Federal Court rules on employer's power to require reasonable overtime

In brief

In considering the terms of an enterprise agreement allowing an employer to require reasonable overtime, the Full Federal Court decided that the employer's increase in the number of overtime hours could constitute a breach of the agreement.¹ Senior Associate Tarsha Gavin and Lawyer Millie Grant report.

How does it affect you?

• Clauses in enterprise agreements that are permissive in character (such as allowing an employer to require an employee to work reasonable overtime) can still contain obligations or restrictions on the actions that an employer can take.
• An enterprise agreement is likely to be interpreted to allow a 'sensible industrial outcome'.

Background

The Construction, Forestry, Maritime, Mining and Energy Union alleged that an employer, Hays Point Services (HPS), had breached the terms of an enterprise agreement by implementing a roster that required employees to work up to 455 overtime hours per year (or 8.7 hours per week). This was beyond the definition of reasonable overtime in the agreement, which was approximately 104 hours of overtime per year.

The enterprise agreement relevantly stated that:

HPS may require an employee to work reasonable overtime and the employee shall work such overtime as required.

A judge of the Federal Court decided this clause was permissive in character and did not impose any obligation on HPS to provide only reasonable overtime. The use of the word 'may' left it open for HPS to require an employee to work beyond 'reasonable overtime'. For this reason, HPS had not breached the agreement. At that stage, it was unnecessary to consider whether the requirement that employees work 455 hours of overtime per year was 'unreasonable overtime'.

The decision

On appeal, the Full Court of the Federal Court disagreed with the earlier decision. The Full Court decided that the word 'reasonable' imposed a restriction on the overtime that HPS 'may require'. The clause 'does not solely provide for an entitlement to HPS, but is also protective of the interests of employees'.

The court considered a previous decision (Amcor²), which provided that the interpretation of enterprise agreements should not be strict but contribute to a 'sensible industrial outcome.' As it was made under the Fair Work Act 2009 (Cth), the agreement should be presumed to be consistent with the Act. Since the National Employment Standards (the NES) limit the maximum hours employees may work, it should be presumed that the restriction imposed on HPS was the only 'sensible industrial outcome.'

Whether the 455 hours of overtime per year was 'unreasonable overtime' was remitted back to the primary judge for determination.