additional hours

By Calum Woods and Lindsay Carroll, NRA Legal

After part-time employment, reasonable additional hours is one the most commonly misunderstood concepts for employers in the retail and quick service industries.

In fact, even the question “how many additional hours would be considered reasonable?” betrays a misapprehension of the topic, as the answer is particular to your business and often different for each individual employee.

In this article, we break down the top 3 most common myths about “reasonable additional hours”, and what it means for your business.

(X) number of hours are “reasonable” for an employee to work

The Fair Work Act 2009 (Fair Work Act) expressly provides that an employer may only require an employee to work at most 38 hours per week, unless the additional hours are “reasonable”. An employee is entitled to refuse to work any “unreasonable” additional hours with impunity.[1]

However, there’s more to the equation than simply choosing a number that sounds fair in the circumstances.

In reality, what constitutes “reasonable additional hours” varies from workplace to workplace, and even employee to employee.

There are several key factors to determine whether additional hours are reasonable, including:

  1. Is there any risk to health and safety (including fatigue)?
  2. What are the employee’s personal circumstances?
  3. What are the needs of the business?
  4. How much notice was given of the request to work additional hours? How much notice did the employee give of their refusal?
  5. How senior is the employee? Do their duties or level of responsibility require them to work additional hours?
  6. Will the employee be paid overtime? If they are paid a salary, is their salary is commensurate with working additional hours?

An employee saying that they can’t stay back because, for instance, they need to pick up their children from school, is actually a recognised situation under the Fair Work Act. This factor must be weighed against all others, to determine whether additional hours would be “reasonable.”

The last point is also of particular interest. Under almost all Modern Awards (including the General Retail Industry Award 2010 (Retail Award), and the Fast Food Industry Award 2010 (Fast Food Award)), any work performed in excess of 38 hours per week must be paid at overtime rates.

Employees don’t have to be paid anything extra for working reasonable additional hours

Simply stated, this is untrue.

The Retail and Fast Food Awards (and almost all other Modern Awards) do not once mention “reasonable additional hours”. They instead refer to full-time employees being rostered for an average of 38 hours per week.

Leaving aside the reference to an “average” number of hours, the Retail and Fast Food Awards require that all work performed in excess of 38 hours per week must be paid at overtime rates. To be clear, when it comes to working out whether overtime will be payable, it is entirely irrelevant if something amounts to “reasonable additional hours” under the Fair Work Act. These hours must still be paid at overtime rates.

What happens when an employee is being paid a salary?

The rule is that employees must be paid for at least the hours they actually work.

To use an extreme example, a Retail Employee Level 4 employed on a full-time basis and earning $100,000 per year is likely being paid for at least the hours they actually work, even if they work additional 5 hours per week.

However, if that same employee was earning $45,000 and working those same additional 5 hours per week, it is now likely that they are being paid less than for the hours that they actually worked.

Overtime rates should be paid on a daily basis

This is a somewhat more complex situation.

Consider this example:

Charlie is a full-time Assistant Store Manager. His normal working hours are 9.00 am – 5.00 pm Monday – Friday, and he works 7.6 hours per day not including his meal break. During a busy week, he is asked to work one additional hour each day.

Charlie will work 43 hours this week. Being a relatively senior employee, it is likely that these additional hours will be considered “reasonable.” We know that Charlie must be paid for 5 hours of overtime this week, however this does not mean that Charlie will be paid an extra one hour per day.

Instead, the 8.6 hours Charlie works on each day is added together progressively, and reaches 38 hours part way through Friday. This means that for the purposes of calculating overtime, all 5 additional hours (while they may have been spread across the week) must be paid almost as if they had been worked on Friday.

The situation would be different if Charlie was a part-time employee, or if he worked all 5 hours on one day instead of across the entire week.

Key takeaways

There isn’t a magic number when it comes to reasonable additional hours. It involves balancing a variety of factors, including the needs of the business and the needs of the employee.

More importantly just because something may amount to “reasonable additional hours” under the Fair Work Act, does not mean that it does not have to be paid at overtime rates under the Modern Awards.

In fact, for all intents and purposes it is immaterial if something amounts to “reasonable additional hours” under the Modern Awards.

If your salaried employees are frequently working additional hours, ensure that their salary is adequately compensating them for at least the hours that they actually work.

If you would like to learn more about the complex overtime rules in the Retail Award, our extremely popular online workshop Rostering for compliance under the General Retail Industry Award returns in November prior to the busy Christmas period, and looks at some of these principles (and others) in much more detail.

For additional assistance, call 1800 RETAIL (738 245) to speak with one of our workplace relations advisors.

[1] See for example Brown v Premier Pet [2012] FMCA 1089.