Fair Work Australia rules against voluntary overtime deals

Fair Work Australia has signalled it will reject workplace agreements that allow employees to volunteer to work extra hours without being paid penalty rates.

The decision handed down involved an appeal against FWA’s decision to reject a workplace agreement between aged care group Bupa Care Services and two unions.

The agreement provided provisions that would have allowed health workers to volunteer to work overtime without receiving penalty rates if it suited their personal circumstances to work.

But FWA Commissioner Greg Smith said the provision failed the “no-disadvantage” test as it could have left the workers worse off under the award.

While the full bench found Smith did not give BUP a change to make written undertaking about its failure to meet the no disadvantage test, it found no fault with his application of the no disadvantage test.

IR expert Peter Vitale told SmartCompany the decision is not a surprise.

“What it boils down to is that the full bench has really said you can’t have an arrangement where people work overtime outside the ordinary span of hours where they don’t get paid the overtime rate.”

“This really points to the Commission’s view and the Government’s view the awards and the legislation provides enough flexibility so people can organise their hours in a manner which suits them and at the same time avoid additional overtime costs. “

Workplace Minister Julia Gillard welcomed the decision.

“Weekend and late-night penalty rates are an important part of the safety net that millions of Australians rely on to pay their bills.”

However, Vitale says the decision still leaves some questions around the use of individual flexibility agreements and the ability of employers to use working hour “averaging” provisions in agreements, where employee hours worked are averaged out over a certain period, such as a month.

Vitale says the full bench ruling indicates employers are still likely to need to pay penalty rates if employees work outside normal hours.

“What this decision means is that you can average the hours out, but what it doesn’t mean is that you pay the ordinary rate for hours work.”