The Federal Court of Australia has ruled that BHP breached a ‘reasonable overtime’ clause within its enterprise agreement by requiring workers to work in excess of 8 additional overtime hours per week.
The agreement provided for a 35-hour working week but included a provision allowing the Company to “require employees to work reasonable overtime”, noting that 104 hours of overtime a year is “generally considered reasonable”.
The employees worked on a roster system which required them to work 455 hours of overtime per year (or over 8 hours per week).
At First Instance
The Federal Court held that the agreement afforded BHP with the discretion to direct workers to work beyond “reasonable overtime” so it was unnecessary to consider whether the overtime hours actually worked by the employee were reasonable.
The Full Federal Court disagreed and held that the use of the wording “reasonable” imposed a limit on the amount of overtime BHP could require workers to work and that the clause did not only provide BHP with an entitlement but was “also protective of the interests of employees”.
BHP acknowledged that under its previous rostering system employees’ un-rostered overtime ranged from 8 hours to 636 hours per year for some workers, before the introduction of a new rostering system limiting this to 455 hours per year.
The CMFEU argued on behalf of the employees that the requirement to work 8.75 hours of overtime per week was unreasonable on the basis that this amount was 435% of the 104-hour benchmark for “generally reasonable” overtime provided by the agreement.
Justice Collier agreed and criticised BHP stating that she was “unable to identify how it could possibly be argued that 455 hours of overtime can be considered reasonable or even generally reasonable when measured against the agreed benchmark”.
Justice Collier held that this conduct constituted a clear breach of section 50 of the Fair Work Act 2009 pertaining to contraventions of an enterprise agreement, and penalties will be issued.
Non-compliance with an enterprise agreement is a breach of the Fair Work Act 2009. Employers must ensure that they are complying with any applicable enterprise agreements, particularly with respect to requiring employees to work reasonable overtime.
If you have questions about what constitutes ‘reasonable overtime’, whether under an enterprise agreement, award or under the Fair Work Act 2009, please do not hesitate to contact Nick Stevens or Jane Murray.