When does leave count as ordinary hours for calculating overtime?
The Clerks – Private Sector Award 2020, like many modern awards, provides for payment of overtime rates for any hours worked at the direction of the employer in excess of, outside of, or on a particular trigger, e.g. in excess of the ordinary weekly hours or 10 ordinary hours on any one day, excluding unpaid meal breaks.
Following an application by EPI Capital (2023), the Fair Work Commission (FWC) had to determine whether periods of leave or authorised absences from ordinary hours of duty under the Award are part of the ordinary weekly hours or the maximum daily ordinary hours constituting the relevant trigger points for overtime entitlements.
What did the FWC conclude?
The FWC concluded there was nothing in the Award suggesting the ordinary hours trigger points must have all been worked before additional hours worked become overtime. Therefore, it answered this question in the affirmative, i.e. leave does count as ordinary hours when working out whether the conditions for overtime entitlements are met.
The FWC based this ruling on the Award provisions that allowed an employee’s ordinary hours to be fixed on particular days and hours in a week. Once fixed, these ordinary hours set the triggers for overtime.
For example, if an employee’s ordinary hours are fixed at 38 hours worked on Monday to Wednesday for 10 hours each day, and on Thursday for 8 hours, and the employee works in a given week at the direction of the employer for 4 hours on the Friday, the 4 hours are in excess of the employee’s weekly ordinary hours fixed in accordance with the Award provisions and attract overtime payments.
If on a given Wednesday the employee took 4 hours of personal leave to attend a medical appointment and then returned to work the remaining 6 hours of ordinary time on that day but worked an additional hour at the direction of the employer, the 4 hours of leave and the 6 hours worked together constitute 10 ordinary hours on that day. The additional hour is an hour worked in excess of the daily maximum and so the overtime payment obligation arises.
Contextual indicators supporting the conclusion
The FWC referred to ‘contextual indicators’ that supported this conclusion, namely:
- Under the National Employment Standards (NES), an employer must not request or require a full-time employee to work more than 38 hours in a week unless the additional hours are reasonable. Hours worked for the purpose of this prohibition are taken to include any hours of leave, or absence, whether paid or unpaid, the employee takes in the week.
- NES entitlements to paid leave reference the leave payment according to the employee’s ordinary hours of work during the relevant period.
When will leave not amount to hours worked?
The FWC did rule that an employee’s period of leave or absence does not amount to hours worked or time worked for the purposes of weekly and daily overtime clauses if taken after the maximum ordinary hours in those provisions are reached.
So, taking the above example of the employee whose ordinary hours are fixed at 38 hours worked on Monday to Wednesday for 10 hours each day, and on Thursday for 8 hours, if the employee worked 2 hours on the Friday and then took 4 hours of personal leave to attend a medical appointment, before returning to work 2 hours, the employee would only work 4 hours of overtime.
What if employment is not regulated by an award?
It’s important to appreciate this ruling may not apply in the case of employment regulated by other industrial instruments. For instance, in TWU v Jetstar (2017), the FWC interpreted an enterprise agreement provision that read, “Where a full-time employee works for a longer period than his or her rostered shift period an average of more than 38 hours per week, averaged over a roster cycle (and taking into account RDO entitlements) the additional time worked will be treated as overtime.” The FWC ruled it was not possible or logical that ‘work’ included periods where no tasks are undertaken and nothing is made or done for the benefit of the employer, such as periods of annual leave, personal leave and other leave.
However, in another decision, Officeworks v SDA (2021), a Full Bench of the FWC construed a provision in an enterprise agreement entitling a full-time employee to overtime payments when they work in excess of a specified trigger point. The FWC Full Bench reached the same conclusion as in the EPI Capital case in a similar way.
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