Resignation: what if you're owed time off in lieu?

Resignation: what if you

By Paul Munro on 8 October 2018 What happens if an employee resigns but is still owed time off in lieu of overtime?

This question was recently sent to our Ask an Expert service.

Q An employee has tendered his resignation by giving two weeks’ notice. The employee works a considerable amount of overtime and is expected to do so during the notice period. He has an arrangement with the company whereby any overtime worked is taken as time off in lieu of overtime.

What is the employee paid on termination with respect to any overtime worked during the notice period? He is employed under the Clerks – Private Sector Award 2010.

A Whether an employee may take time off in lieu of payment of overtime penalty rates will depend on the terms of the applicable modern award or enterprise agreement. In this case, the Clerks – Private Sector Award 2010 (cl. 27.5(c)) provides that “an employer must, if requested by the employee, provide payment, at the rate provided for payment of overtime under the award (time and a half for the first two hours and double time thereafter), for any overtime worked where such time has not been taken within four weeks of accrual.”

This means there will not be an opportunity for the employee to take time off in lieu of overtime during the period of notice. Consequently, any overtime worked (and not taken as time off in lieu of overtime) is to be paid at the appropriate overtime penalty rate prescribed by the award.

Modern awards


Whether an employee and his/her employer are permitted to agree to taking time off in lieu of payment of overtime is subject to the terms of the applicable modern award. Such a term is not ‘standard’ in modern awards. Usually, the term allows an employee, with the consent of the employer, to take leave at an agreed time. Time is taken at the ordinary time rate that is an hour for each hour worked (although an award may provide the hours equivalent to the appropriate overtime penalty rate).

There is usually a period of time if time off in lieu of overtime has not been taken, commonly four weeks, after which the employee may elect to be paid at the appropriate overtime penalty rate.

Modern awards which contain time off in lieu of payment of overtime terms include:
  • Food, Beverage and Tobacco Manufacturing Award 2010
  • General Retail Award 2010
  • Legal Services Award 2010
  • Manufacturing and Associated Industries and Occupations Award 2010
  • Meat Industry Award 2010
  • Mining Industry Award 2010
  • Road Transport and Distribution Award 2010
  • Social, Community, Home Care and Disability Services Award 2010
  • Storage Services and Wholesale Award 2010
  • Timber Industry Award 2010
  • Vehicle Manufacturing, Repair, Services and Retail Award 2010
The bottom line: As the provision of time off in lieu of payment of overtime is not a ‘standard’ provision in modern awards, reference should be made to the applicable modern award or enterprise agreement to determine whether the parties can agree to such an arrangement.
 

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