21 December 2018

When overtime is no longer reasonable

This article was written by Emily Lamberto.

Employers should ensure that when exercising an entitlement to require employees to perform additional hours of work, they comply with the terms of that entitlement.

Key impacts

  • Employers should ensure that they observe any restrictions on the exercise of an entitlement that is beneficial to them.
  • Employers should ensure that even where it has an entitlement to require employees to perform additional hours of work, this entitlement is exercised reasonably.

Facts

Clause 34.1 of the Hay Point Services Pty Ltd Enterprise Agreement 2013 deals with overtime work and provides that Hay Point Services (HPS) “may require an employee to work reasonable overtime, and the employee shall work such overtime as required.”

By implementing a new roster, the effect of which was to require employees to work 455 hours of overtime per year or 8.7 hours of overtime per week, it was alleged by the Construction, Forestry, Mining and Energy Union (CFMEU) that HPS failed to comply with clause 34.1 of the Agreement, and contravened section 50 of the Fair Work Act 2009 which provides that a person must not contravene a term of an enterprise agreement.

Having found that clause 34.1 does not impose any obligation on HPS to require reasonable overtime, the primary judge at first instance dismissed the CFMEU’s application on the basis that clause 34.1 is not a provision that is capable of contravention. The CFMEU appealed to a Full Court of the Federal Court of Australia (FC) on the grounds that the primary judge erred in the construction of clause 34.1.

Outcome

The FC ultimately found that whilst clause 34.1 provides an entitlement to HPS that is beneficial to it, the word “reasonable” restricts the capacity of HPS to require employees to perform additional hours of work, and imposes an obligation on HPS to observe that restriction.

The FC rejected a submission by HPS that the word “reasonable” entitled an employee to refuse any unreasonable requirement to work overtime. Particularly, this construction was found to be inconsistent with the structure and text of the clause, and did not promote a sensible industrial outcome. This is because this construction imposes the burden of refusing unreasonable requirements to perform additional work on the employee, fails to protect the employee from being compelled to perform unreasonable overtime contrary to the National Employment Standards and may be perceived by the employee as likely to jeopardise the employee’s employment.

The matter has been remitted to the primary judge for further determination on whether HPS did, in fact, require its employees to work unreasonable overtime.

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