Changes to Casual Overtime Award Clauses

Shane Bryan

On 30 October 2020, the Fair Work Commission (the Commission) announced updates to the casual and overtime clauses in 97 awards. The updated clauses start from the first full pay period on or after 20 November 2020.

To find out if your award is affected and what you need to do, click the links below:

The updates are different for each award, but some common examples of how some awards have been updated include clarifying:

  • how casual and overtime loadings interact
  • whether casuals are entitled to overtime
  • the hours when overtime applies.

Some of these updates will mean changes to overtime pay rates for casual employees in some awards.

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:

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

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

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

What do you need to do next?

  1. Review your casual employee/s to determine which Awards they fall under.
  2. If your casual employees are covered by an Award listed in determinations list ., apply the Award stipulated Casual Overtime method. 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.

To find out further information access the FairWork Ombudsman website below: