A business mandating a 50-hour work week for its employees was deemed unreasonable by the Federal Court. What counts as ‘reasonable’ overtime?

An Australian employer has been fined a total of $90,000 after the Federal Court found that it had unreasonably required an employee to work 50 hours per week. This requirement was found to be in contravention of section 62 of the Fair Work Act 2009, which stipulates that 38 hours is the maximum weekly hours of work.

The employer, a meat wholesaler, wrongly classified the employee under the Meat Industry Award 2010, and failed to pay him overtime rates. In Australia, an Award is an instrument that operates with the force of legislation and that sets minimum rates of pay and conditions in certain industries.

The Court also found that the employer failed to ensure that copies of the Award and the National Employment Standards were available to the employee, failed to post a roster on their premises and failed to provide the employee with a Fair Work Information Statement (which is also a Fair Work Act requirement).

The employee, who is a Ghanaian immigrant, was subject to a written contract that required him to work 50 ‘ordinary’ hours per week from 2.00am to 11.30am on weekdays, and from 2.00am to 7.00am on Saturdays, plus ‘reasonable’ additional hours as requested. 

Section 62 of the Fair Work Act imposes a limit on the number of hours an employee may be asked or required to work, and, generally, 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 considered to be reasonable. 

The Fair Work Act also stipulates that employees may refuse to work additional hours if they are unreasonable. In this case, the Court held that the employee was required to work 50 hours a week, notwithstanding that he voluntarily entered into the agreement (his contract of employment) to do so. The question was whether it was reasonable for the employer to require him to work the 12 additional hours each week.

What counts as a ‘reasonable’ overtime request?

In order to satisfy Fair Work requirements, there are a number of factors that must be taken into account in determining whether additional hours are reasonable. They include:

• Risks to health and safety – there were risks to the employee’s health and safety from working the additional hours, accepting the evidence that because of the start times and physical nature of the work he was often exhausted, and noting that fatigue can increase the risk of accidents and contribute to disease.
• Employee’s personal circumstances – little evidence was advanced about the employee’s personal circumstances, although it was noted that he was a very recent immigrant who likely possessed little or no knowledge of Australian law.
• Relevant needs of the workplace – while the evidence tended to suggest that the 50-hour week aligned with the business’s needs, that did not necessarily support the conclusion that the additional hours were reasonable.
• Entitlement to receive additional compensation – while the employee was entitled to receive overtime/penalty rates for working the extra 12 hours, he was not paid overtime rates in accordance with the Award, meaning this factor did not assist the employer’s contention that the additional hours were reasonable.
• Was notice given by the employer of the request/requirement? – Notice was provided to the employee regarding the additional hours (it was included in the letter of offer and as a term of his contract).
• Did the employee give notice of their intention to refuse to work the additional hours? – The employee did not give notice, despite opportunities to do so, and he gave evidence that he did not take up an offer by the employer in 2019 to employees to adjust their working hours. He was concerned that if he spoke up his employment would be terminated.
• Usual patterns of work in the industry – there was no evidence of usual patterns of work in the meat industry relevant to this factor.
• Nature of the employee’s role/level of responsibility – there was nothing in the nature of the employee’s role that suggested a need for him to work more than 38 hours a week, and he had no managerial/supervisory responsibilities.
• Were the additional hours in accordance with averaging terms? – This factor was irrelevant.

Other relevant matters

The Court rejected the employer’s submission that the fact the 2:00 am start was considered “unsociable” was irrelevant, noting that the question is whether requiring or requesting the employee to work the excess hours are reasonable, and the time those hours are required to be worked has a logical bearing on the question of reasonableness.

The Court also found that the number of additional hours was relevant, as well as the regularity and frequency of them, and the fact that, to the extent that they took the employee over the ordinary 5-day working week, they deprived him of his weekends. 

Whether or not the majority of the employer’s workers preferred a 50-hour week (evidence was led to suggest this) did not make the hours reasonable in this case. 

Further, the fact that he did not question the employer’s offer or attempt to negotiate its terms and made no complaint about working 50 ‘ordinary’ hours before the union’s involvement was unsurprising, due to the fact that he was a recent immigrant to Australia (from a third-world country) who needed employment.

The Judge found that it was “tolerably clear” the employee had no idea of his award entitlements until he contacted the union, which she held was a factor to be taken into account along with the other relevant considerations. 

On balance, the Court was persuaded that it was unreasonable of the employee to require or request the plaintiff to work an additional 12 hours every week.

For its contraventions of the Fair Work Act and Award requirements, the employer was ordered to pay a total of $93,000 in penalties to the employee. The Court considered that the breach of the Fair Work Act was deliberate and occurred over an extended period of time, with the employer arranging its business on the basis that employees on the production floor were required to work a 50-hour week over six days. 

The Judge was not persuaded that the employer was contrite about its conduct or had taken any real corrective action, and imposed a $30,000 penalty having regard to the need for deterrence.

What can HR and leaders learn from this case?

Employers must be wary, and should generally avoid, contractually requiring workers to work more than 38 hours a week. It is preferable for employment contracts to stipulate that the ordinary hours of work for full-time employees are 38 hours (or less) per week, plus any reasonable additional hours required to perform the employee’s duties. 

Employers should exercise caution when requesting or requiring that a worker work in excess of 38 hours a week. An employer will not be in breach of the Fair Work Act where an employee voluntarily works additional hours, so long as the employer does not request or require that they do so, and as long as the additional hours worked (even voluntarily) do not make the work unsafe (this would involve a breach of Australia’s various work health and safety laws). 

If an employer does wish to request or require an employee to perform additional hours, it would be prudent for the employer to consider the factors listed in section 62(3) of the Fair Work Act, and to consult with the relevant employee. 

Employers should remember, however, that additional hours may well be reasonable, especially in circumstances where the request or requirement to do so is ad hoc and infrequent (and not, like in this case, a weekly requirement under the contract). 

Further, and by way of example, the significant remuneration and other benefits paid to someone like a senior manager, together with the nature of the role and level of responsibility, may be sufficient to ensure that additional hours are reasonable in many cases, and also that additional hours an employee is required to work may also be reasonable if the hours are worked at a particular time and in a particular manner in order to meet the employer’s operational requirements.

This article has been republished, with permission, from Harmers Workplace Lawyers. This article is also slightly edited. You can view the original here.

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