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  1. #1
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    Default Full Time Hours V. Overtime Hours

    Hi,

    I always find this question a confusing one to answer. I was hoping I could get some feedback on this:

    At what level do you stop paying an employee over time hours? Are "levels" even the right way to be thinking about it?

    An example might be an office worker on Clerk Private Sector Award, working Monday to Friday, working from 09:00 to 18:00. This amounts to 40 hours per week which is over the NES's 38 hours. And I think this is beyond 'reasonable additional hours' as it's regular, systematic additional hours.

    Usual advise is high paid executives are compensated for the hours and have to work the extra. Low paid employees are entitled to be paid overtime. But at what stage is the line drawn and the employee stops receiving the OT?

    I typically say that once the job role goes beyond the classifications of the Award, they cease being paid overtime.
    Rates MA000002: Clerks - Private Sector Award 2010
    Classification MA000002: Clerks - Private Sector Award 2010


    Is that correct?

  2. #2
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    Default

    This is very interesting subject!

    Does the NES's 38 hours include breaks? Because if it doesn't then 9am to 6pm is less than 38 hours.

    If someone is paid more, surely that is because of their skills, experience and possibly qualifications. They can undertake work that less skilled, less experienced and possibly less qualified people cannot do. Surely they are deserving of the higher pay. Why should they be expected to work longer hours than a more junior worker on a lower salary?

  3. #3
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    Default

    9am to 6pm (with a one hour meal break) is 8 hours. Times 5 days = 40 hours

    Quote Originally Posted by Moz View Post
    Why should they be expected to work longer hours than a more junior worker on a lower salary?
    This is were it gets confusing, and the argument begins - obviously a CEO on $300K a year isn't paid overtime for staying back a little late. But minimum wage receptionist would be paid OT.

    When does the OT stop?

  4. #4
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    Default

    Quote Originally Posted by bullswool View Post
    When does the OT stop?
    Unfortunately, the answer is seems to be "it depends" :-)

    Obviously many jobs, in fact almost all jobs, sit somewhere between a min wage receptionist and a CEO.

    Some jobs have bonuses and/or commission attached. Sometimes it's related to their own individual performance, such as revenue generation, but in other cases it may be linked to profitability.

    Most CEO's have some sort of bonus potential.

    There are also some "professionals" who effectively get paid by the hour - accountants, lawyers, GPs - but then not all accountants, lawyers and GPs get paid according to the number of hours they work (or bill to a client).

    Even within the receptionist role, there is a wide range of salaries, usually determined by skills and experience, but also by industry. Some receptionists may be required to work more that 38 hours per week and others may not.

    The default demarcation between people who are paid OT and those who are not, is usually whether they are paid an hourly rate or an annual salary, but this isn't necessarily fair.

    Personally, I don't believe anyone on a fixed wage should have to regularly work excessive hours with no extra remuneration, and more importantly no choice in the matter. However, there are many many people in that situation. Many employers completely ignore the NES.

  5. #5
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    Apr 2012
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    Default

    I think key is why are the additional hours required? Are they because more wigits are required suddenly so it's all hands on deck to do it - that means overtime. OR some other last minute requirement necessitates employees working back, hence overtime; OR is it because the job incumbent is not efficient OR is it the job incumbent needs the money so deliberately slows the work process down and get the overtime that way (believe me this happens and many employers don't seem to realize they need to control over this, not the employees).
    My view is if someone is on a 6 figure salary or package, they are paid to do the job not by the hour. Lower paid employees are less likely to be in professional jobs and are paid by the hour.
    The final scenario of course is you have an employer who does not have the budget for more bodies so deliberately extends the hours of their employees all the time. Short of said employees refusing to work the additional hours (they can do this lawfully), many employees feel pressured, may not feel secure in their jobs so they don't rock the boat.
    It's been my experience that frequently it is about businesses managing poorly to the point where they don't have systems and effective processes in place to ensure worker do their jobs efficiently so there is little need fore overtime.
    Tiger

  6. #6
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    Sep 2013
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    SA
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    Default

    OK. Firstly, we would all like to think IR is a wonderful colourful world, but it to say it is very black with some odd bits of white....

