Is The Refusal Of Overtime Payments By Employers Legal?

Is The Refusal Of Overtime Payments By Employers Legal?

The majority of employees work overtime at least once during their careers. In fact, according to Australian Institute’s Go Home on Time Day Report, it was found that, on average, the respondents worked overtime and were unpaid for 4.3 hours of work on a weekly basis. 

The report also found that unpaid overtime work robs Australian employees and the Australian economy of over $92 billion every year.

With these statistics in mind, the question arises: Is the refusal of overtime payment by employers legal? In this article, we’ll explain what ‘overtime’ is and whether it is legal for employers to refuse their employees’ overtime payments.

Read along!

Table of Contents

What Is “Overtime”?

The National Employment Standards (NES) states any work beyond 38 hours in a week or work outside the ordinary hours of work outlined in an award or an employee’s employment contract is considered overtime hours. 

Furthermore, section 62 of the Fair Work Act 2009 states that the maximum amount of hours a full-time employee should work is 38 hours, and the maximum amount of hours an employee who isn’t a full-time employee should work is 38 hours of their ordinary weekly working hours. The exception to this rule is a request for an employee to work reasonable additional hours.

Generally, employees are covered by a modern award, enterprise agreement or other registered agreement that applies depending on the type of industry the business operates in and the duties and work the employees are allocated. 

As an employer, it’s crucial for you to familiarise yourself with the minimum pay and conditions of employment contained in the modern award or registered agreement.

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Is It Legal For Employers to Refuse Their Employees Overtime Payments?

There is no simple yes or no answer to this question. There are numerous factors to consider to determine whether it is legal for an employer to refuse their employees’ overtime payments. These include the following:

1. Look At Your Employee’s Award Or Agreement

Under employment law, it isn’t illegal for employers to refuse their employees’ overtime payments if the award, enterprise agreement or other registered agreement that applies to an employee outlines that overtime rates do not apply. 

For example, under the Retail Award, if an employee works full-time, then they are entitled to overtime rates for the additional hours they work. However, if an employee works on a casual basis, then they won’t receive overtime rates. Instead, they will be paid at their ordinary rate of pay and casual loading

Therefore, as an employee, you must take into account what type of employment your workers have, as this will determine if they are entitled to overtime rates and overtime pay.

As a general rule, if you are unclear as to when overtime is paid, you should refer to the Modern Award, which provides specific details regarding the following:

  • How overtime is paid to employees for extra hours, they have worked
  • How payment must be made for overtime hours an employee worked on weekends
  • The required rest periods that must be provided to an employee after the employee has worked overtime
  • Whether time off in lieu of overtime is available.

Through Lawpath, you can create a customisable and ready-to-use Employment Agreement in under 15 minutes.

2. An Employer Can Only Request An Employee To Work Overtime If It Is Reasonable

Working overtime hours is allowed under the Fair Work Act 2009 (Cth). An employer can request for an employee to work overtime as long as the request to work the additional number of hours is considered to be ‘reasonable overtime’. The Australian Government’s Fair Work Ombudsman outlines the factors that must be considered when an employer requests that an employee works overtime. These include the following:

  • Whether there any health and safety risks associated with working overtime
  • The employee’s personal situation, such as whether they have family responsibilities
  • The needs of the workplace
  • Whether the employee is entitled to receive overtime payment rates or penalty rates for the additional hours, they will be working
  • If they are paid at a higher rate due to the knowledge that they will sometimes need to work overtime hours 
  • Whether the employee was provided with sufficient notice that they will be working overtime
  • Whether the employee has notified their employer that they can never work overtime
  • The usual patterns of work in the industry
  • The employee’s role and the level of responsibility they have must be a consideration
  • Whether the overtime hours that have been requested of the employee comply with the award or agreement that applies to them

It is important to note that employees have the option to decline to work overtime hours if it is unreasonable to do so.

3. If An Employee Is Required To Work Overtime, You Must Give Notice

As an employer, it’s crucial for you to be aware that you are required to give your employees a reasonable amount of notice when you are requesting them to work overtime hours. Employees are not required to accept overtime requests if they are unreasonable. Therefore, you can’t legally penalise an employee for refusing an unreasonable request.

Furthermore, if you are paying your employee overtime or penalty rates, you need to authorise these payments. This is because if you fail to authorise these payments, your employee won’t be entitled to any payments.

Conclusion

Ultimately, as an employer, you should be aware that it’s not illegal to refuse to make overtime payments. However, this depends on whether or not your employees’ modern award or agreement sets out that overtime rates do not apply. Where overtime rates do apply, you will be legally required to pay your employees overtime or penalty rates.

As an employer, if you’re still unsure whether you’re required to pay your employees overtime payments, you should hire a lawyer for legal advice to avoid legal consequences. 

Contrastingly, if you’re an employee and you’re unsure whether you were supposed to be paid overtime, you can also hire a lawyer for legal advice to determine whether you were supposed to be paid.

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