours workedEducational Services (Post-Secondary Education) Award 2020Remains the sameEducational Services (Schools) General Staff Award 2020Remains the sameEducational Services (Teachers) Award 2020Remains the sameElectrical Power Industry Award 2020Remains the sameElectrical, Electronic and Communications Contracting Award 2010IncreasingFast Food Industry Award 2010Remains the sameFitness Industry Award 2010Remains the sameFood, Beverage and Tobacco Manufacturing Award 2010Remains the sameFuneral Industry Award 2010Remains the sameGardening and Landscaping Services Award 2020Remains the sameGas Industry Award 2020Remains the sameGeneral Retail Industry Award 2020Remains the sameGraphic Arts, Printing and Publishing Award 2020Remains the sameHair and Beauty Industry Award 2010Remains the sameHealth Professionals and Support Services Award 2020IncreasingHigher Education Industry – General Staff-Award 2020No casual loading paid on OT hours workedHorse and Greyhound Training Award 2020Remains the sameHydrocarbons Industry (Upstream) Award 2020Remains the sameJoinery and Building Trades Award 2010Remains the sameLabour Market Assistance Industry Award 2020IncreasingLegal Services Award 2020Remains the sameLive Performance Award 2010Remains the sameLocal Government Industry Award 2020DecreasingMannequins and Models Award 2020Remains the sameManufacturing and Associated Industries and Occupations Award 2020Remains the sameMarine Tourism and Charter Vessels Award 2020IncreasingMarine Towage Award 2020IncreasingMarket and Social Research Award 2020Remains the sameMeat Industry Award 2020Remains the sameMedical Practitioners Award 2020Remains the sameMining Industry Award 2020Remains the sameMiscellaneous Award 2020Remains the sameMobile Crane Hiring Award 2010Remains the sameNursery Award 2020Remains the sameNurses Award 2010Remains the sameOil Refining and Manufacturing Award 2020Remains the samePassenger Vehicle Transportation Award 2020DecreasingPastoral Award 2010Remains the samePest Control Industry Award 2020Remains the samePharmaceutical Industry Award 2010Remains the samePlumbing and Fire Sprinklers Award 2010Remains the samePort Authorities Award 2020Remains the samePorts, Harbours and Enclosed Water Vessels Awards 2020IncreasingPoultry Processing Award 2020Remains the samePremixed Concrete Award 2020Remains the sameProfessional Diving Industry (Industrial) Award 2020Remains the sameProfessional Diving Industry (Recreational) Award 2020OT paid on the casual hourly rateRacing Clubs Events Award 2010Remains the sameRacing Industry Ground Maintenance Award 2020Remains the sameRail Industry Award 2020Remains the sameReal Estate Industry Award 2020Remains the sameSalt Industry Award 2010DecreasingSeafood Processing Award 2020Remains the sameSecurity Services Industry Award 2020Remains the sameSilviculture Award 2020Remains the sameSporting Organisations Award 2020Remains the sameStevedoring Industry Award 2020IncreasingStorage Services and Wholesale Award 2020Remains the sameSugar Industry Award 2020IncreasingSupported Employment Services Award 2020DecreasingSurveying Award 2020IncreasingTelecommunications Services Award 2020IncreasingTextile, Clothing, Footwear and Associated Industries Award 2020Remains the sameTransport (Cash in Transit) Award 2020IncreasingTravelling Shows Award 2002DecreasingWaste Management Award 2020Remains the sameWater Industry Award 2020DecreasingWine Industry Award 2020Remains the sameWool Storage, Sampling and Testing Award 2010Remains the same

Cecilia White( Director, HR Consulting )

With a background in legal practice, Cecilia has developed strong technical expertise in all matters relating to workplace law, including awards, contracts, disciplinary matters, investigations, equal opportunity and HR policy development. Her legal background is combined with her expertise across all areas of HR management and strategy, as well as significant experience in delivering workplace training.

Cecilia is also an experienced and nationally accredited mediator, specialising in workplace mediation.

With a proven ability to provide advice that is both technically sound and commercially pragmatic, Cecilia’s focus is to develop strong partnerships with clients and work with them to manage risk and liability, ensure compliance, optimise performance and achieve positive outcomes for their organisation, however large or small. She strongly believes that prevention is better than the cure and that strong policies and contracts, early intervention and excellent communication are critical to ensuring effective people management.