The 1st of the National Employment Standards (NES) is that which provides that the maximum weekly hours are 38 hours for full-time employees (or if the employee works less than 38 hours per week, then their ordinary hours of work in a week), subject to reasonable additional working hours.
The NES does not restrict the period over which hours can be averaged if done via a modern award or enterprise agreement… otherwise hours can only be averaged over a six month period by written agreement (a Section 64 arrangement). In practice, this means you will need to keep records of any such agreements and the hours worked… you will never know when you may have to justify an averaging arrangement or that hours worked were not additional to such an arrangement.
In determining whether a request to work additional hours is reasonable, the following must be taken into account:
any risk to the employee’s health and safety from working the additional hours;
the employee’s personal circumstances, including family responsibilities;
the needs of the business or workplace in which the employee is employed;
whether the employee is entitled to receive overtime payments, penalty rates or other compensation for the additional hours;
whether the employee’s level of remuneration reflects an expectation of working additional hours;
the nature of the employee’s role, and the employee’s level of responsibility;
the amount of notice given by the employer to the employee of the requirement to work additional hours;
any notice given by the employee to the employer of his or her inability to work the additional hours requested;
the usual patterns of work in the industry, or the part of an industry, in which the employee works;
whether the additional hours are in accordance with averaging terms included in a modern award or enterprise agreement that applies to the employee;
for non award employees, whether the additional hours are in accordance with an averaging arrangement agreed to in writing by the employer and employee under Section 64; and
any other relevant matter.
In reality the real issue for you is, do you need to take steps to protect yourself when you pay an employee over-award payments in the expectation that the employee will, on average, work in excess of 38 hours per week. The answer is, “Yes”!
If the employee is an award employee, then from 1 January 2010, under the Fair Work Act you will be able to enter into a written flexibility arrangement with the employee to vary the relevant award, including any terms about hours of work. For example, let’s assume the relevant clause in the award to be varied is 18.1.1. The relevant part of the flexibility agreement would look like this:
Award term to be varied:
Clause 18.1.1 which provides that full time workers work no more than an average of 38 ordinary hours per week.
Clause 18.1.2 which provides that overtime payments be made if an Employee works more than 38 hours per week.
How the Award is to be varied:
The Employer requires the Employee to work 42 ordinary hours per week without payment of overtime.
How the Agreement results in the Employee being better off overall:
The Employer will pay the Employee a gross weekly wage of $1,000, which means the Employee will receive more money than if the Employer paid the Employee for a 42 hour week pursuant to the Award.
Note: The above example has been simplified for the purpose of this email and does not contain all of the formal detail required for a flexibility agreement to comply with the Fair Work Act. In a later email in this series I will explain in greater detail how flexibility agreements work and how they may benefit your business.
Non Award employees
If your employee is not an award employee but is likely to work, on average, in excess of 38 hours per week, then you should use an “absorption clause” in your contract of Employment/Letter of Offer similar to this:
“Your remuneration includes payment for all overtime, allowances, penalty rates and loadings which you may become entitled to under the relevant industrial laws.”