Questions & Answers - Working hours

Question:

I work in a company with a long standing 'tradition' of working a 40 hour week. Most of our employees are employed on common law agreements that specify notional working hours from 8:30am to 5:00pm from Monday to Friday, and that additional hours may be required but that the employee will have no entitlement to overtime pay.

Will it be possible to draft something similar for our common law contracts that will be compliant with the NES. Essentially we're saying to our employees that we expect them to work a 38 hour week & require them to work 2 hours of overtime per week; that they get the same hourly rate for the normal time & overtime; and that from time to time they may need to work additional hours that won't be paid. Any suggestions?

Answer:

Yes you can do this. This year you can simply say in a contract "You will work a 40 hour week. Your remuneration will compensate you for any entitlements you might have for working those hours, including any overtime entitlements.” Next year, if the employee is covered by an award you can make an award flexibility agreement to similar effect. These stand along side employment contracts.

Question:

Can we still require an employee to work 40 hours a week provided the ordinary week is 38 hours plus 2 additional hours where reasonable and accounted for in the salary?

Answer:

You can still require an employee to work a 40 hour week provided that this is spelt out at the outset of employment in the employee's employment contract and the remuneration compensates for the additional hours. You might want to make clear to the employee that if his/her personal circumstances create a problem in respect of working hours on any particular occasion the employee should raise that with you.

Question:

I have a Project Officer in QLD (not under an Award or IA) who wants to work a compressed work week to do her 35 hours in 4 days instead of 5 days. This will be 8.75 hrs day. Is there any penalty as an employer that I need to look out for if she works over 8 hours per day? Her weekly hours will not exceed normal hours of 35.

Answer:

No.

Question:

Although it is understood maximum hours of work for a full time employee are 38 hours per week plus additional reasonable overtime, is it lawful for an employer to ask an employee to sign a contract stating minimum 45 hours per week for a salaried employee? Currently the employee in question has an employment contract which does not state hours of work, however he is 'docked' for hours worked less than 45 hours per week.

Additionally, if hours of work are not stated in the contract, however there is an expectation to work 45 hours per week, to calculate an employee's hourly rate, would you still base calculations on a 38 hour week?

Answer:

Assuming no award applies, then the question of whether these hours are unreasonable is governed by Part 7 Div 3 of Workplace Relations Act (which continues to apply until 31 December 2009, despite its repeal on 1 July 2009). Whether these hours are reasonable would depend on such factors as:

• Do the hours create a health and safety issue i.e. is it physical work?
• Is the employee sufficiently compensated for working the excessive hours. The minimum wage would be 45 X base hourly rate. (If you require 45 hours to be worked then you must pay for it even if not in contract. However, leave pay is calculated on 38 hour week.) I think if you were only paying the minimum wage that would be a factor suggesting it was unreasonable.
• Was it made clear to the employee at the time or recruitment that these hours would be worked?

Similar rules will apply under the NES on and from 1 January 2010.

Question:

My questions are about the averaging hours award/agreement free employees.

1. If an employee wants to compress their working week indefinitely to M: 10hrs, Tues: 10hrs, Wed: 10hrs, Thurs: 8hrs, does this mean under the FWA it can only be done for half the year and not the rest of the year?
2. Also for the Friday that they are not at work, if this happens to be a public holiday, should they be paid for this day?

Answer:

1. No. You just need an average of 38 hours worked a week over the averaging period, which cannot be longer than 6 months.
2. No. If you don't require them to work on the public holiday then they will not be paid for that day.

Question:

We are a small company mainly involved in industrial maintenance and domestic installations/repairs. The hours an employee is required on site varies from day to day. We currently have an indentured apprentice and are wondering what the obligations of: 1) us, the employer, and 2) the apprentice in regards to communicating the hours of work. For example, if on occasion no communication has been made by the company the day before, is it required for the employee to attempt to contact us regarding the time and place for work the following day?

Answer:

The employee needs to be ready and willing to serve you under the employment contract. This means they need to get in touch with your organisation's depot or home base to ascertain work commitments. There may also be award obligations on you as an employer to let the employee know of work roster. The situation is different if the employee is a casual but an apprentice is not usually casual.

Question:

In relation to the Maximum weekly hours provision under the NES, can you please explain what, if any, action you would advise needs to be undertaken by an employer who currently employs people on standard working weeks that are in excess of 38 hrs per week (e.g. 45 hour weeks), in order to prepare for 1 January.

Answer:

I suggest you state in the memorandum issued to existing employees in the next pay review something along the following lines: "Your remuneration package is designed to compensate you for all hours that we require or request you to work each week (which in your case is at least 45 hours). However, if you have any issues regarding your working hours please do not raise those with me."

I also suggest you include those words in your template employment contract for new employees.

Question:

Our current employment contracts state 40 hours for the working week. We are in Victoria and are not under an award. In line with the NES, do we need to change the hours to state 38?

Answer:

No, but we suggest you state in the memorandum issued to existing employees in the next pay review something along the following lines: "Your remuneration package is designed to compensate you for all hours that we require or request you to work each week (which in your case is at least 40 hours). However, if you have any issues regarding your working hours please do not raise those with me." We also suggest you include those words in your template employment contract for new employees.

Question:

What does this mean: "However, if you have any issues regarding your working hours please do not raise those with me."?

Answer:

The answer to your question is highlighted by the release earlier this month of the first case dealing with what constitutes "reasonable additional hours" (MacPherson v Coal & Allied Mining Services Pty Limited [2009] FMCA 881(9 September 2009).

