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UpdatesJun 05, 2017

Does paid leave count towards ordinary hours when calculating overtime?

Many awards and enterprise agreements entitle workers to overtime payments for hours worked in excess of ordinary or rostered hours. What if a worker takes paid personal level or paid annual leave at a time when they would otherwise be performing work during ordinary hours?

By Charles Power

Many awards and enterprise agreements entitle workers to overtime payments for hours worked in excess of ordinary or rostered hours. What if a worker takes paid personal level or paid annual leave at a time when they would otherwise be performing work during ordinary hours?

Can a worker claim overtime if they are then required or requested to work outside those ordinary hours?

For example, a part-time employee who is ordinarily rostered on Monday to Thursday shifts, is away on sick leave from Monday to Wednesday and is called in on the Friday to work an additional shift. Does the worker receive overtime for that shift?

This issue was considered by the Fair Work Commission (FWC) in a decision TWU v Jetstar (2017). The question to be resolved was whether Jetstar ground crew employees were entitled to have periods of personal and other leave, which fall during a pay week or roster cycle, taken into account when calculating overtime payments.

The matter was referred to the FWC for determination pursuant to the dispute resolution procedure under the Jetstar Services enterprise agreement.

The relevant overtime clause stated: Where a full-time employee works for a longer period than his or her rostered shift period, or an average of more than 38 hours per week, averaged over a roster cycle (and taking into account RDO entitlements) the additional time worked will be treated as overtime.

Casuals and part-timers

Similar provisions were made for casuals and part-timers, in which a threshold of daily or weekly hours was stipulated and provision made for overtime payments when the employee worked more than the threshold.

The union applicant argued overtime should be payable, irrespective of any leave entitlements accessed during the pay week or roster period. This interpretation was said to be supported by section 62 of the Fair Work Act 2009 (Cth), which prescribes maximum hours of work as part of the National Employment Standards.

Section 62(4) defines hours of work as including ‘any hours of leave, or absence, whether paid or unpaid, that the employee takes in the week and that is authorised…’.

The union argued that the enterprise agreement should be interpreted on the basis the parties to it intended ‘work time’ to have the same meaning as in s 62 of the Act.

Actual performance

The employer argued ‘work’ meant the actual performance of duties and was a different concept to ‘ordinary time’, ‘ordinary hours of work’ or ‘rostered hours’. Moreover, section 62(4) of the Act had no application because that provision was for the specific purpose of calculating maximum hours; not for any other purpose.

The FWC accepted the employer’s arguments and ruled that the word ‘works’ or ‘worked’ must mean being physically at work and performing work or other functions associated with work, at the employer’s direction.

Work does not include periods where no tasks are undertaken and nothing is made or done for the benefit of the employer, such as periods of annual leave, personal leave and other leave.

Ruling interpretation

This ruling is based on an interpretation of a particular enterprise agreement provision, albeit one that commonly appears in similar terms in other enterprise agreements.

However, employers should beware assuming this decision has a universal impact.

I am aware that the Fair Work Ombudsman has adopted a contrary construction of overtime provisions that deploy similar wording.

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