​'Reasonable overtime' clause could lead to breaches

​

By Mike Toten on 8 November 2018 A union has successfully appealed against an enterprise agreement clause that required employees to work “reasonable overtime”.

A Full Court of the Federal Court found that the clause was capable of being breached by the employer, which in turn would breach the Fair Work Act 2009.

Facts of case


An enterprise agreement contained the following subclause: “[Employer name] may require an employee to work reasonable overtime and the employee shall work such overtime as required”.

The Construction, Forestry, Maritime, Mining and Energy Union (CFMEU) claimed that, by implementing a new roster, the employer was requiring employees to work 455 hours of overtime per year, or 8.7 hours per week, and that doing so contravened that clause of the agreement. However, the Federal Court ruled that the clause did not impose any obligation on the employer to require employees to work those hours, and therefore it was not a provision that the employer could contravene. The CFMEU appealed against that ruling.

The agreement provided for 35 ordinary hours per week, averaged over a five-week cycle. Another clause defined “reasonable overtime” as 104 hours per year, but added that this did not infer either that 104 hours would be available to every employee or that every employee must work 104 hours. 

The court based its decision on the word “may” being used when referring to the employer and “shall” when referring to employees. “May” meant giving permission to act and therefore provided an entitlement but not an obligation to the employer.

The clause did not provide that the employer “may not” require an employee to work overtime unless the overtime is reasonable. 

The full court said that consideration of the meaning of a clause should not be a strict one, but one that contributes towards a sensible outcome for the parties to the agreement. 

Decision


The Full Court disagreed with the court’s interpretation and upheld the appeal. As well as a permissive element, the clause also had restrictive and protective (for employees) elements. It only allowed the employer to require “reasonable” overtime, and anything more than that was a breach (the latter covered both contravention and failure to comply). 

The employer argued that “reasonable” entitled an employee to refuse any unreasonable overtime requirement but had nothing to say about what the employer could “require”. However, the Full Court found that the word “reasonable” qualified what the employer “may require”. It imposed a limitation that the employer had to comply with. The latter interpretation was also consistent with the National Employment Standards, which impose an obligation on employers not to require an employee to work more than 38 hours per week unless the extra hours are “reasonable”. 

The clause in the agreement could have enabled the employer to request or require unlimited extra work hours, which would breach the Fair Work Act. The purpose of the clause should be to protect employees from unreasonable overtime hours. 

The employer’s interpretation of the clause placed all obligation on employees to refuse unreasonable hours, and none on the employer to ensure that the extra hours were reasonable in the first place. 

The clause was unlawful because it was possible for the employer to contravene it. 

The Full Court did not rule on the other grounds of the CFMEU’s appeal, which involved whether 455 hours per year was an unreasonable amount of overtime. The matter was remitted to the Federal Court for redetermination.

The bottom line: Clauses in enterprise agreements cannot permit an employer to contravene the clause, and therefore the Fair Work Act. When drafting agreement clauses, seek expert advice to ensure there are no potential unintended meanings or possible interpretations.

Read the judgment


Construction, Forestry, Maritime, Mining and Energy Union v Hay Point Services Pty Ltd, [2018] FCAFC 182, 23 October 2018 
 

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