HR's risks and obligations in requiring employees to work overtime

by Human Capital27 Jun 2012

Employers’ general duty to provide a safe workplace for employees continues to be the cornerstone of any employment relationship for more reasons than simply litigation. In the struggle to meet business demands during times of ‘doing more with less’, HR must consider the impact on an employee’s family responsibilities and health.

According to employment law experts at Clayton Utz, a number of cases have shed light on employers' rights and responsibilities when employees are required work overtime to meet business demands. It has become increasingly important for employers to consider what hours they can reasonably expect their employees to work because:

  • the International Labour Organisation has declared that one in five Australian employees are working at least 50 hours per week
  • a legal precedent set by the Australian Industrial Relations Commission decided that employees can refuse to work overtime for reasons which may include their family responsibilities; and
  • the effect of an employer requiring employees to work excessive hours may mean the employer is unable to retain a quality workforce or may increase the employer's exposure to workers' compensation or other claims due to stress related injuries.

While the limitations surrounding requests for overtime are many and varied, lawyers at Clayton Utz pointed to a number of key factors in determining the acceptability of a request:

1. Is it acceptable to agree on any legitimate hours of work

An employer and employee are quite able to negotiate a contract of employment which requires the employee to work more hours than normal, provided this is within the scope of any applicable legislation, such as WH&S legislation.

The High Court found that by insisting upon the performance of contractual terms, an employer is unlikely to breach their duty of care to the employee.

However, employers should be aware of requiring employees to perform duties or hours which take them beyond the scope of their employment contract. For example, it is not uncommon for the contract of a salaried employee to prescribe a nominal 38 hour week and expect an employee to work in excess of these hours at times.

2. Don’t ignore signs that overtime is adversely affecting an employee

It is integral employers be astute to any behaviour which indicates an employee may be having difficulty performing their duties. Examples of such behaviour may include any complaints by the employee to this effect or any uncharacteristic and prolonged absences from work.

A High Court decision in the case of Koehler v Cerebos found that while employers aren’t expected to be ‘clairvoyant’ in predicting adverse health effects of overtime, it also did not limit an employer's exposure to workers’ compensation claims by an employee whose “unreasonable” hours causes them to make a stress-related claim.

3. If no clear overtime guidelines exist, hours must be monitored to ensure they are not causing stress or impacting on family

An employer who expects their employees to work "reasonable" overtime and who does not specify what it considers to be "reasonable" may be exposed if they insist on the employee performing work which is beyond the scope of their contract. This will be exacerbated if the employee notifies the employer that the performance of this overtime, for whatever reason, is causing them stress.

4. Contracts of employment should set out what hours employees should work to fulfil their duties and what obligations there are to do overtime

To minimise the risk of an employee bringing a claim for unlawful dismissal or psychiatric injury, employers should ensure that employees' contracts of employment clearly set out what hours the employee is to work to fulfil their duties and what overtime obligations there are. In light of the investment an employer makes in its employees, and the employer's ongoing WHS obligations, employers should set reasonable working hours for their employees, which accommodate their personal circumstances.

Terminating an employee because of a reluctance to work overtime is fraught with complications and advice should be sought first. Although the High Court's decision in Koehler v Cerebos assures employers that they are not required to act as clairvoyants, their general duty to provide a safe workplace for employees continues to be a real and important incident of any employment relationship.


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