Federal Independent MP, Monique Ryan, is being sued by her former Chief of Staff, Sally Rugg, for allegedly being involved in the Commonwealth’s decision to terminate her employment because she refused to work “unreasonable” additional hours (Rugg). Furthermore, the Finance Sector Union has recently taken NAB to court for allegedly requiring certain employees to work “unreasonable” additional hours.
Both cases have reignited the debate about what it means when an employer requires an employee to work reasonable additional hours and when an employee can refuse to work extra hours.
Section 62 of the Fair Work Act (FW Act) provides that 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”. An employee has the right to refuse to work additional hours if they are “unreasonable”. Whether additional hours of work are “reasonable” has been an age-old question with no clear answer.
What does the FW Act say?
The FW Act sets out a few factors to help employers determine whether additional working hours are reasonable. These factors include:
- is there any risk to employee health and safety from working the additional hours
- what are the employee’s personal circumstances, including family responsibilities
- what are the needs of the workplace or enterprise in which the employee is employed
- is the employee entitled to receive overtime payments, penalty rates or other compensation for, or a level of remuneration that reflects an expectation of, working additional hours
- has any notice been given by the employer of any request or requirement to work additional hours
- has any notice been given by the employee of their intention to refuse to work additional hours
- what are the usual patterns of work in the industry, or part of an industry in which the employee works
- what is the nature of the employee’s role, and the employee’s level of responsibility
- are the additional hours in accordance with the averaging terms included under section 63 in a modern award or enterprise agreement that applies to the employee, or with an averaging arrangement agreed to by the employer and employee under section 64.
As Justice Mortimer noted in handing down an interlocutory ruling in the Rugg proceeding, the construction and operation of section 62 of the FW Act has rarely been the subject of any judicial analysis and has a number of complexities.
One instance in which the Federal Court recently considered the meaning of reasonable additional hours under section 62 of the FW Act was in Australasian Meat Industry Employees Union v Dick Stone Pty Ltd  FCA 512.
In that case, the Australasian Meat Industry Employees Union (Union) took action on behalf of a Ghanaian immigrant (employee) who worked as a labourer at Dick Stone, a meat wholesaler. The employee was required under a written contract to work 50 “ordinary work hours” a week, from 2:00 am to 11:30 am on weekdays, and from 2:00 am to 7:00 am on Saturdays, plus reasonable additional hours as requested. The employee often worked a 50-hour week and, from time to time, worked extra hours for which he was paid overtime rates.
The Union claimed that the employee’s employment contract breached the FW Act and the then Meat Industry Award 2010. The court agreed. The court said an employee could agree to work ordinary hours above 38 hours. However, it was up to Dick Stone to prove that those additional hours of work were ‘reasonable’.
On the issue of how an employer can prove additional hours of work were ‘reasonable’, the court said:
“What is reasonable in any given case depends on an evaluation of the particular circumstances of both the employee and the employer having regard to all relevant matters including those matters mandated for consideration in section 62(2) [of the FW Act].”
Although the court found the 50-hour work week was necessary for Dick Stone to operate its business, other factors swayed the court to conclude that the employee’s additional working hours were unreasonable, including:
- the health and safety risks associated with long shifts in a role requiring the use of knives
- the employee did not hold a managerial role that may warrant additional working hours
- the employee was not being paid overtime rates for the additional hours he was required to work.
Key lessons for employers
The FW Act does not prohibit an employee from working additional hours. An employee can voluntarily agree to work extra hours provided those hours are reasonable. Likewise, an employer and employee can agree on limitations on when an employer can request or require an employee to work additional hours.
Employers should give careful consideration before requesting or requiring an employee to work additional hours. If the requirement or request that an employee work additional hours is found to be unreasonable, an employer could be found in breach of the FW Act and be liable for civil penalties (up to $82,500 for body corporate employers).
While the question of whether additional working hours are reasonable depends on the circumstances of each case, employers can consider taking the following steps to mitigate the chances that their request or requirement that an employee works additional hours will be unreasonable:
- keep track of the hours employees work each week and ensure any additional hours are necessary for them to perform their job. This is especially important for employees who receive an annual salary, where the amount is meant to compensate them for any ‘reasonable additional hours’ they are required to work. Ensure these employees also have an appropriate ‘set-off’ clause in their employment contract so that their salary can be set-off against any entitlements under an applicable modern award
- ensure an employee is given notice for any request or requirement to work additional hours. Employees should be given the opportunity to raise any objections to working the additional hours, and those objections should be carefully considered
- check any applicable modern award, enterprise agreement, workplace policy or contract of employment which may place additional obligations on employers to take if they are going to request or require their employees to work additional hours – is the employee going to be entitled to any overtime payments or penalty rates for working the additional hours?