The case was brought by an electrical fitter working at a mine maintenance team who used to be on a rotating three-week Monday to Friday roster, which averaged 40 hours a week. In November 2008, the company introduced a 44 hour, two-week cycle of four shifts (three 12 hours and one eight), still Monday to Friday.

The mineworker is married with 4 children - 2 at university - and argued that the additional hours disrupted his family life, including his ability to take his sons to sports training sessions and coach their soccer team, plus family mealtimes.

The fact that additional hours impact adversely on an employee's family responsibilities is a factor that the legislation expressly states must be taken into account in determining whether additional hours required to be worked in excess of 38 a week are reasonable.

However in this case the Court ruled that the benefits to the employer of the new rosters outweighed the detriment to the employee. The Court also said that the work pattern allowance and extra RDOs arising out of the new shifts adequately compensated the employee. Therefore the extra rostered hours over the statutory 38 hours were, as they affected the employee, reasonable.

In your case we are recommending that you tell employees, in effect: "You are adequately compensated for the additional hours we require you to work in excess of 38 a week. However if a particular issue arises for you at any time regarding the impact of working those hours (i.e. it is adversely impacting on your family responsibilities) talk to us and we will see if there is anything we can reasonably do to mitigate that impact."

Question:

The NES outline weekly hours as 38 hours. Our employment contracts outline a 40 hour week in our office. Can you outline what we need to do to continue to work a 40 hour week (yet don't breach the NES)?

Answer:

Under the NES, it is permissible for employees to work overtime in addition to 38 hours each week, provided that such additional hours are reasonable. The Fair Work Act lists a range of factors that an employer must take in to account in determining whether such a requirement is reasonable, including whether the employee is entitled to overtime or penalty rates and an employee's family responsibilities. Please note that the Act also allows for employees to refuse to work additional hours if they consider that they are unreasonable. You will need to refer to any relevant industrial instrument (awards or agreements now or Modern Award and enterprise agreements after 1 January 2010) to determine whether staff will be entitled to overtime payments.

Question:

We contract our employees to 40 hours per week. This is mainly due to our payroll and CRM/Project/Billing systems being structured around 40 hour billing weeks. Being a professional services/consulting firm - having 38 hours per week (i.e. 7.6 hours/day) is not feasible and we would have to change all our systems/payroll/billing, basically our whole billing structure. The majority of our employees earn over the $108,300 threshold, so are exempt from Award conditions, but this is a NES basic condition. We have been advised that we can say in contracts "40 hours per week, plus reasonable additional hours as required to complete your duties", but I am unsure if this is correct. We believe that the additional two hours per week is reasonable additional hours, and that given all employees are either above threshold or more than 15% above min Award rate for their role that this is a reasonable working week. Please advise the options for this so we can retain 40 working hours in the contracts. It would cost our business a significant amount of money and have serious impacts on the functioning of the business and relationships with our customers if we had to change this.

Answer:

Please note that your employees earning above $108,300 will not be automatically exempt from the application of modern awards. You will need to enter into an enterprise agreement or written guarantees of earnings with these employees in order to displace any relevant modern award (if they are covered).

You can still require an employee to work a 40 hour week on the basis that the maximum ordinary hours of work are 38 each week, but you can require employees to perform reasonable additional hours.

In your employee's contracts under a section relating to 'Working Hours' you should include words to the effect "you will be required to work 38 hours per week plus reasonable additional hours (generally 2 each week) having regard to the requirements of your position. You will not be entitled to any additional payment for overtime". Then, in the a section relating to 'Remuneration' you should include words to the effect "you acknowledge that your remuneration is inclusive of any loadings, penalties, overtime rates or other amounts to which you may be otherwise entitled under any industrial instrument."

You will then need to ensure that the base rate of pay is sufficiently high in order to absorb these amounts.

Finally, you might want to make clear to the employee that if his or her personal circumstances create a problem in respect of working hours on any particular occasion the employee should raise that with you.

Question:

1. Does unpaid maternity leave count towards years of service when considering redundancy payment?
2. What happens with 457 visa holders in terms of NES and 12 months unpaid parental leave? Does this take precedence or do the minimum salary requirements per annum?
3. Average Working Hours - If we reference averaging of hours based on 26 weeks in employee handbook, is the fact that employees sign off on the handbook sufficient to meet obligation in NES which states "employee may agree in writing to average hours over 6 months or less"?

Answer:

1. Generally speaking, unpaid maternity leave does count towards years of service when considering redundancy payments. This position could be changed in a company policy, industrial instrument or contract of employment.
2. 12 months parental leave does not disrupt the continuous service requirements of a 457 visa holder.
3. In our view, it would be preferable to have an employee sign a document that specifically states that they agree to average their hours over 6 months or less.

Question:

Our current common law agreements require employees to work 40 hours per weeks as there tends to be an expectation from clients that we deliver 40 hours per week. Am I required to re-issue new contracts to employees with adjusted hours back to 38 per week or simply distribute correspondence, update hours of work policies to reflect the changes and adjust salaries?

Or can I imply that employees are expected to work a minimum of 38 hours per week, and will get paid the additional two hours per week if worked so as to meet client expectations?

Answer:

There is no legal requirement to issue new contracts. Further, the maximum number of hours is 38 per week plus reasonable additional hours. If the employees are not covered by an industrial instrument, policy, or have a contractual entitlement to overtime, you are not necessarily required to compensate employees for those 2 additional hours.