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SME
22-03-2010, 09:22 AM
Hi everyone,

I'm a (very) small business owner in Victoria and my existing employment contracts with my 3 employees stipulate a 40 hour week. However I see the NES which came into effect on Jan 1, 2010 says the maximum is 38 hours per week.

Can anyone tell me;
1. Do I have to change my existing employment contracts?

2. If I do change the contracts can I reduce my employees annual salary to compensate for this reduction in hours? (my contracts specify only an annual salary, no hourly rate is specified)

Thanks,
JD

SuzanneC
22-03-2010, 09:47 AM
Our contracts also state 40 hours per week; the NES (Clause 12.2) allows this "the employer may require the EE to work reasonable additional hours in the week. 2 hours per week is not considered unreasonable in most circumstances, however if an employee was to claim "unreasonableness" to the requirement to work 40 hours, then I believe the NES also provides criteria to base the determination of this decision (Clause 12.4).
I'd be interested to hear others' views on this too.
cheers
Suzanne

SME
22-03-2010, 09:04 PM
I think the extra hours over and above 38 hours are "on request" rather than being a standard daily requirement.

The fairwork.gov.au website says that all private employers from 1 Jan 2010 must "meet the terms and conditions of the National Employment Standards (NES)".

Surely that means we can't have people on employment contracts that are in breach of the NES minimum requirements?

If we were allowed to "contract" people to work a couple of extra hours every week, then surely we would also be allowed to pay them a bit less than the minimum wage, and perhaps give them a couple of days less leave than the NES requires.

I suspect the intent is that the NES is set in stone as far as contracts of employment are concerned, but in reality there should be a bit of 'give and take'.

Has anyone had any formal advice on this?

Chipmunk
24-03-2010, 08:03 PM
Hi SME,

Without knowing the intimate details of your employees and there industrial instrument coverage I will provide some broad general advice.

Basically the NES provides for 38 hours per week for a fulltime employee as per section 63 of the Fair work Act 2009. This means that your contract of 40 weeks would be effectively overridden by the NES as you cannot contract out of a legislative minimum entitlement. Where you need to be careful is, if your employees are covered by a modern award they may be penalty rates that apply to your employees for those 2 hours extra that they work (Depending on when the business incorporated ect). It may be worth giving the fair work infoline a call to have a chat to someone about your minimum requirements under the Fair Work Act.

SME
25-03-2010, 07:15 AM
Thanks Chipmunk.

My staff are admin people and to be really honest I have no idea whether they are covered by an award, (probably like thousands of other small business owners).

Rather than have them work an extra 2 hours per week I am looking at amending their contracts to 38 hours per week and reducing their annual salary accordingly. I'm sure we can make up the extra 2 hours per week per person by improving efficiency.

Maybe that's why Kevin Rudd was always going on about improving efficiency :)

arowe
29-03-2010, 08:46 AM
One thing to bear in mind is that the Award Modernisation and NES is "not intended to reduce a workers' income". Not knowing the industry that you work in, your staff could be covered by the "Clerks - Private Sector Award 2010". As with most awards, if your current contracts state that the "Ordinary Hours are 40" then yes, the NES does override this to mean that now the Ordinary Hours are 38. If you have put your staff on "annualised salaries" which means they do not receive any payment for overtime now, and they are paid above the Award rate (which under the above award ranges from $580.00/week to $813.00/week) and you have included Allowances, penalty rates and leave loading, then you shouldn't really have a need to reduce their income.

Just bear in mind that the key message that Rudd put out was the no Australian will be worse off, which means that you shouldn't be reducing their salaries, but rather absorbing the changes into their current salary, which means that you could hold back a pay increase to absorb the extra 2 hours they are working until the salaries catch up.

SME
29-03-2010, 12:24 PM
Just bear in mind that the key message that Rudd put out was the no Australian will be worse off, which means that you shouldn't be reducing their salaries, but rather absorbing the changes into their current salary, which means that you could hold back a pay increase to absorb the extra 2 hours they are working until the salaries catch up.

