In this article, Special Counsel Adele Garnett and Partner Anna Hendry from HopgoodGanim Lawyers discuss what employers should consider when determining whether additional hours are ‘reasonable’ (above the standard 38 hours for full-time employees), and the risks associated with employees regularly being required to work unreasonable additional hours.
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As working patterns over the last 20 to 30 years have become much more variable for all types and categories of employment in Australia, it is common for businesses to require an employee to work hours outside of, or in addition to, their ordinary hours of work. It has also been reported that 13% of Australians work very long hours, above The Organisation for Economic Co-operation and Development (OECD) average, and that Australians generally have a worse work-life balance than workers in the United States.1 Research indicates that ‘time-poverty’ can have an impact on well-being, physical health, and productivity. 2
Section 62 of the Fair Work Act 2009 (FW Act), part of the National Employment Standards (NES), states 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.3 This means that requesting an employee to work in excess of 38 hours is prima facie unreasonable, with the burden on the employer to show the excess hours are reasonable.4 The NES applies to all employees and a breach can result in both civil penalties and an award of compensation.
More recently, the issue of unreasonable additional hours has been the subject of a high-profile case where the former Chief of Staff for Federal Independent MP, Monique Ryan, sued her former employer, for allegedly being involved in a decision to terminate her employment because she refused to work “unreasonable” additional hours – allegedly around 70 to 80 hours per week. This case recently settled, reportedly for a payment of $100,000, with no admission of fault.5
Are additional hours reasonable?
There is no rule for all as to what is ‘reasonable’, but case law and section 62 of the FW Act make it clear that what is reasonable depends on the particular circumstances of both the employee and the employer, considering the ten factors outlined in section 62(3) (Ten Factors): 6
- any risk to health and safety from working the additional hours;
- the employee’s personal circumstances, including family responsibilities;
- workplace needs;
- any compensation received for working the additional hours;
- any notice given to work the additional hours;
- any notice given by the employee of an intention to refuse to work the additional hours;
- the usual patterns of work in the industry;
- the nature of the employee’s role, and level of responsibility;
- whether the additional hours are in accordance with averaging terms or arrangements that apply to the employee; and
- any other relevant matter.7
A recent case considered by the Federal Court (the Court) provides a rare insight into what additional hours are reasonable and how the Ten Factors should be applied.
The worker was employed as a knife hand / labourer by Dick Stone (a long-established butcher and meat processor) and received an ‘employment commencement pack’ which stated that his ordinary hours were 50 hours per week, to be worked 2:00am to 11:30am Monday to Friday, and from 2:00am to 7:00am on Saturdays. The employer bore the onus of proving these hours were reasonable.
The worker received an hourly pay rate that was greater than the modern award minimum (for ordinary hours), but overall, less than what he would have received if award overtime rates had been paid. There was no provision in the contract to set-off over-award payments (hourly rate) against overtime entitlements, so despite Dick Stone’s arguments, no off-set applied. The Court found the worker was underpaid.8
The Court considered the Ten Factors, including factor 10, the very broad “any other relevant matter”. The Court particularly noted the underpayment, the unsociable hours of work, the effect on weekends and personal/family time (the worker had very young children), and that the worker was not a manager. Consideration was also given to the vulnerability of the worker, having only recently arrived from a third-world country needing employment, and was unfamiliar with Australian law.
Importantly, the Court noted the obvious and significant health and safety risks of working with knives while working long hours, stating it was common knowledge that fatigue increases the risk of workplace accidents (even though the risks had not materialised for this worker).
The fact that the worker had not complained about the hours, or requested different hours was noted, but this did not greatly assist the employer, particularly having regard to the worker’s vulnerability. The employer also argued that reducing working hours to 38 hours per week would impact on staff retention because of the financial incentives of working 50 hours per week (i.e. business needs), but the Court said this “did not necessarily support the conclusion that the additional hours were reasonable” in this worker’s case.
The Court held that, while the worker had agreed to the employment terms and had not complained, the additional 12 hours per week were unreasonable additional hours and the employer had, accordingly, contravened section 62 of the FW Act. For that contravention it was ordered to pay a civil penalty of $30,000.9
Other possible legal risks
Employees who resign due to unreasonable additional hours may also bring an unfair dismissal application, arguing that they have been forced to resign due to unreasonable demands, amounting to a constructive dismissal. Remedies include either reinstatement or compensation of up to six months of pay.
For example, in Sathananthan v BT Financial Group Pty Limited10 , the employee regularly informed the employer of the impact that consistent excessive working hours (over a number of years) were having on him, but the employer did not properly respond, essentially forcing the employee to resign. The ‘dismissal’ was held to be unfair, and the employee was awarded $45,000 in compensation.
Work health and safety
Employers also have a duty of care under work health and safety legislation to ensure a safe work environment, and face possible prosecution for criminal offences if that is not provided. Fatigue due to excessive additional hours, particularly in industries involving manual handling, operation of machinery or long journeys home, is a significant and recognised workplace health and safety risk.
