Changes to Casual Overtime Calculations

Posted on 19/11/2020

HR & Recruitment

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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

Overtime is calculation on the permanent base rate, and it excludes the casual loading:

$20 (base rate) x 150% (overtime penalty) = $30

 

  1. The Cumulative Method

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

 

  1. The Compounding Method

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)

Award Overtime Rates for Casual increasing, decreasing, or staying the same?

 

Aboriginal Community Controlled Health Services Award 2020 Remains the same
Aged Care Award 2010 (from the first full pay period on or after 01 March 2021) Increasing
Airline Operations-Ground Staff Award 2020 Remains the same
Airport Employees Award 2020 No casual loading paid on OT hours worked
Alpine Resorts Award 2020 Casual loading in incorporated into the penalty rates in the Award
Ambulance and Patient Transport Industry Award 2020 Decreasing
Amusement, Events and Recreation Award 2020 Decreasing
Animal Care and Veterinary Services Award 2020 Remains the same
Architects Award 2020 Remains the same
Asphalt Industry Award 2020 Remains the same
Banking, Finance and Insurance Award 2020 Remains the same
Black Coal Mining Industry Award 2010 Increasing
Broadcasting, Recorded Entertainment and Cinemas Award 2010 Increasing
Building and Construction General On-site Award 2020 Remains the same
Business Equipment Award 2020 Increasing
Car Parking Award Remains the same
Cemetery Industry Award 2020 Remains the same
Children’s Services Award 2010 OT rates include the casual loading (using the cumulative method)
Cleaning Services Award 2020 Remains the same
Clerks—Private Sector Award 2020 Remains the same
Coal Export Terminals Award 2020 Remains the same
Commercial Sales Award 2020 Remains the same
Concrete Products Award 2020 Increasing
Contract Call Centres Award 2020 Increasing
Corrections and Detention (Private Sector) Award 2020 No casual loading paid on OT hours worked
Cotton Ginning Award 2020 No casual loading paid on OT hours worked
Dredging Industry Award 2020 No casual loading paid on OT hours worked
Educational Services (Post-Secondary Education) Award 2020 Remains the same
Educational Services (Schools) General Staff Award 2020 Remains the same
Educational Services (Teachers) Award 2020 Remains the same
Electrical Power Industry Award 2020 Remains the same
Electrical, Electronic and Communications Contracting Award 2010 Increasing
Fast Food Industry Award 2010 Remains the same
Fitness Industry Award 2010 Remains the same
Food, Beverage and Tobacco Manufacturing Award 2010 Remains the same
Funeral Industry Award 2010 Remains the same
Gardening and Landscaping Services Award 2020 Remains the same
Gas Industry Award 2020 Remains the same
General Retail Industry Award 2020 Remains the same
Graphic Arts, Printing and Publishing Award 2020 Remains the same
Hair and Beauty Industry Award 2010 Remains the same
Health Professionals and Support Services Award 2020 Increasing
Higher Education Industry – General Staff-Award 2020 No casual loading paid on OT hours worked
Horse and Greyhound Training Award 2020 Remains the same
Hydrocarbons Industry (Upstream) Award 2020 Remains the same
Joinery and Building Trades Award 2010 Remains the same
Labour Market Assistance Industry Award 2020 Increasing
Legal Services Award 2020 Remains the same
Live Performance Award 2010 Remains the same
Local Government Industry Award 2020 Decreasing
Mannequins and Models Award 2020 Remains the same
Manufacturing and Associated Industries and Occupations Award 2020 Remains the same
Marine Tourism and Charter Vessels Award 2020 Increasing
Marine Towage Award 2020 Increasing
Market and Social Research Award 2020 Remains the same
Meat Industry Award 2020 Remains the same
Medical Practitioners Award 2020 Remains the same
Mining Industry Award 2020 Remains the same
Miscellaneous Award 2020 Remains the same
Mobile Crane Hiring Award 2010 Remains the same
Nursery Award 2020 Remains the same
Nurses Award 2010 Remains the same
Oil Refining and Manufacturing Award 2020 Remains the same
Passenger Vehicle Transportation Award 2020 Decreasing
Pastoral Award 2010 Remains the same
Pest Control Industry Award 2020 Remains the same
Pharmaceutical Industry Award 2010 Remains the same
Plumbing and Fire Sprinklers Award 2010 Remains the same
Port Authorities Award 2020 Remains the same
Ports, Harbours and Enclosed Water Vessels Awards 2020 Increasing
Poultry Processing Award 2020 Remains the same
Premixed Concrete Award 2020 Remains the same
Professional Diving Industry (Industrial) Award 2020 Remains the same
Professional Diving Industry (Recreational) Award 2020 OT paid on the casual hourly rate
Racing Clubs Events Award 2010 Remains the same
Racing Industry Ground Maintenance Award 2020 Remains the same
Rail Industry Award 2020 Remains the same
Real Estate Industry Award 2020 Remains the same
Salt Industry Award 2010 Decreasing
Seafood Processing Award 2020 Remains the same
Security Services Industry Award 2020 Remains the same
Silviculture Award 2020 Remains the same
Sporting Organisations Award 2020 Remains the same
Stevedoring Industry Award 2020 Increasing
Storage Services and Wholesale Award 2020 Remains the same
Sugar Industry Award 2020 Increasing
Supported Employment Services Award 2020 Decreasing
Surveying Award 2020 Increasing
Telecommunications Services Award 2020 Increasing
Textile, Clothing, Footwear and Associated Industries Award 2020 Remains the same
Transport (Cash in Transit) Award 2020 Increasing
Travelling Shows Award 2002 Decreasing
Waste Management Award 2020 Remains the same
Water Industry Award 2020 Decreasing
Wine Industry Award 2020 Remains the same
Wool Storage, Sampling and Testing Award 2010 Remains the same

 

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