Preparing for peak season: Understanding ‘reasonable additional hours’

In the lead up to the peak retail trade season, employers may have additional hours on offer to staff during busy times. Importantly, beyond being aware of the applicable rates of pay for additional ordinary hours and overtime, employers ought to familiarise themselves with the factors necessary to consider when determining whether to offer additional hours is reasonable, or not.

The phrase, “reasonable additional hours” refers to the section 62 of the Fair Work Act 2009 (FW Act) that states that an employee may be required to work up to a maximum of 38 hours per week by an employer unless the additional hours are ‘reasonable’.

Even asking the question, “how many additional hours would be considered reasonable?” suggests that a specific number of hours would satisfy the legislative requirements when the answer is often different for each individual employee.

Myth 1 – It’s ‘reasonable’ for an employee to work ‘X’ number of hours

In addition to the provision of ‘reasonable additional hours’, section 62 of the FW Act stipulates that employees are entitled to refuse to work any “unreasonable” additional hours without penalty.

However, there’s more to the equation than simply choosing an arbitrary number and deciding it is ‘reasonable’. What constitutes ‘reasonable additional hours’ varies from workplace to workplace on a macro level, and employee to employee on a micro level.

There are several key factors to consider when determining whether additional hours are reasonable, which include:

1. Health and safety risks to employees (including fatigue);
2. The employee’s personal circumstances, including family responsibilities;
3. The needs of the employer;
4. The notice given by the employer of the request to work additional hours;
5. Any notice given by the employee of their intention to refuse to work additional hours;
6. The nature of the employee’s role and level of responsibility; and
7. Whether employees will be paid overtime or other compensation, or if they are paid a salary, whether the salary is commensurate with working additional hours.

Myth 2 – Employees don’t need to be compensated for working reasonable additional hours

Simply put, this is untrue. The General Retail Industry Award and the Fast Food Industry Award (and almost all other Modern Awards) do not once mention “reasonable additional hours” and instead refer to full-time employees being rostered for an average of 38 hours per week. Any work performed in excess of these 38 hours per week must 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.

Where an employer is found to have breached the FW Act by having employees work unreasonable additional hours, they may be liable to civil penalties, up to $82,500.00 for body corporate.

Steps to mitigate risk

Employers should take steps to ensure that any additional hours they request an employee work are reasonable. Steps could include:

• Carefully considering the key factors (above) when determining whether the proposed additional hours are reasonable;
• Retaining rosters and accurate records of hours worked to ensure all additional time is recorded;
• Providing employees with proper written notice of any request or requirement to work additional hours; and
• Reviewing applicable modern awards, enterprise agreements, employment contracts and workplace policies to understand whether they provide for overtime and additional penalties for employees who work additional hours or otherwise, place additional obligations on employers.

Key takeaways for employers

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

It is important to remember that whilst additional hours may be considered “reasonable ” under the FW Act, that does not mean those hours do not have to be paid at overtime rates under applicable Modern Awards.

Where salaried employees are frequently working additional hours, employers should ensure that their salary adequately compensates them for at least the hours that they actually work.

If you have a question regarding reasonable additional hours or require support with rostering, please call NRA Legal on 1800 572 679 to speak with one of our workplace relations advisors.