2 min read

Complying with the FW Act for overworked employees

By Charles Power

Each week we read about the overworked employees, who have been allegedly not paying their employees for the hours they have worked.

These cases are often not concerned with employers applying a pay rate that is less than the applicable award rate. Rather, they relate to the use of weekly or annual salaries that build in an over-award margin, which is alleged to be insufficient for the hours actually worked by the employee.

The focus of the attention of the Fair Work Ombudsman and other agencies is primarily concerned with situations where young or otherwise vulnerable employees are exploited through these arrangements.

This is fortunate for those employers of professionals who require these employees to work 50 or 60 hours a week. Often these organisations do not have any records of the hours worked by their professional employees.

In most cases there is no award applicable to the employment of these workers. However the Banking, Finance and Insurance Industry Award covers senior specialists and professionals in the financial services sector.

The Professional Employees Award (PEA) covers professional scientists, engineers and IT employees. The PEA does not designate a penalty rate for overworked employees. However, it requires that full-time employees are compensated for time worked regularly in excess of ordinary hours of duty (being 38 hours per week or an average of 38 over a regularly worked cycle), time worked on call-backs (or in readiness for a call-back), time worked on afternoon, night or weekend shifts and any time spent carrying out duties over the telephone or via remote access outside of ordinary hours of duty.

This compensation can include granting special additional leave, granting special additional remuneration, taking the above factors into account in fixing annual remuneration, or granting a special allowance or loading. The PEA requires this compensation and/or remuneration to be reviewed annually to ensure it is set at an appropriate level.

  • Even if the professional employee is award-free, requiring employees to work significant hours each week in excess of 38 may lead to claims that you have required employees to work unreasonable additional hours in contravention of the reasonable hours National Employment Standard in the Fair Work Act.
  • You will have good grounds to defend claims on unreasonable additional hours if your employees are paid salaries above minimum entitlements, such that they are adequately remunerated to reflect the expectation of additional hours.

What are some other options to mitigate your legal risk in this area?

  • Undertake an audit of currently worked hours: select a number of employees to log their pattern of hours for two to three months. Once the audit has been completed, review the salaries and increase salaries in line with the excess hours required or limit the excess hours required of employees.
  • Implement a time in lieu policy: a time in lieu policy would specify the circumstances in which an employee is entitled to time in lieu, e.g. employees receive an entitlement to one hour of time off for each hour worked in excess of ordinary hours, on the condition that overtime is logged and submitted to their manager.
  • Management oversight: instruct managers to have broad oversight of the hours being worked by their subordinates, and frequently emphasise that their subordinates have an obligation to not work unhealthy or unsafe hours of work.
  • Implement a claims-based system for excessive overtime: develop a mechanism to deal with employees who are, for whatever reason, requested or required by their manager to work hours beyond the specified cap.
  • Ensure adequate set off clauses in employment agreements: a set-off clause should indicate the salary paid is in satisfaction of all entitlements under any relevant industrial law or instrument.
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