Whether you’re in an industry which traditionally closes over Christmas, or one which revolves around it, these next few weeks leading up to the festive season are bound to be busy. A lot of your employees may be pulling additional hours, but are you aware of your rights and obligations in regards to Leave, overtime, compensation & TOIL?
The National Employment Standards (NES), enshrined in the Fair Work Act 2009, state that the maximum weekly hours an employee may work are 38 hours per week for a full-time employee. A part-time employee’s maximum weekly hours are equivalent to those agreed with the employee as being their “ordinary hours”, and could be as little as two or three hours per week or as much as 37.5, depending on your individual agreement.
Beyond these thresholds lies “reasonable additional hours” – aka overtime. Making employees work overtime is not an employer’s right, as you can only request additional hours if such hours are reasonable. Reasonableness depends on a number of factors, including:
- any risk to health and safety
- the employee’s personal circumstances
- the length of notice given
- the usual patterns of work in the industry
If such a request is unreasonable, then the employee has the right to refuse to work.
The Fair Work Act provides that authorised hours of leave are to be included when counting hours of work. Therefore, a full-time employee who takes 8 hours of annual leave on Monday is to be taken as having already worked 8 hours, and will only have 30 ordinary hours of work remaining in the week. Once he passes 30 hours he will be working overtime, despite being physically at work for less than 38 hours in that particular week. This applies to both paid and unpaid leave.
Any employee who works overtime is entitled to be compensated for it. If the employee is covered by an Award or Enterprise Agreement, the applicable overtime rates will be set out in those instruments. Typically, overtime is payable as time and a half (150% of their ordinary pay) for the first two or three hours, then double time (200%) thereafter, but it is important to check the particular instrument as there are many rules relating to different days of the week, classifications of employees and employment status.
Award and Agreement-free employees may not have as many rules regulating their wages, but the compensation offered in exchange for working overtime is one of the key factors in working out whether a request to work additional hours is reasonable, so they will still need to be suitably rewarded for their additional commitment.
Many employers favour the practice of providing time off in lieu (TOIL) rather than paying overtime rates, which can have several benefits in terms of cost and flexibility. However, it is not an automatically available option. You should check the applicable instrument to ensure offering TOIL to your employees, and if so, what rules govern the practice. For example:
- Do you need the employee’s agreement to choose TOIL rather than overtime penalty rates?
- Do you need the agreement to be recorded in writing?
- Is TOIL offered at the equivalent time (ie an hour off for an hour worked) or the equivalent rate (ie two hours off for an hour worked, if at the 200% overtime rate)?
- Can it be offered to all employees or just a particular classification or stream?
For more information on overtime and TOIL and what this means for you, clients should contact the HR Assured team. If you’d like more information about the benefits of becoming an HR Assured client contact us today for an informal chat.