The ASU has been dealing with a number of enquiries regarding hours and reasonable overtime.
The queries have mainly come from individuals who have an individual contract as part of their conditions of employment. Some of these employees on individual contracts are also not covered by either an Enterprise Agreement or Award usually because of the nature of their occupation and/or their seniority.
Whilst not all employees have their conditions underwritten by a collective agreement or award all employees are covered by the Fair Work Act 2009 which sets a number of employment conditions. Significantly one of those matters pertains to working hours and overtime if only in brief terms.
Section 62 of the Fair Work 2009 is as follows:
62. Maximum weekly hours
Maximum weekly hours of work
(1) An employer must not request or require an employee to work more than the following number of hours in a week unless the additional hours are reasonable:
(a) for a full-time employee—38 hours; or
(b) for an employee who is not a full-time employee—the lesser of:
(i) 38 hours; and
(ii) the employee’s ordinary hours of work in a week.
Employee may refuse to work unreasonable additional hours
(2) The employee may refuse to work additional hours (beyond those referred to in paragraph (1)(a) or (b)) if they are unreasonable.
Determining whether additional hours are reasonable
(3) In determining whether additional hours are reasonable or unreasonable for the purposes of subsections (1) and (2), the following must be taken into account:
(a) any risk to employee health and safety from working the additional hours;
(b) the employee’s personal circumstances, including family responsibilities;
(c) the needs of the workplace or enterprise in which the employee is employed;
(d) whether the employee is entitled to receive overtime payments, penalty rates or other compensation for, or a level of remuneration that reflects an expectation of, working additional hours;
(e) any notice given by the employer of any request or requirement to work the additional hours;
(f) any notice given by the employee of his or her intention to refuse to work the additional hours;
(g) the usual patterns of work in the industry, or the part of an industry, in which the employee works;
(h) the nature of the employee’s role, and the employee’s level of responsibility;
(i) whether the additional hours are in accordance with averaging terms included under section 63 in a modern award or enterprise agreement that applies to the employee, or with an averaging arrangement agreed to by the employer and employee under section 64;
(j) any other relevant matter.
Authorised leave or absence treated as hours worked
(4) For the purposes of subsection (1), the hours an employee works in a week are taken to include any hours of leave, or absence, whether paid or unpaid, that the employee takes in the week and that are authorised:
(a) by the employee’s employer; or
(b) by or under a term or condition of the employee’s employment; or
(c) by or under a law of the Commonwealth, a State or a Territory, or an instrument in force under such a law.
Clause 62 of the Act identifies that employees who are full time are not expected to work more than 38 hours in a week unless they are to perform ‘reasonable overtime’.
What constitutes or does not constitute ‘reasonable overtime’ is outlined in the Clause. However, the provisions are general and do not detail how it is to be compensated. These issues are dealt with in more detail under the relevant award or collective agreement.
The obvious question that comes to mind is, does Clause 62 have any real effect? An employee could potentially make a claim through the Federal Court that their hours were more than 38 and that the overtime was unreasonable, and they were not being appropriately compensated for that overtime. However, examples of this sort of action are few in number and can be very costly.
In claims for overtime compensation that are disputed, the employer usually sites two issues in support of their case.
The first point is that the employee took it of his or her own initiative to do the extra hours and that they were not directed to do it so, and therefore the employer should not be forced to pay it.
The second point used by employers is that the employee is paid above the award rate and the over award salary compensates them for the extra time.
Regarding the first point, the fact is that many employees feel compelled to work overtime in order to keep on good terms with their employer to secure their employment. As such, claims for overtime can be prejudiced by the fact that the employer can deliberately seek to undermine the process by not having formal systems in place to direct overtime yet it is still undertaken.
For employees it is important to try and deal with this issue prospectively where and when you can.
Secondly, if you are on an individual contract that does not mean that an Award does not apply. You should investigate this as it can be a good bargaining tool in your discussions with your employer. For instance, Awards not only detail how overtime is to be compensated but also provide that ‘all inclusive salaries’ should identify how the employee is compensated in writing.
Reference could be made to such matters in your annual review discussions. All Awards have provision for an annualised salary with restrictions on how it can be applied. The following is a typical example of an Award provision for an annualised salary.
Notwithstanding any other provision of this award, an employer and an individual employee may agree to vary the application of certain terms of this award to meet the genuine individual needs of the employer and the individual employee. The terms the employer and the individual employee may agree to vary the application of are those concerning:
- arrangements for when work is performed;
- overtime rates;
- penalty rates;
- allowances; and
- leave loading.
The employer and the individual employee must have genuinely made the agreement without coercion or duress. An agreement under this clause can only be entered into after the individual employee has commenced employment with the employer.
The agreement between the employer and the individual employee must:
- be confined to a variation in the application of one or more of the terms listed in clause 7.1; and
- result in the employee being better off overall at the time the agreement is made than the employee would have been if no individual flexibility agreement had been agreed to.
The agreement between the employer and the individual employee must also:
- be in writing, name the parties to the agreement and be signed by the employer and the individual employee and, if the employee is under 18 years of age, the employee’s parent or guardian;
- state each term of this award that the employer and the individual employee have agreed to vary;
- detail how the application of each term has been varied by agreement between the employer and the individual employee;
- detail how the agreement results in the individual employee being better off overall in relation to the individual employee’s terms and conditions of employment; and
- state the date the agreement commences to operate.
The employer must give the individual employee a copy of the agreement and keep the agreement as a time and wages record.
Except as provided in clause 7.4(a) the agreement must not require the approval or consent of a person other than the employer and the individual employee.
An employer seeking to enter into an agreement must provide a written proposal to the employee. Where the employee’s understanding of written English is limited the employer must take measures, including translation into an appropriate language, to ensure the employee understands the proposal.
The agreement may be terminated:
- by the employer or the individual employee giving 13 weeks’ notice of termination, in writing, to the other party and the agreement ceasing to operate at the end of the notice period; or
- at any time, by written agreement between the employer and the individual employee.
The right to make an agreement pursuant to this clause is in addition to, and is not intended to otherwise affect, any provision for an agreement between an employer and an individual employee contained in any other term of this award.
So if your employer is suggesting the salary includes overtime make sure it is in writing and the compensation can be identified.
The other matter to remember is that the Award rates are minimum rates in that they act as a barrier. Pay rates can be higher and normally are especially if the employer is wishing to pay market rates. Just because you are paid over the Award rate that does not automatically mean that you are not to be compensated for overtime.
For example, an employer can be paying an administrative employee $25.00 an hour when the Award says the minimum rate must be $22.00 an hour. When the issue of overtime compensation is discussed the employer argues that the $3.00 extra an hour is to compensate overtime and other allowances.
All employees should be aware of this even when the employer is saying that they pay above award rates or market rates. For employees under an Award it is important to remember that there are obligations the employer must follow even when they use an ‘all inclusive salary’ to pay you.
The ASU does not condone these type of arrangements (we support the operation of collective agreements wherever possible) but realises they are a reality in many workplaces. If you have any concerns or queries it is wise to contact us for advice in how to deal with the matter.