Overtime rates of pay not easily avoided in agreement clauses

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Overtime rates of pay not easily avoided in agreement clauses

The FWA has declined to approve an agreement that provided for the removal of overtime payments where employees indicate that they would prefer to work hours that would normally attract overtime.

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The FWA has declined to approve an agreement that provided for the removal of overtime payments where employees indicate that they would prefer to work hours that would normally attract overtime.
 
This case has been noted on WorkplaceInfo in the context of a complaint by the Federal Opposition that the Fair Work legislation was being interpreted against the interests of business.
 
The clause in issue
 
The matter related to the following clause of the proposed agreement:
‘33.8 Preferred hours arrangements
 
33.8.1 An employee may wish to work additional hours at particular times or on a continuous basis or during particular roster periods due to personal circumstances. Examples of personal circumstances are family and/or carer’s responsibilities and/or financial circumstances, but may also include other situations.
 
33.8.2 An employee may at his or her initiative advise the employer in writing of the additional hours of work that he or she wishes to be rostered to work across the available shifts (at any of the employer’s facilities covered by this agreement), but it is not compulsory for an employee to do so. Where an employee requests to work additional hours on an available shift, the employer will endeavour to roster the employee to work on that shift.
 
33.8.3 Where an employee requests to work additional hours on an available shift at any of the employer’s facilities covered by this agreement, the employee will be paid at their ordinary hourly rate of pay (plus any additional shift penalties). In such circumstances, overtime payments will not be applicable. Further, there is to be an adequate break between periods of work that are the subject of an arrangement covered by this subclause.
 
33.8.4 Where the employer requests or requires an employee to work additional hours, this time will be paid at normal overtime rates. The operation of this subclause is not intended to undermine any historical overtime arrangement(s) requested or required by the employer.
 
33.8.5 An employee may give written notice to change his or her preferred hours arrangements, or cease a preferred hours arrangement and revert to the ordinary spread of hours under the agreement at any time. Unless otherwise agreed, this change will take effect from the next roster to be posted.
 
33.8.6 The operation of this subclause shall be trialled and then reviewed by the persons covered by this Agreement after 6 months in operation. Should any issue raised in that review process not be resolved, it may be referred to FWA in accordance with the dispute resolution procedure in clause 41 of this agreement.’
Commissioner Smith made the following observations before proceeding to his consideration of the application:
‘It is worth noting at this stage that the overwhelming majority of employees to be covered by this agreement are women who work part-time. I also note that this is the aged care sector where reliance on government funding is high.’
Fails no-disadvantage test
 
Commissioner Smith pointed to the essential issue:
‘It can be seen that this clause has at its core, the removal of overtime payments where a person indicates that they would prefer to work hours which would normally attract overtime. The time worked would be paid for at ordinary rates. The clause is premised on a voluntary act by the employee and the process will be monitored by the parties to the agreement.’
Clause rejected
 
Commissioner Smith drew attention to the matters that had to be considered before approval could be granted:
‘The clause is portrayed as being a benefit to employees. However, there is clear disadvantage when compared to the award because that person would have ordinarily received overtime for the hours worked.
 
The benefit is said to derive from the fact that an employee will get work that they might not have otherwise been given.
 
The no disadvantage is then said to arise from the fact that by picking the hours an employee wants to work, that is a benefit and the trade-off is that the work is performed at ordinary rates.
 
This however is a subjective test. FWA is being asked to accept that a person believes they are better off because they get work at a rate below the safety net.
 
The same could be said of a person who would offer for work at an amount below the minimum wage thereby giving themselves a cost and competitive edge against a person who wishes to relay upon the safety net. The concept could apply to public holidays and shift loadings. A good example may be a nurse who prefers night shift because of family responsibilities. In those circumstances it could also be argued that the act of volunteering eliminated the need for the loading.
 
... For the concept to be acceptable, it must rely upon the subjective belief of the employee rather than the objective testing of the award against the agreement.
 
... This is clearly an approach which undermines the standards fixed in awards and the basis for determining the no disadvantage test.’
NES
 
The FWA then pointed to a potential undermining of the NES:
‘The next issue is that it may have the potential to undermine the operation of the National Employment Standards (NES).
 
In effect, the proposition can extend the concept of a 38 hour week. This is particularly evident in the current matter …
 
... The Nurses (Victorian Health Services) Award 2000 [AP790805] has a similar provision: A part-time employee is one who is employed and who is ready, willing and available to work on a regular basis any number of hours up to but not exceeding 38 hours in any one week (or 76 in a fortnight) provided that the number of hours worked may vary from week to week by mutual agreement.
 
... The example given by BUPA that some employees have two jobs during the week and would prefer to only have one which was extended so as to avoid a higher tax rate on the second job, can be achieved under the award as it stands. The issue boils down to an employee who would work more than 38 hours per week and outside the spread of hours. This is why it could be seen to undermine the intention of the NES. Whilst, on one view, there is no compulsion to work more than 38 ordinary hours per week (without averaging), the proposed provision perhaps undermines the concept of 38 ordinary hours. If the provision is used to “encourage” employees to volunteer to work those hours so that overtime costs are avoided then it does work more strongly against the concept of a 38 hour week.’
No-disadvantage test not satisfied
 
Commissioner Smith viewed the proposed clause as a cost to the employees rather than a benefit:
‘... it can be seen that this proposed clause represents a cost saving rather than a benefit. It would be difficult to suggest that an employee would see the benefit in being paid less than that which would ordinarily apply. In short, it is the gift of employment that the employer is offering provided it is at a discounted rate from the safety net. This is a concept which, in my view, has far reaching implications for the operation of the safety net of wages and conditions.
 
... Finally, the question is whether or not, on balance, the benefits contained in the proposed agreement mean that the no disadvantage test is satisfied? I do not doubt that the parties have negotiated an agreement which in some cases is superior to the underpinning reference instruments.
 
... However, in my view, the issue in this area of employment is so fundamental to the operation of the safety net and the NES that the agreement must be rejected as failing the no disadvantage test.’
 
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