Overtime: What's 'Fair and Reasonable'Nov 16, 2023
I'm sure we've all heard of the term 'overtime' - but most people have no idea when it comes into play. Let's discuss!
Here are some important definitions straight from Fair Work:
Ordinary hours - The amount of hours worked by an employee that doesn’t include overtime. For example, the ordinary hours of a full-time employee are usually 38 hours per week - however this depends on the wording in the relevant Award (if any).
Overtime - The time worked outside of ordinary hours. Awards and registered Agreements will state when overtime can be worked and the rate of pay for working overtime. Awards and Agreements also stipulate other occasions that may trigger overtime (e.g. working through breaks, not having enough time off between shifts, being recalled to work when on call).
In terms of working overtime, Fair Work states that "an employer must not request or require a full-time employee to work more than 38 hours per week unless the additional hours are reasonable." But how do we determine what additional hours are reasonable?
There's no one rule that determines what is meant by reasonable. However, there are various factors that can help to determine the reasonableness of the overtime request. These include, but are not limited to:
- The workplace's needs - This may be highly applicable to client-centered businesses that have strict deadlines to meet.
- The personal circumstances of the employee - This takes into consideration the family dynamics i.e., child and caring responsibilities.
- Health, safety, and well-being risks - This is a particularly sensitive factor for businesses within safety-critical industries i.e., construction. It's general knowledge that working a labour-intensive job will lead to fatigue and being able to assess this is important for employee wellbeing.
- Additional compensation - Determining if the employee is entitled to additional payments and entitlements should be considered i.e., penalty rates, meal allowances etc.
- The notice given by the employer to work additional hours - Employers should be providing adequate notice in line with any Award or Enterprise Agreement requirements.
- The notice provided by the employee to refuse any additional hours.
- The usual patterns of work within the applicable industry - It's important to determine if overtime is commonly utilised or if this is a once-off request.
- The employee's position within the company - Is the employee a Manager? If not, should the additional hours be sitting with them?
- The overtime clauses as per the employee's contract - Was overtime included within their employment contract? Were they aware that their role, from time to time, may require additional hours?
- Any other relevant considerations!
Where an employer willingly subjects their employees to unreasonable overtime, there are serious consequences. In the instance that a serious contravention is found to have taken place, the employer may be liable for fines of up to $660,000! As an employer, it's not worth the risk!
If you are working in an industry where working additional hours is common, make sure you take the following into consideration:
- Breaks during overtime - Check the relevant Award to see if this applies to your employees.
- Loaded rate arrangements - Check your contract to see if your employees are on loaded rates.
- Minimum hours for overtime shifts - Check the relevant Award to see if a minimum overtime shift applies.
If you need help digesting any of the following information, please don't hesitate to reach out to the Employii Team at [email protected]
If you require more information, please check out the Fair Work website here.
Author: Chelsea Finlay (HR Officer).