Overtime or time off in lieu – Fair Work reviews

As part of its four yearly review of modern awards, the Fair Work Commission has turned its attentions to overtime and time off in lieu (TOIL). In a decision earlier this month, the FWC decided that TOIL provisions should be included in all modern awards that deal with overtime.

The idea behind TOIL is that employees can elect to have time off when they work overtime hours, instead of being paid overtime rates.

Photography / Joshua Davis

Photography / Joshua Davis

At present, many modern awards already contain TOIL provisions, but they do not all deal with the rate of TOIL accrual in the same way; some allow for the accrual of TOIL at a rate reflective of overtime penalties (for example, where the overtime penalty is time and a half, the employee accrues one and a half hours TOIL for every hour of overtime worked), whereas other awards allow for TOIL to be accrued on a time-for-time basis (that is, where an employee works one hour of overtime, they accrue one hour of TOIL). Furthermore, some modern awards are silent on the issue of overtime and TOIL completely.

To address these variations the FWC proposed a TOIL model clause. The model clause will be inserted into all modern awards that currently have overtime provisions. Therefore, any award that is silent on overtime will continue to be silent on TOIL. In circumstances where there is an existing TOIL clause that allows of a higher rate of accrual than the model clause, that higher rate will be substituted into the wording of the model clause for that award only, thus preserving any existing entitlement. All other modern awards that have overtime provisions will be varied to include the new model clause.

In general terms, the proposed model clause says:

·      Employers and employees can agree to TOIL instead of overtime penalty payments

·      When an employer and employee make an agreement regarding toil, the following requirements apply:

o   each occasion overtime is worked and TOIL is to be taken, a written agreement must be made. The agreement must:

§  record the start and finish of the overtime

§  state that the employee can request overtime payment at the penalty rate if they don’t use their TOIL

§  be retained as employee record

o   TOIL is to be calculated at a time-for-time rate

o   within four weeks of the overtime being worked, the employer and employee must agree about when the TOIL is to be taken

o   TOIL must be taken within 12 weeks, otherwise overtime payment must be made to employee

o   If upon termination, an employee has TOIL accrued, it must be paid out at the overtime rate

·      Where an employee is eligible to make an individual flexibility arrangement, it can be made in relation to TOIL and an employer cannot refuse unless there are reasonable business grounds for doing so.

·      An employer must not exert undue pressure or influence on and employee in relation to the employee’s decision about whether to make an agreement to take TOIL or not.

In its decision, the FWC noted that there needed to be some exceptions to the model clause. For example, the Building and Construction General On-Site Award 2010, Joinery and Building Trades Award 2010 and the Seagoing Industry Award 2010 are not proposed to be varied because of the history of these awards and the particularities of the industries to which they apply.

The FWC will be accepting submissions regarding the model clause until 28 August 2015 and will conduct a further hearing on the matter on 4 September 2015.

If you would like to learn more about we do, contact THE WORKPLACE.

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