    Lets strip it back to reality shall we here. There is no difference between wages and salary earners if they are still covered by an Award and it applies to the work being performed. So first rule of thumb is does an award apply and if so, is the employee covered by it by their duties and contract (if any).

    Then from here you will determine whether the base rate applies for what hours of work, and then determine if the award described ordinary hours and describe overtime.

    Quite simply, if the award stated the ordinary hours of work per week are 38 and that overtime hours stand alone each day (i.e. 7.6 hours of ordinary time per day (excl. meal break of 30 to 60 minutes), then no matter what each minute of work beyond the ordinary hours per day are deemed overtime hours and payable at the over time rates.

    There is of course a caveat (as always) that if a 'master and servant' (employer and employee) have entered into contractual relations to pay a higher rate of pay and there has been an offer and acceptance that a higher rate is payable to 'set-off' a 'designated' (MUST be specific) amount under an award then MAYBE overtime would be absorbed in this payment.

    But to keep it simple as most small / mid sized business wont rely on or even have heard of/considered the Poletti v Ecob case relating to the 'designation' of award entitlements, and this misconception is getting a lot of businesses into financial difficulties and back paying a lot of overtime penalty rates. A request to undertake 'Reasonable Additional Hours" is not an open invitation to free labour.

    The other matter effecting employers now is that while the Act permits an employer to require an employee to perform this 'reasonable request' and often a lot of employer put it into a contract mandating every week and employee to perform 2 to 10 hours a week as 'reasonable additional hours' unpaid but then forget that an employee can also reasonably 'Refuse' to do them then what? - general protections claim for ending the employment contract etc for her right to refuse! hmmm.

    I can't believe businesses believe that asking employees to perform reasonable additional hours is an open door to free labour and that they think an industrial umpire, the Parliament or the legislation would even propose to permit it is even more fanciful, so trust me when I say.......all award covered workers are paid for every minute they are required to work.... be-it ordinary time or at the point an award sets the overtime boundary and the penalty payments that flow on from that additional work. (There are only some exceptions such at the Restaurants award or the Hospitality Industry award that set a 25% base wage increase to offset overtime etc,)

    If we use the example of the Clerks Private Sector Award as the bench mark here: Clause 27.1 "ii) outside the hours fixed in clause 25 of this award [38 hrs per week]; - must be paid time and a half for the first two hours and double time thereafter calculated on a daily basis.

    So your employee in this instance is owed 2 hours at OT rates....each and every week they have had the requirement to do so.... and it cannot be offset in the general sense.

  7. #7
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    Default

    Thank you for such a thorough reply IndustrialResources! I really appreciate the advise.

    I have these conversations all the time with Managers around when somebody is required to work back late one night versus paying the overtime. I wish there was a black and white answer...

    Following on from your reply, IndustrialResources, I have a follow-up question:
    When is an employee not covered by an Award? When is their level deemed high enough for them not to be entitled to overtime? (this is probably how I should have phrased my original question)

  8. #8
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    Apr 2012
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    Default

    It's about educating your Managers/Team Leaders to plan the work properly. If this done in an ideal world, there should be no or less need for anyone to work additional hours. Often there are two contributors, 1) hourly paid employees string out the work so they get paid the Overtime and the business doesn't stamp it out at the outset and 2) work efficiencies are slack or mismanaged. Organizations need to have policies in place so all are clear that overtime is a) approved in advance of it being worked and b) under what circumstances employees may be asked to work it eg a last minute order coming in, etc.
    An non award covered employee's employment contract may include a clause referencing reasonable additional hours being required but the offset is that the salary offered takes those 'reasonable hours' into account. Any employee can refuse to work (sorry accidentally hit some button or other and this message split) requested additional hours. Non award employees are usually professionals of some kind and paid the bigger bucks and often in those situations, where there is those busy periods eg end of financial year when Accounts need to put in the big hours, then the employer would have a time off in lieu policy in place.
    Tiger

  9. #9
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    Default

    Quote Originally Posted by bullswool View Post
    When is an employee not covered by an Award? When is their level deemed high enough for them not to be entitled to overtime?
    Award coverage is NOT determined by the salary paid to an individual - it's determined by whether the worker is performing a role that is covered by a classification in an award (taking into account both the industry and the role in the industry).

