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1 in 3 Aussies Work Unpaid Overtime. Is it You?

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  1. WEEKLY INSIGHT

Time Thieves Beware! Aussie Courts Crack Down on Overtime Exploiters with fines up to $165k.

Employees are often categorised as exempt or non-exempt. Exempt employees, typically in supervisory or management roles, are usually not entitled to overtime pay, while non-exempt employees performing routine tasks usually are. Modern Awards with overtime clauses, enterprise agreements, registered agreements, or employment contracts determine whether an employee can be required to work overtime – with the key consideration being “where reasonable” (FWO 2024).

Reasonable additional hours, particularly in professional services, can be difficult to define. However, the general rule is that 10-20% extra hours per week (of your contracted hours) are generally considered typical. More than 25% might be unreasonable in most cases.

Under Australia’s NES (National Employment Standards), the FWA sets clear guidelines regarding working hours. Specifically, Section 62(1) states that employers should not require full-time salaried employees to work beyond 38 hours per week unless the additional hours are deemed reasonable. When contravened (e.g. more than 40 hours), the Australian court has ordered employers penalties of $82,500 and up to $165,000 for serious contraventions.

While the FWA does not specify a hard limit on reasonable additional hours, certain indicators can suggest when overtime might be considered unreasonable. For example, consistently working over 48 hours a week, frequent weekend work, or extended overtime periods—particularly if uncompensated—could be deemed excessive. Moreover, being asked to work long hours at short notice can significantly disrupt personal life, further pointing to the unreasonableness of such requests.

2. HR/IR & LEADERSHIP

Aussie Workers Robbed of nearly 300 Hours of Unpaid Overtime Every Year?!

In Australia, many salaried employees mistakenly believe they are not entitled to overtime pay. While they are exempt from minimum wage requirements, the key factor determining overtime eligibility is job duties, not salary type. Again, salaried employees can still be entitled to overtime pay if they are working unreasonable hours.

Due to this misconception, The Australia Institute uncovered that Aussie workers are doing a staggering 280 hours of unpaid overtime each year despite regulations. This translates to about 6 hours weekly, amounting to an annual value of over $11,000. According to the ANU (2024), For a healthy life, the workweek should be capped at 39 hours instead of adhering to the 48-hour limit established around the world over 80 years ago.

A notable instance highlighting the issue of excessive working hours occurred in March 2023. The Finance Sector Union, backed by Hall Payne Lawyers, launched a legal challenge in the Federal Court against one of Australia’s big four financial institutions (AFR 2023). This case was on behalf of managers allegedly required to work 55 to 80 hours per week, spotlighting the debate over what constitutes “reasonable” additional hours.

The key lesson here is that some exempt employees, such as those in higher-level or managerial roles, may still qualify for overtime pay under specific circumstances. A formal request process can help document these situations and ensure that employees are compensated appropriately. Furthermore, employees can refuse unreasonable overtime requests, and employers cannot penalise them for doing so.

3. TEAM DIARY

Modern Work, Modern Options, marvinHR is making TOIL Work for Your Business

In next week’s podcast (@The marvinHR De-Brief), we’re exploring the concept of choice—a notion that extends beyond mere flexibility to encompass true autonomy in how work is accomplished. Linking this to this week’s topic of overtime, a well-designed TOIL policy that respects employee choice can contribute to a more positive work environment by demonstrating trust and valuing employee well-being.

In 2015, the FWC introduced an update to the model TOIL term. But what exactly is TOIL? Standing for Time Off In Lieu refers to an employee’s entitlement to take time off from work in place of or instead of receiving overtime pay for the additional hours they worked outside of the normal hours they are contracted to work. “Model TOIL terms” refers to a comprehensive set of guidelines or standards designed to help employers effectively implement this innovative TOIL scheme.

The following terms should be in the TOIL Agreement.

  1. Mutual Agreement between employer and employee – written or verbal.
  2. Record Keeping must be stored for 7 years as part of the employee’s record.
  3. Flexibility, employees should have the option to request payment for any accrued but not yet taken TIL at the correct overtime rate. After the request, payment must be made in the next pay cycle.
  4. Accrual, TIL should be enjoyed within 6 months of working the overtime. If not, employees must be compensated at the usual overtime rate during the following pay cycle.
  5. Upon Departure, if an employee decides to leave or their employment is terminated, any untaken time in lieu should be paid out upon termination.  
  6. Policy or Contract: in the absence of a modern industry award or a registered agreement detailing TOIL arrangements, employers must establish clear guidelines through workplace policies or employment contracts.

Contact our team at marvinHR today; we can help you create a win-win situation for your business and your employees! We provide services for the following: Managing Overtime, Reducing Overtime Cost, TOIL Policy Development and Calculating TOIL Accrual & Management Tools.

View this **FREE** marvinHR TOIL Request Form Template:

4. THIS WEEKS TOP 4 HR READS

1. MIT SLOAN – Management Review – A Five-Step Guide to Improving Your Employer Brand

2. What’s the secret to attracting Gen Z employees?

3. 1 in 8 new hires leaving during probation: report

4. Academics seek pay for emails out of hours

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