Employers are often left completely surprised when an employee makes a claim for overtime payments they claim to have worked over the course of their employment.
Employers are often left completely surprised when an employee makes a claim for overtime payments they claim to have worked over the course of their employment.
What are the maximum weekly hours?
The National Employment Standards (NES) provides that for full-time employees, the maximum “ordinary” weekly hours are 38. However, section 62 FW Act contemplates circumstances whereby an employer may request or require an employee to work more than 38 hours in a week, provided that the additional hours are “reasonable”.
What are reasonable additional hours?
The FW Act does not explicitly state what is meant by “reasonable additional hours”. However, subsection 62(3) of the FW Act provides a list of factors which can be taken into account to assess the reasonableness of the employer’s request. Factors can include whether there is a risk to the employee’s health and safety, the usual pattern of work in the particular industry or the employee’s role and level of responsibility.
When will overtime be payable?
Some Modern Awards or Enterprise Agreements provide for circumstances where overtime is to be paid (or Time Off in Lieu provided). For Award Free employees, the entitlement to overtime would generally only exist if it is specified in their contract as a contractual entitlement.
In a recent Federal Circuit Court of Australia (FCCA) decision, Gorval v Employsure and Lynch v Employsure and Mahoney v Employsure [2016] FCCA 231, three Award Free Employees lodged a claim against the Employer for payment of their unpaid overtime.
The Employees alleged that they were required to work 45 hours per week (7 hours more than the maximum 38 hours as per the NES) including during their one hour lunch break. The Employer argued that the employees only worked 40 hours per week and that the two additional hours were “reasonable additional hours”.
The FCCA agreed with the Employer that the employees worked 40 hours per week and following a review of the factors under section 62(3) of the FW Act, held that the additional two hours were not unreasonable.
Tips for employers
Employers should have clearly drafted employment contracts. To prevent claims of underpayment for additional hours, employment contracts should specify:
- the ordinary days and hours of work (including the span of hours as stated in the applicable modern award, if any);
- whether reasonable additional hours are required from time to time in order to perform the duties of the role;
- whether the employee’s reasonable additional hours are already compensated for in their remuneration or whether they will be paid separately at overtime rates; and
- whether employees are required to obtain agreement with management prior to overtime being worked in order for it to be paid.
Clarity around the terms and conditions upon which additional hours are worked will help employers avoid surprise claims for payment.
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