Overtime Requirements - What Are Reasonable Additional Hours?

With working hours becoming more flexible than ever before and employees able to stay connected to work even when they’re not in the office, working overtime is a reality for many. Depending on their role some workers will expect, and be expected, to put in more than eight hours a day, but other employees may not be remunerated for contributions past 5.30 pm. So, as an employer, how do you know what constitutes reasonable additional hours and how can you ensure you are not underpaying your staff by asking them to work additional hours?

When can staff be expected to work overtime without additional pay?

You should refer to the National Employment Standards which outline the maximum hours an employee can work in a week. Modern awards, employment contracts and registered agreements do not alter the Standards or the maximum hours.

In general, you must not require or ask your employees to work more than the maximum hours in a week unless it is reasonable. Your employee may refuse to work additional hours if they are not reasonable.

The maximum number of hours a full-time employee can work in a week is 38. An employee’s employment contract, modern award or enterprise agreement may include terms relating to the averaging of hours of work.

With averaging arrangements employees may work different amounts per week over a month and the employer will still be compliant with the 38-hour week maximum. For example, if the hours an employee works across four weeks are 36, 50, 32 and 34 the average hours worked was 38 per week, which is acceptable. It would not be reasonable for the employee to expect 12 hours of overtime pay for week 2 when they worked less than 38 hours a week for week 1, 3 and 4.

What are ‘reasonable additional hours’?

The law does not define what ‘reasonable additional hours’ are and what is reasonable will typically depend on a number of factors specific to your workplace and employees. These factors include:

• any health and safety issues related to the additional hours, including the risk of fatigue or stress workers may suffer as a result of the extra work and hours;
• how much time off the worker has had between shifts;
• how the additional hours may impinge on the worker’s personal life;
• the nature of the work and whether it is essential to the running of the business at the time the additional hours are worked;
• what is considered reasonable in the industry the business is in; and
• the worker’s level of seniority.

Under what circumstances should you pay staff overtime?

An employee’s entitlement to overtime rates when working additional hours will depend on their employment contract, modern award or enterprise agreement.

Overtime rates are paid at a higher rate if an employee works beyond their ordinary or agreed hours or the spread of ordinary hours (i.e., an average of 38 hours per week for a full-time worker)

It is likely that overtime payments should be paid if:

• the employee’s remuneration does not reflect that additional work hours would be expected (for example, they are a junior team member being asked to work weekends);
• the employee is not covered by an award with entitlements for overtime payments, penalty rates, or another type of compensation for working additional hours
• the employee is covered by an award with overtime entitlements, but when averaged out, the additional work hours push their wage below the national minimum standard;
• you were unable to give the employee adequate notice prior to requiring them to work additional hours;
• you know that the additional work hours will encumber the employee’s personal responsibilities (such as attending to family or personal matters).

If you need clarification about your workplace and what reasonable additional hours can be undertaken by your workers without overtime payments, our experienced human resources team can help.