Ordinary hours vs. overtime hours: What’s the difference?

by Jul 10, 2024Fair Work, Human Resources, View All

The Fair Work Commission (FWC) recently addressed a significant dispute between a worker and his employer, a security company, under s.739 of the Fair Work Act 2009. The case arose when the worker, frustrated with the employer’s failure to provide the minimum number of hours as per their contract, sought the Commission’s intervention after internal resolution attempts failed.

This dispute underscores the crucial distinction between ordinary hours and overtime hours in the workplace, highlighting the broader implications for employment benefits.


The Core of the Dispute

The heart of the matter revolved around an Individual Flexibility Agreement (IFA) and the company’s enterprise agreement. The worker claimed that the employer breached these agreements by not providing the agreed minimum number of ordinary hours, opting instead to pay overtime rates. This claim was not just about monetary compensation; it also concerned leave entitlements and superannuation contributions accrued over ordinary hours.

The worker’s argument was based on the IFA signed on October 29, 2021, which stipulated a minimum of 24 ordinary hours per week. He contended that without at least seven days’ notice of his roster, the employer had to pay overtime rates in addition to the 24 ordinary hours.

On the other hand, the employer argued that the IFA was not validly made under the flexibility clause of the Enterprise Agreement, thus negating their obligation to provide the minimum hours. Alternatively, the employer claimed that even if the IFA was valid, it allowed the conversion of ordinary hours to overtime when less than seven days’ notice was given.


Arbitration and Key Questions

The FWC had to address two key questions through arbitration:
1. Was the employer required to provide the worker at least 24 ordinary hours each week from May 2021 to November 2022, excluding periods of leave?

2. Did the employer breach the IFA and the Enterprise Agreement by:
a. Paying the worker at overtime rates for any of his 24 ordinary hours per week?
b. Providing the worker with his roster with less than seven days’ notice?


FWC’s Findings and Considerations

Upon examining the Enterprise Agreement and the IFA, the FWC noted that the IFA clearly stated, “Your roster will be provided to you seven [7] days in advance wherever possible and could consist of no less than 24 regular hours according to week plus any allowances and loadings you’ll be entitled to according with the Enterprise Agreement.

The Commission found the IFA to be a valid written agreement, entitling the worker to a minimum of 24 ordinary hours per week. It ruled that substituting these hours with overtime breached clause 2.1.3(e) of the Enterprise Agreement. Moreover, the FWC acknowledged that while the employer could change roster requirements based on operational needs, they were still obligated to provide the minimum ordinary hours if they failed to give seven days’ notice.


Impact of Overtime Triggers

The FWC determined that the IFA allowed more flexibility regarding overtime triggers, aligning with the Enterprise Agreement’s intent. This meant the employer had some leeway in meeting the minimum hours requirement, even if strict notice requirements were not met.


Conclusion and Recommendations

The FWC concluded that the employer had indeed breached the agreement by substituting overtime for ordinary hours and paying overtime rates without basis. However, it did not find the employer at fault for providing less than seven days’ notice for rosters, due to the flexibility clause in the IFA.

The Commission recommended that the employer review and adjust the worker’s payments and accruals for the periods in question. It also suggested terminating the IFA by mutual agreement if the worker was dissatisfied with the current arrangement and advised the employer to review other IFAs for compliance.


Understanding Ordinary and Overtime Hours

This case highlights the importance of clearly understanding and distinguishing between ordinary and overtime hours:

– **Ordinary Hours**: Regular hours agreed upon in the employment contract or agreement, typically entitling the worker to standard pay, leave entitlements, and superannuation.

– **Overtime Hours**: Hours worked beyond the ordinary hours, usually attracting higher pay rates but may not accrue the same entitlements as ordinary hours.
Employers and employees alike must ensure clarity and compliance with their agreements to avoid disputes and ensure fair treatment.
For more insights and updates on employment law and workplace disputes, stay tuned to our blog.

Disclaimer: The information provided in this blog was accurate at the time of writing and is intended as general advice. For specific advice, please call AHR on 1800 577 515.

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