From Canberra to Court: What constitutes "reasonable additional hours" under the Fair Work Act?

In brief - New claims filed in the Federal Court are set to analyse a rarely-litigated section of the Fair Work Act 2009 (Cth) (Act) concerning whether an employee's additional hours of work are reasonable or unreasonable. The outcome of these claims could have significant implications for employers and how they manage salaried employees who work significant overtime.

Sally Rugg, the former Chief of Staff for Independent MP Monique Ryan, has sued the Commonwealth and Ms Ryan, claiming that the additional hours she worked during her 70-hour work weeks were unreasonable. Similarly, the Finance Sector Union has lodged a claim against National Australia Bank (NAB) alleging that NAB Managers, who were nominally employed to work 38 hours a week, were working 10 to 16 hours a day and were forced to work unreasonable overtime.

Both of these claims centre on the effect of section 62 of the Act, and what it means for an employee to work reasonable additional hours without additional compensation.

What does Act say regarding an employer requesting an employee to work reasonable additional hours?

Section 62 of the Act provides that an employer must not require a full-time employee to work more than 38 hours per week unless the additional hours are reasonable. Similarly, for a part-time employee, the limit is the lesser of 38 hours and the employee's ordinary hours of work in a week.

Section 62(3) of the Act, sets out the facts to be taken into account when determining whether additional hours would be considered reasonable or unreasonable. These factors include: 

1. any risk to employee's health and safety from working the additional hours

2. the employee's personal circumstances, including family responsibilities

3. the needs of the workplace or enterprise in which the employee is employed

4. 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

5. any notice given by the employer of any request or requirement to work the additional hours

6. any notice given by the employee of his or her intention to refuse to work the additional hours

7. the usual patterns of work in the industry, or the part of an industry, in which the employee works

8. the nature of the employee's role, and the employee's level of responsibility

9. 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

10. any other relevant matters.

How have the Courts interpreted section 62 of the Act?

In 2022, the Federal Court of Australia considered the operation of section 62 of the Act in Australasian Meat Industry Employees Union v Dick Stone Pty Ltd [2022] FCA 512 (Dick Stone decision). 

In March 2016, Dick Stone Pty Ltd (Dick Stone), a large meat wholesaler in Sydney, offered a job to Mr Samuel Boateng (Mr Boateng). Mr Boateng's employment contract had a term that required him to work 50 ordinary work hours per week from 2.00 am to 11.30 am on weekdays and from 2.00 am to 7.00 am on Saturdays, plus reasonable additional hours as requested. Mr Boateng was covered by the Meat Industry Award 2010 (Award) but the contract did not include the stipulated rate of pay under the Award.

Throughout the course of his employment Mr Boateng regularly worked 50-hour weeks, and at times worked additional hours. Mr Boateng was paid his regular hourly rate of pay for these additional hours. The Australasian Meat Industry Employees Union (Union) brought a claim on behalf of Mr Boateng alleging that, among other things, Mr Boateng's additional hours were unreasonable.

Were the additional hours worked unreasonable?

The Court held that Mr Boateng's additional hours were unreasonable. Justice Katzmann considered the factors outlined under section 62(3) of the Act. Justice Katzmann took into account the personal circumstances of the Applicant and found that as a recent immigrant, Mr Boateng was unaware of his rights under the Act. Justice Katzmann also noted that Mr Boateng was not paid overtime for the additional hours he worked.

Whilst Justice Katzmann conceded that Dick Stone did have a business need for employees to work additional hours, the 2.00 am start time in Mr Boateng's contract was unusual, and the hours of work were not in accordance with the averaging terms in the Award. Additionally, Justice Katzmann determined that the hours of work deprived Mr Boateng of a weekend because they exceeded the ordinary 5-day working week. 

What should employers be thinking about?

The Rugg case and the Union case against the NAB is a timely reminder of the need for employers to be certain as to whether the requests they make of employees to work additional hours is compliant with section 62 of the Act. The Courts will determine whether additional hours are reasonable or unreasonable with reference to the factors outlined under section 62(3) of the Act.

Employers should examine the hours of work of their employees, particularly white collar workers to ensure that additional hours are both reasonable and remunerated correctly.