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What you need to know about working overtime

Work-life balance is apparently getting worse in Australia, and we work longer hours than ever before. According to research conducted by The Australia Institute, Australians now work millions of hours of unpaid overtime annually, an average of 5.94 hours per week for each full-time worker. That adds up to more than $128 billion worth in unpaid labour annually. But if you are regularly working overtime, are you entitled to additional payment? The answer is not always clear.

So can an employee simply refuse to work overtime if they are not entitled to any additional payment? Under the Fair Work Act, they can only do this if an employer’s request is unreasonable. But determining what is “reasonable” depends on the circumstances. The Fair Work Act says that the following must be taken into account:

  • any risk to employee health and safety
  • the employee’s personal circumstances, including family responsibilities
  • the needs of the workplace or enterprise in which the employee is employed
  • 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
  • any notice given by the employer of any request or requirement to work the additional hours
  • any notice given by the employee of his or her intention to refuse to work the additional hours
  • the usual patterns of work in the industry
  • the nature of the employee’s role, and the employee’s level of responsibility
  • whether the additional hours are in accordance with averaging terms included in a modern award or enterprise agreement, or an averaging arrangement agreed to by the employer and employee
  • any other relevant matter.

An employee’s personal circumstances can be very relevant in deciding if an overtime request is reasonable or not. In the 2012 case of Brown v Premier Pet (trading as Bay Fish), the employer notified its employees of a new roster that would require them to work three hours additional overtime once every few weeks, on public holidays or weekends.

Adam Brown, one of the workers, objected to the new roster. He was willing to work occasional overtime, but wanted to spend his free time in his own private business. As a bankrupt, he was also concerned that the additional work might affect his liability to make contributions to his bankrupt estate.

He was ultimately dismissed for refusing to agree to the new roster, but was reinstated after the Federal Magistrates’ Court decided that the requirement to work overtime was unreasonable given all the circumstances. Although Brown was single and had no dependants, the court considered that his involvement in a private business and his bankruptcy liability concerns were legitimate issues that the employer had failed to take into account.

 

  • any risk to employee health and safety
  • the employee’s personal circumstances, including family responsibilities
  • the needs of the workplace or enterprise in which the employee is employed
  • 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
  • any notice given by the employer of any request or requirement to work the additional hours
  • any notice given by the employee of his or her intention to refuse to work the additional hours
  • the usual patterns of work in the industry
  • the nature of the employee’s role, and the employee’s level of responsibility
  • whether the additional hours are in accordance with averaging terms included in a modern award or enterprise agreement, or an averaging arrangement agreed to by the employer and employee
  • any other relevant matter.

An employee’s personal circumstances can be very relevant in deciding if an overtime request is reasonable or not. In the 2012 case of Brown v Premier Pet (trading as Bay Fish), the employer notified its employees of a new roster that would require them to work three hours additional overtime once every few weeks, on public holidays or weekends.

Adam Brown, one of the workers, objected to the new roster. He was willing to work occasional overtime, but wanted to spend his free time in his own private business. As a bankrupt, he was also concerned that the additional work might affect his liability to make contributions to his bankrupt estate.

He was ultimately dismissed for refusing to agree to the new roster, but was reinstated after the Federal Magistrates’ Court decided that the requirement to work overtime was unreasonable given all the circumstances. Although Brown was single and had no dependants, the court considered that his involvement in a private business and his bankruptcy liability concerns were legitimate issues that the employer had failed to take into account.

EMPLOYER DOS AND DON’TS ON OVERTIME

Do confirm whether your employees are covered by an award or agreement, and if overtime penalties apply.

Do ensure that employment contracts and policies are clear on whether overtime penalties are payable or not.

Don’t make overtime policies overly prescriptive as they must allow for individual circumstances.

Do attempt to negotiate with employees who object to overtime, and ask for disclosure of individual circumstances.

Do be aware of what is “reasonable” for your industry.

Elizabeth Ticehurst is Special Counsel – Employment at KPMG.

 

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