But that is effectively a pay increase now!

In reality lots of legislation has an effect that wasn't intended, especially when those creating the legislation do so in a hurry without thoroughly thinking through all of the ramifications.

My staff don't get leave loading or penalty rates (they don't work public hols or weekends), but they are paid well above the top of the award.

Therefore, unless there is a way for them to work 40 hours per week without it costing me any more, the Govt has left me no economically viable alternative but to reduce their hours and their annual salary accordingly.

arowe
31-03-2010, 03:03 PM
Below is the NES Standard for for Ordinary hours. If I can offer you any advice, talk to your staff about this issue rather than reducing their pay and their hours. In accordance with the below clause, it is not unreasonable for you to request them to work the additional 2 hours per week, and if you are paying well above the award rate, then they are being remunerated fairly, and would probably be happy to continue to work the hours they are doing and maintaining their current wage, which means you all win.

Division 3—Maximum weekly hours
62 Maximum weekly hours
Maximum weekly hours of work
(1) An employer must not request or require an employee to work
more than the following number of hours in a week unless the
additional hours are reasonable:
(a) for a full-time employee—38 hours; or
(b) for an employee who is not a full-time employee—the lesser
of:
(i) 38 hours; and
(ii) the employee’s ordinary hours of work in a week.

Employee may refuse to work unreasonable additional hours
(2) The employee may refuse to work additional hours (beyond those
referred to in paragraph (1)(a) or (b)) if they are unreasonable.
Determining whether additional hours are reasonable
(3) In determining whether additional hours are reasonable or
unreasonable for the purposes of subsections (1) and (2), the
following must be taken into account:
(a) any risk to employee health and safety from working the
additional hours;
(b) the employee’s personal circumstances, including family
responsibilities;
(c) the needs of the workplace or enterprise in which the
employee is employed;
(d) whether the employee is entitled to receive overtime
payments, penalty rates or other compensation for, or a level
of remuneration that reflects an expectation of, working
additional hours;
(e) any notice given by the employer of any request or
requirement to work the additional hours;
(f) any notice given by the employee of his or her intention to
refuse to work the additional hours;(g) the usual patterns of work in the industry, or the part of an
industry, in which the employee works;
(h) the nature of the employee’s role, and the employee’s level
of responsibility;
(i) whether the additional hours are in accordance with
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;
(j) any other relevant matter.

AlexT
15-04-2010, 03:07 PM
Hi, Hate to be the bearer of bad news but I have to agree with arowe. There are many SME owners out there who are cursing Kevin Rudd for the lack of flexibility these changes have made. Your employees are very likely to be covered by the Clerks Modern Award 2010. There is a flexibility clause in every modern award that allows employers to offset over award payments against certain clauses such as penalty rates, allowances, leave loading etc. However, you really need to make an Individual Flexibility Agreement (IFA) with your staff to be truly complying with this. Their current contracts will not be valid in terms of the 40 hours per week term. However you are able to say they are a salaried employee who is paid well above the award and they are paid to do a particular job which means working 38 hours plus reasonable additional overtime. If you were rostering them for more than 38 hours each week then the extra hours would be considered overtime. Therefore you need to write up an IFA to offset any overtime and show that they are better off under this agreement than under the basic award.

I hope this isn't too confusing. It all seems like a lot of paperwork for small employers but worth getting it clear up front.

Taimi

SME
15-04-2010, 04:17 PM
... if you are paying well above the award rate, then they are being remunerated fairly, and would probably be happy to continue to work the hours they are doing and maintaining their current wage...

They are indeed. So basically Rudd has caused me to waste a lot of my time, for absolutely zero benefit, to anyone!

Furthermore he has imposed the same time wasting bureaucracy on thousands of other small businesses around the country, and probably quite a lot of larger businesses as well.

So much for improving efficiency!

It's rather ironic that Rudd makes no apology for 'burning out' his own staff!