Averaging Hours and Set Off Clauses

[arowe]

Just wondering whether anyone has some examples of an "Averaging Hours" and a "Set Off" clauses that they could send through?

[Moz]

I don't know what an Averaging Hours clause is, but we use this very simple Set Off clause;

Set Off
If, on termination of your contract, you owe us any money (including any amounts that we may have mistakenly paid to you), we may offset that amount against any payment we are legally obliged to make to you.

[arowe]

Sorry, I should have put more info in.

Averaging Hours:
In a fortnight, our rosters may require staff to work more than 38 hours in one week, eg they may work 48 hours, so the following week, we would only roster them on for 28 hours. They would then be rostered off once they've worked 76 hours in the fortnight, and then start again. On the odd occassion that there are additional hours to be worked in a fortnight, we would pay overtime in accordance with the relevant Award. Effectively, this means that the extra hours in the first week would be banked and taken in the following week.

Set Off Clause:
In the Modern Awards, there is an "Award Flexibility" clause (generally clause 7.) In a decision with important implications for employers, the Full Bench of Fair Work Australia (FWA) recently confirmed that the use of set-off clauses in contracts of employment is not inconsistent with modern awards.

Set-off clauses in employment contracts operate so that over-award earnings are set-off against specific requirements in an award.

Prior to the decision, there had been some uncertainty about whether set-off clauses can be used to satisfy modern award entitlements.

Example of a set-off

An employee may be paid $300 pa over minimum award wages (the over-award payment). This over-award payment may absorb or set-off an annual leave loading that the employee has an entitlement to under an Award and which is not specifically paid to the employee.

In the decision, the Full Bench confirmed that it is:

“generally accepted that if the salary is expressly paid in compensation of all award entitlements and the amount paid exceeds the amount due under the award then the arrangement is not inconsistent with the award.”

The Full Bench noted that the variation sought in the decision may “reduce existing flexibility and require changes in practices which have operated for many years” and rejected the position that the “only arrangements which can legally be entered into are those expressly provided for in the award”.

While the Full Bench’s decision was made in respect of the Clerks Award, the comments of the Full Bench appear to have general application to the use of set-off clauses as a means to conveniently satisfy minimum entitlements.

So I'm looking for some example clauses that meet this when we are looking to pay our staff above the Award, taking into account various entitlements in the Award and the flexibility clause.

I hope this all makes sense.

[Chipmunk]

Hi Moz.


Set Off
If, on termination of your contract, you owe us any money (including any amounts that we may have mistakenly paid to you), we may offset that amount against any payment we are legally obliged to make to you.[/quote]

In relation to the clause above, did you get any legal input on how this impacts the Fair Work Act and an employees guaranteed entitlements?

[Chipmunk]

Originally Posted by arowe

Sorry, I should have put more info in.

Averaging Hours:
In a fortnight, our rosters may require staff to work more than 38 hours in one week, eg they may work 48 hours, so the following week, we would only roster them on for 28 hours. They would then be rostered off once they've worked 76 hours in the fortnight, and then start again. On the odd occassion that there are additional hours to be worked in a fortnight, we would pay overtime in accordance with the relevant Award. Effectively, this means that the extra hours in the first week would be banked and taken in the following week.

Set Off Clause:
In the Modern Awards, there is an "Award Flexibility" clause (generally clause 7.) In a decision with important implications for employers, the Full Bench of Fair Work Australia (FWA) recently confirmed that the use of set-off clauses in contracts of employment is not inconsistent with modern awards.

Set-off clauses in employment contracts operate so that over-award earnings are set-off against specific requirements in an award.

Prior to the decision, there had been some uncertainty about whether set-off clauses can be used to satisfy modern award entitlements.

Example of a set-off

An employee may be paid $300 pa over minimum award wages (the over-award payment). This over-award payment may absorb or set-off an annual leave loading that the employee has an entitlement to under an Award and which is not specifically paid to the employee.

In the decision, the Full Bench confirmed that it is:

“generally accepted that if the salary is expressly paid in compensation of all award entitlements and the amount paid exceeds the amount due under the award then the arrangement is not inconsistent with the award.”

The Full Bench noted that the variation sought in the decision may “reduce existing flexibility and require changes in practices which have operated for many years” and rejected the position that the “only arrangements which can legally be entered into are those expressly provided for in the award”.

While the Full Bench’s decision was made in respect of the Clerks Award, the comments of the Full Bench appear to have general application to the use of set-off clauses as a means to conveniently satisfy minimum entitlements.

So I'm looking for some example clauses that meet this when we are looking to pay our staff above the Award, taking into account various entitlements in the Award and the flexibility clause.

I hope this all makes sense.

This is essentially correct, so long as the employer have taken into account the minimum entitlements the employee would be entitled to under their relevant award, and make it clear at the outset of the employment relationship that the remuneration they would receive is encompassing certain award entitlements. This is where most employers go wrong, they want flexibility but they ignore the minimum entitlements in the award, and fail to inform the employee of what they are being paid and how that salary is made up.

[admin]

re-posted on behalf of Moz to fix up quoting

Originally Posted by Chipmunk

Hi Moz.

In relation to the clause above, did you get any legal input on how this impacts the Fair Work Act and an employees guaranteed entitlements?

Hi Chipmunk,
It was written by a lawyer before the FWA, but it's intention is not really consistent with what (I now know) arowe is looking for.

usual caveats apply

[Chipmunk]

Originally Posted by admin

re-posted on behalf of Moz to fix up quoting



Hi Chipmunk,
It was written by a lawyer before the FWA, but it's intention is not really consistent with what (I now know) arowe is looking for.

usual caveats apply

Thanks for that

[FWI]

Hi Chipmunk,
It was written by a lawyer before the FWA, but it's intention is not really consistent with what (I now know) arose is looking for.

usual caveats apply

Thanks for that

I would be very careful in apply these principles post 1 July 2009 under the Fair Work Act.

Set off arrangements (offsetting) can only occur if there is a 'Written agreement' specifically identifying the over award payment is to set off another 'particular' entitlement.

In essence, if you do as it is suggested in this tread to deduct overpayment or other monetary amounts from say, a termination payout, any deductions at all are inconsistent with the NES (National Employment Standard) in particular section 323 and 324 of the Act in that a deduction can only be made if: The authorisation is in writing AND is principally for the employees benefit...

Overpayments or excessive payment for non accrued leave entitlements are at the mercy of the employer.

Also, the principles of Polletti vs Ecob, Otis Elevator Co, Faulkner and Faulkner and other high or federal court rulings only permit to set off payment for 'like for like' matters such and an overpayment of annual leave can only be set off against an underpayment of annual leave on termination, not overpayment of wages to later offset an underpayment or non payment of an unlike entitlement such as annual leave and further-more, can only occur over the pay period in which the overpayment relates, not month or years down the track when it is identifies.