The tricky balance with flexible work arrangements

The COVID-19 pandemic forced many employers to think about traditional and new ways of working, including how hours of work are performed and the flexibility that more and more employees are coming to expect from their employer. The post-pandemic working world has seen an increase in many employers being willing to facilitate flexible working arrangements.

However, flexible work arrangements aren’t new. The right to request a “flexible work arrangement” has been part of the National Employment Standards in the Fair Work Act 2009 (Cth) (FW Act). Under that standard, some employees (such as parents, workers with a disability, and pregnant workers) are eligible to request flexible work arrangements.

Those arrangements can include changes to start and finish times, part-time work, job sharing and working from home. Section 65 of the FW Act sets out the requirements that must be complied with when making and responding to flexible work arrangements. Recent changes have seen further enhancement of this important standard as part of the FW Act.

While flexible work arrangements offer considerable benefits to both employers and employees, the arrangements can sometimes blur the boundaries between employees’ personal and working lives, leading to “hidden overtime.”

There is often a tricky balance for employers and employees to strike where the job demands of a position require some reasonable additional hours to be worked, but a flexible work arrangement can define work hours more clearly. When is a reasonable expectation not so reasonable or, even more significantly, unlawful?

Recapping the essentials – reasonable additional hours

Under the National Employment Standards, employees are entitled to refuse to work additional hours if they are unreasonable. Whether additional hours are reasonable requires a consideration of the following factors:

• any risk to employee health and safety from working the additional hours
• the employee’s personal circumstances, including family responsibilities
• the needs of the workplace
• whether the employee will receive overtime payments, penalty rates, compensation or a level of remuneration which reflects the expectation to work additional hours
• any notice given by the employer to require the additional hours, or by the employee of their intention to refuse the additional hours
• usual patterns of work in the relevant industry
• the nature of the employee’s role and level of responsibility
• whether additional hours are in accordance with averaging terms in an industrial instrument or other agreement between the employer and employee
• any other relevant matters.

Many employment contracts include a term stating that the employee may need to work additional hours as required to fulfil the requirements of the role. For salaried workers (those paid on an annualised basis), the clause may even state that the employee “agrees” that their salary adequately compensates them for any additional reasonable hours worked.

However, depending on the circumstances, relying on a contractual term may not be sufficient. The expectation of reasonable additional hours is not always lawful. For example, in 2022, the Federal Court of Australia held that it was unreasonable for a knife hand at a meat wholesaler to work an additional 12 hours per week (Australasian Meat Industry Employees Union v. Dick Stone Pty Ltd [2022] FCA 512). 

While a contractual term is one positive step that employers can take to indicate an employee agrees to working overtime, employers are also required to assess what is “reasonable” by engaging with each of the elements in section 62(3).

Additionally, employees who are covered by an award or enterprise agreement may be entitled to receive overtime pay for additional hours worked. Employers are advised to therefore monitor overtime worked by award covered employees, even where they are paid on an annualised basis, to ensure they are remunerated at or above their minimum award entitlements for the hours worked.

Occupational health and safety considerations

Working additional hours can also increase occupational health and safety risks. In most Australian jurisdictions, “persons conducting a business or undertaking” (PCBU) have an obligation to ensure, as far as is reasonably practicable, that employees (and other persons) are not exposed to risks to psychological health and safety arising from work being performed for the PCBU.

In the context of flexible working arrangements, employers may need to be vigilant of the practical effect of flexible work arrangements and to continually monitor hours of work to ensure that “flexibility” isn’t leading to safety risks because of the way the hours of work are performed or how many hours are worked. A failure to adequately address safety risks may expose an employer to investigation or prosecution by the safety regulator, increased absence due to ill health caused by unreasonable work hours and demands and/or claims for compensation due to a workplace “injury.”

So what steps can employers take to reduce these risks?

Employers can take positive steps to manage requests for flexible work arrangements, including:

• Implementing policies and procedures which are consistent with the processes under the FW Act, with particular regard to those categories of workers who are lawfully entitled to make a request for flexible work arrangements under the FW Act.
• Establishing the employer’s position about flexible work arrangements that fall outside of the FW Act framework.
• Considering employee job design, including managing expectations about how much work an employee can practically complete during their agreed working hours.
• Working to make necessary adjustments to address risks of unreasonable work hours or demands.
• Reviewing the adequacy of existing controls to manage psychosocial risks in the workplace more generally, including methods for maintaining boundaries between working hours and personal life. These methods can include marking out employee work hours in team calendars, identifying employee working hours in email signatures, and not contacting or emailing employees outside of their working hours.
• Conducting training for employees to manage risks arising from flexible work and for managers to identify and respond to risks as they arise.
• Auditing award covered “annualised salary” employees to ensure employees are being paid at or above their minimum award entitlements.

Amanda Junkeer is a Practice Leader in the Workplace Relations team at Moores in Melbourne.