Don’t let overtime become a legal risk

Article by HR Legal

As the common saying goes: “there are not enough hours in the day!” This is true in many situations, particularly in caravan holiday parks, where it can often seem the working week does not contain enough hours for employees to get the job done.

The legal position under the Fair Work Act 2009 (Cth) (FW Act) is that an employer must not request or require a full-time employee to work more than 38 hours per week, unless the additional hours are reasonable. Employees retain the right to refuse any additional hours that are considered to be unreasonable.

The FW Act outlines a list of non-exhaustive factors an employer must take into account when considering whether additional hours are reasonable, including, work health and safety risks, employee’s personal circumstances (including family responsibilities), business requirements, notice provided and the nature and seniority of the employee’s role.

So, while it can be reasonable to require some employees to work over and above their standard weekly hours in certain circumstances, often it is asked, at what stage do these additional reasonable hours become unreasonable and overtime becomes a legal risk?

The Federal Circuit and Family Court of Australia has recently considered this question, finding that it was unreasonable for an employer to require one of its employees to work a 40-hour work week.

In that case, the employee, Ms Chin, was employed by Visual Thing Australia Pty Ltd (VTA) as a Creative Retouching Specialist in a full-time capacity from 2014 to 2022. Ms Chin’s written employment contract contained the following clause:

“Standard hours of work are 40 hours per week, Monday to Friday, 9.00am sharp to 6.00pm.”

Ms Chin received no compensation for working two hours of overtime each week. Ms Chin claimed that VTA had breached the FW Act by requiring that she consistently work unreasonable additional hours over the course of her employment.

The Court found that in this case, the additional two hours per week were unreasonable because they were:

  • Required on a consistent and ongoing basis, rather than being occasional or incidental;
  • Not compensated in any form – that is, there was no financial payment or recognition for the additional work; and
  • A fundamental expectation of employment rather than an occasional necessity.

What does this mean for employers?

This decision highlights that it was not the two additional hours per week in isolation that was unreasonable – it was that the extra hours were consistently and permanently required for the employee’s entire employment.

It is not uncommon across holiday and caravan parks for employers to require employees to work a standard 40-hour work week – often due to the fast-paced environment, strict deadlines and customer/industry expectations. However, while these factors may exist, it does not provide employers with an automatic right to require employees consistently work a 40-hour week, without further consideration.

Employers should ensure they take a proactive approach in managing these risks and avoid implementing a ‘one size fits all approach’.

If you need assistance in ensuring compliance with your workplace obligations, please do not hesitate to contact HR Legal: (03) 9948 2450.

This content was provided by HR Legal as part of its partnership with Caravan Industry Association of Australia. It does not reflect the views or opinions of Caravan Industry Association of Australia. References to products, services and claims made in this article should not be viewed as endorsements from Caravan Industry Association of Australia.