The Christmas rush: additional hours, overtime and penalty rates

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By Joanna Knoth, Senior Associate and Gemma Little, Lawyer 

The lead up to Christmas is often a busy time, with many employers managing extended trading hours or trying to finalise projects or tasks before the holidays. This may result in employees being required to work longer hours or on weekends.

Prior to the Christmas period, employers should consider:

  • whether it is reasonable to ask employees to work additional hours; and
  • any obligations to pay employees overtime, penalty rates or loadings.

Reasonable additional hours

The National Employment Standards (NES) provide that an employer cannot request or require:

  • a full time employee to work more than 38 hours per week;
  • a part time employee to work more than their ordinary hours of work,

unless that request is reasonable.

An employee may refuse to work additional hours if the request is not reasonable. To determine whether the additional hours are “reasonable”, it is necessary to consider a range of factors including:

  • any risk to employee health and safety from working the additional hours;
  • the employee’s personal circumstances, including family responsibilities;
  • the needs of the workplace;
  • whether the employee receives compensation for working the additional hours, for example, by way of overtime payments, penalty rates or their level of remuneration;
  • the notice given by the employer of the request or requirement to work the additional hours;
  • the usual patterns of work in the industry, or the part of an industry, in which the employee works; and
  • the nature of the employee’s role and the employee’s level of responsibility.

Accordingly, what is “reasonable” will be assessed on a case-by-case basis. However, requiring an employee to work “whatever hours it takes” is not reasonable, even when that employee is paid a base salary that exceeds the statutory minimum: Sagona v R & C Piccoli Investments Pty Ltd [2014] FCCA 875.

Modern awards and enterprise agreements

If an employee is covered by a modern award or an enterprise agreement, they may be entitled to overtime, penalty rates or other allowances for hours work outside their ordinary hours.

Modern awards and enterprise agreements may also include terms providing for the averaging of hours of work over a specified period.

Employers should familiarise themselves with their obligations under any applicable awards or agreements.

If an employer does not wish to pay its employees in strict compliance with a modern award, it should ensure it has appropriate contractual arrangements in place. For example, employment contracts for award covered employees should expressly provide that:

  • the employee is paid an all-inclusive salary or hourly rate;
  • the remuneration paid to the employee can be set off against all monetary entitlements payable under an applicable award, agreement or other industrial instrument.

Employers must ensure that they pay employees the same as, or more than, the remuneration the employee is entitled to under any applicable award or enterprise agreement. Failure to do so may result in a breach of the Fair Work Act 2009 (Cth) and, among other matters, the imposition of monetary penalties against the employer.

Accordingly, any all-inclusive salary or hourly rate paid to an employee must calculated with regard to busier periods, such as the Christmas period.

This marks day seven of MDC Legal’s twelve days of Christmas blog series, addressing a variety of issues that may arise during the festive season.