    For example, the Clerks—Private Sector Award 2010 typically covers employees performing clerical work (unless the clerical role is covered by a relevant industry award such as the General Retail Industry Award 2010). However, a person managing clerical employees (but not performing clerical work themselves) won't be covered by the Clerks—Private Sector Award 2010 because the Award doesn't provide an award classification for the manager. The award-free manager must be paid at least the Federal Minimum Wage, but realistically might be earning anything from $50,000 upwards, although the salary is not important in determining their award coverage - their duties are.

    For another example, the Professional Employees Award 2010 sets a minimum salary of $70,245 for the highest classification. An employer might choose to pay 2 or 3 times this rate (if the individual had highly developed skills in an obscure programming language, or excellent project management skills, or whatever) but the worker would still be covered by the award if the role that they performed was consistent with an award classification. In this specific case, the award allows the employer and worker to agree (for example) that the extra pay includes compensation for working more than 38 hours per week, or working nights or weekends, etc, and the compensation arrangements will be consistent with the award requirements.

    Bottom line is: there's no salary level that clearly indicates that an employee is "award-free". Award coverage is determined by the worker's role, and whether there is an applicable award that contains a classification relevant to that role.

    Once award coverage is confirmed, the award will tell you what the overtime payment obligations are. Some awards, like the Registered and Licensed Clubs Award specifically don't require payment for overtime to club managers, if the manager receives a base pay rate that is at least 20% above the award minimum rate for the classification. But if the manager is not receiving the additional base pay, then they are entitled to overtime pay.

  10. #10
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    Quote Originally Posted by bullswool View Post
    When is an employee not covered by an Award? When is their level deemed high enough for them not to be entitled to overtime? (this is probably how I should have phrased my original question)
    Sorry for delay in responding, but Greg Schmidt has most of it covered.

    Essentially, the Award system will apply to an employee if the employer falls within the coverage of the award AND the employee performs work set out in the coverage.

    An award sets the 'minimum' entitlements. Here, both parties to an employment contract can agree to pay above the minimum rates but over award payment do not exclude an employee because they pay or exceed the award minimum entitlements.

    There are abilities for the parties to agree that additional amounts of money to be used to 'Set-off' a particular entitlement or satisfy a particular award entitlement but these are very specific areas of law that do require professional legal advice as most even when they are provided for, fall over in a court challenge.

    The simple question the regulators will look at is:

    1. What is the 'actual' work [duties] being performed (not what the contract may state);
    2. What industry is business actually in and what in all honesty does it do;
    3. What classification was purportedly accepted by the parties to be; and
    4. What are the 'real' qualifications the employee has and are they for the industry.

    Almost all awards cut off award coverage from the responsibility level of manager {except say the HIGA, restaurant award and a few others} but award coverage is NOT determined by income. To give an example is that some awards even contemplate over award pay rates and provide clauses for example that base penalty rates to be paid on the 'ordinary rate of pay', not a base rate of pay.

    For your specific example, lets say your employee is a level 3 Food and Bev Attendant under the Restaurant Award has an ordinary base rate of pay of $35 per hour under a contract of employment but the award base rate = $20.21.

    The Award states that : Monday to Friday:150% of the employee’s ordinary base rate of pay for the first two hours of overtime then 200% of the employee’s ordinary base rate of pay for the rest of the overtime.

    There duties mean that they are covered by the award even though their contracted rate is a lot higher their overtime in this instance is 150% of their $35 rate of pay and even if as an employer you have a contract to state they are required to work reasonable additional hours, as I stated before, the industrial system was not designed or supported by the courts to enable free labour, and to requirement to do additional hours MUST attract a payment per the award (is award covered) that means usually at overtime rates.
    Last edited by IndustrialResources; 09-09-2017 at 06:13 PM.

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