Another significant risk is of a worker becoming unwell, and making a workers’ compensation claim or a common law claim for a psychiatric injury due to excessive work hours. In the case of Ackers v Cairns Regional Council,11 it was held that the employer was negligent in (amongst other things) requiring the employee to continually work excessive hours due to inadequate staffing, without seeking to address the underlying staffing problem. Further, when the employee showed signs of psychological distress due to the workload, the employer responded by instigating a performance improvement plan. The employee suffered a significant psychological injury and was awarded damages of approximately $1.1 million.
In Carr v Workers' Compensation Regulator 12, the Queensland Industrial Relations Commission found that the psychological injury sustained by the employee was a result of a requirement to work excessive hours and that the employer’s response to the excessive workload was unreasonable. The Commission observed that “…I do consider the imposition of an unattainable level of workload and work intensity on Ms Carr, in the absence of adequate personnel support and resources to the job, to be unreasonable management action.” This was despite the employer taking various (unsuccessful) steps to alleviate the workload.
Given the significant consequences employers and employees both face for breaching the NES and the various other legal risks, this is a timely reminder that what may be reasonable for one, may not be reasonable for all. It is also worth noting the business risks of losing (or causing injury to) a valued and hard-working staff member.
The key takeaways from these cases are:
- Employers can only request or require an employee to work additional hours above 38 hours per week if such hours are reasonable, considering the particular workplace and the personal circumstances of each employee. If challenged, the onus is on the employer to prove any additional hours are reasonable.
- If there are breaches of the relevant modern award involved (e.g. underpayments, not providing rostered days off), it is likely that additional hours above 38 hours will be found to be unreasonable13 – so it is essential that employers comply with their obligations under applicable awards.
- The Court will consider it to be common knowledge that working longer hours creates fatigue and health risks, particularly in safety-critical industries and for drive-in-drive-out workers. Employers have a duty under work health and safety legislation to ensure the safety of their workers, which is a significant factor in determining whether additional hours are reasonable.
- While consideration specifying additional hours in an employment agreement does not, in itself, make them ‘reasonable’. Employees often ‘agree’ to employment offers that contain unreasonable terms, and the NES overrides employment agreements.
- Special care to needs to be taken with vulnerable employees who are requested to work additional hours to ensure they are not taken advantage of – for example, temporary visa holders, those who may not understand the Australian employment law system, or employees who have English as a second language. The Courts are particularly critical of employers who take advantage of this power imbalance – whether intentional or not.
- Failing to complain about excessive hours does not mean that additional hours worked are reasonable – employees have many reasons why they don’t complain. Employers must therefore monitor workloads, particularly when put on notice of the potential for excessive workload, such as staff shortages, staff leave or underperformance.
- Where an employee complains about excessive hours or workload, an employer must act, or compound their exposure to a range of legal risks.
- Employment agreements need to contain specific drafting to deal with any all-inclusive payments, regardless of whether they provide an above award hourly rate or annual salary (for example, to set-off against overtime payments), otherwise the employer risks an underpayment claim. Employers must check award wage modelling periodically to ensure any above award rate is adequate to compensate employees for all award entitlements.
For more information or assistance with your own circumstances, please get in touch with HopgoodGanim's Insurance and Workplace and Employment teams, or Stephen Howell, Director and Principal Advisor at Effective Governance.
1. https://www.abc.net.au/news/2023-05-22/why-are-so-many-australians-working-overtime-long-hours/102353176, accessed on 22 May 2023.
2. Giurge , Whillans and West, ‘Why time poverty matters for individuals, organisations and nations’ Nature Human Behaviour, Vol 4, October 2020, pp 993–1003.
3. Fair Work Act 2009 (Cth). s 62(1)(b) makes corresponding provision for part-time employees.
4. Fair Work Ombudsman v DTF World Square Pty Ltd (in liq) (No 3)  FCA 201.
5. https://www.theguardian.com/australia-news/2023/may/08/sally-rugg-accepts-100000-to-settle-workplace-dispute-with-mp-monique-ryan accessed on 23 May 2023.
6. Australasian Meat Industry Employees Union v Dick Stone Pty Ltd  FCA 512.
7. Fair Work Act 2009 (Cth) s 62(3).
8. This was a separate (successful) part of the claim against Dick Stone.
9. Other penalties were ordered in relation to various other breaches of the FW Act.
10. Sathananthan v BT Financial Group Pty Limited  FWC 5583.
11. Ackers v Cairns Regional Council  QSC 342.
12. Carr v Workers' Compensation Regulator  QIRC 059.
13. Fair Work Ombudsman v DTF World Square Pty Ltd (in liq) (No 3)  FCA 201; Australasian Meat Industry Employees Union v Dick Stone Pty Ltd  FCA 512.