Overtime Approval

When an employee works outside the ordinary hours set out in their employment contract, enterprise agreement or modern award, this is known as overtime. These extra work hours usually attract overtime rates, as they are not part of the standard employment agreement. However, in most cases paid overtime requires preapproval, whether the work is performed at the request of the employee or the requirement of the employer. This article looks at implied and express overtime approval through the lens of a recent federal court case.

Federal Court decision on overtime approval

In Australian Salaried Medical Officers’ Federation v Peninsula Health [2023] the Federal Court of Australia determined that employees who routinely work extensive overtime without formal permission did so with implied authorisation from their employer. This representative proceeding (also known as a class action) involved 1,100 trainee doctors making claims for unpaid overtime for their work at a public hospital. The claim was for overtime hours performed beyond the rostered finish time. The claim proceeded despite the fact that the hospital had a written overtime policy that explicitly excluded the operation of implied authorisation. The junior doctors worked under relevant multi-employer enterprise agreements that stated that overtime was only payable if they worked rostered hours beyond their ordinary hours or authorised overtime in excess of their rostered hours. This enterprise agreement contains employment terms and conditions in accordance with the provisions of the Fair Work Act 2009.

The ordinary hours of work for each junior doctor was 38 hours per week (or an average of 38 hours per week over a four-week period). The claimants alleged that they regularly worked more than their rostered hours to chart, do ward rounds, prep patients for medical procedures, and undertake clinical handovers. The central question in the case was whether the overtime was authorised given that it was implied and not express authorisation. The claimants asserted that their overtime was performed with the authority of their employer and therefore they were entitled to overtime rates of pay as outlined in the enterprise agreement.

The respondent argued that the word ‘authorised’ should be defined according to its grammatical meaning, that is, to give legal power or authority, to empower, to formally sanction. It was their contention that the hospital had elaborate processes for the authorisation of overtime in their policy and guidelines and this was the only way to obtain authorised overtime. The respondent felt no obligation to pay overtime as the applicants had not followed these processes to obtain overtime. The court rejected this interpretation as it could have ‘absurd results’ and result in ‘very significant unfairness’.

The court noted that it is not practicable for employees to be closely supervised in every employment relationships. Due to this fact, it found that authorisation to work in excess of rostered hours could be implied and that enterprise agreements could not limit the authorisation process. Justice Bromberg held that the hospital delegated the supervision of junior doctors to registrars, who required tasks that could not be completed during a shift. It follows then that the direction to complete these activities was an implied authorisation to work overtime. A request or requirement to work overtime is suffice to designate the extra time as authorised hours. In this case, the authorisation was implied because:

• the responsibilities of the doctors included tasks performed outside rostered hours
• the employer’s instructions specified how and when these tasks should be performed (for instance, studying charts before rostered hours)
• it was necessary for the doctors to work outside rostered hours because of the work structure and insufficient time to complete the required work
• the employer was aware that there was insufficient time during the rostered hours to finish the work, and that the doctors were working outside rostered hours, and
• notably, the employer failed to direct the employees not to work outside of ordinary rostered hours.

The court found the hospital was in breach of its obligations under both the Agreement and the Fair Work Act. The lead applicant in the matter was awarded $8,000 in unpaid overtime, with the finding also applicable to other employees in the class action.

Employers must monitor employees’ overtime

This case is a reminder for employers to monitor the work hours of their employees. When an employer is aware that their employees work in excess of their normal hours and does not prevent this from occurring, it is difficult for the employer to subsequently argue that these hours were not authorised.

Employers should also review their workplace policies to ensure that there are fair and clear rules over the authorisation of overtime. Employers should:

• issue regular reminders to employees about the authorisation process for overtime
• review current employee adherence to working ordinary hours and address any failures in the system that might give employees grounds to argue they have implied authorisation to work overtime, and
• ensure workplace compliance with the overtime policy to ensure the policy cannot be circumvented.

The employment law team at Go To Court can answer any question you have about implied approval of overtime. Please communicate with the team today on 1300 636 846.