Late last year, the (then) Minister for Industrial Relations wrote to the Fair Work Commission (FWC) asking the FWC to undertake a review of key awards in distressed industry sectors as a result of the COVID-19 pandemic, such as the retail and hospitality sectors, with a view to increasing flexibility.
Consequently, the FWC has commenced a process to consider the inclusion of loaded rates and exemption rates clauses in awards that cover the retail and hospitality industries. On 19 May 2021, the FWC published a Draft Determination that (if given effect to) will provide retail employers with some much needed flexibility when utilising part-time employees.
The proposed variations affect clauses 10 and 15.9 of the General Retail Industry Award 2020 (Award), both of which deal with the hours worked by part-time employees. In short, the effect of the variations are to enable part-time employees to “flex up” their hours without necessarily incurring additional overtime penalties.
We have outlined the key changes contained in the Draft Determination below. Note that there has not yet been a final decision by the FWC to vary the Award, but we anticipate that these changes will be enacted in coming weeks.
Changes to regular pattern of work
Currently, clause 10 of the Award requires, amongst other things, that an employer and a part-time employee agree in writing to a regular pattern of work, including the number of hours to be worked each day. If the part-time employee works in excess of the agreed hours, they are entitled to overtime penalty rates.
The amendments to clause 10 of the Award would alter and clarify the way in which a variation to an employee’s regular pattern of work can be agreed. Although every variation would still have to be “recorded in writing”, as long as the variation is agreed to before it takes effect (or in the case of a single shift, before the end of the shift) then no overtime penalty rate will arise[1]. The Draft Determination provides the following example:
Example: Sonya’s guaranteed hours include 5 hours’ work on Mondays. During a busy Monday shift, Sonya’s employer sends Sonya a text message asking her to vary her guaranteed hours that day to work 2 extra hours. Sonya is happy to agree and replies by text message confirming that she agrees. The variation is agreed before Sonya works the extra 2 hours. Sonya’s regular pattern of work has been temporarily varied under clause 10.6. She is not entitled to overtime rates for the additional 2 hours.
The FWC is also seeking to insert clarification into clause 10 of the Award that “recorded in writing” can mean an exchange of emails, text messages, or other forms of electronic communication, in line with common practice.
Furthermore, any such “written” variation agreement would now only have to be provided to the employee upon request (as opposed to the current requirement for a copy of the variation agreement to be provided automatically) thus easing the administrative burden on employers.
“Guaranteed hours”
Under an amended version of clause 10 of the Award, part-time employees would be afforded ‘guaranteed hours’, a term defined to mean “the number of hours to be worked on each day of the week” This is in addition to employers needing to agree in writing as to the “regular pattern of work”.
As a safeguard for part-time employees, the FWC is also proposing to insert a mechanism that allows for a review of the ‘guaranteed hours’ agreed to at the beginning of the employment, as follows:
- if an employee’s ‘guaranteed hours’ are less than the ordinary hours that the employee has regularly worked in the previous 12 months, then the employee may request for the employer to increase their ‘guaranteed hours’ on an ongoing basis to reflect the ordinary hours they are working;
- this request can only be made in writing and can only be made once every 12 months by an employee;
- the employer must respond in writing within 21 days and can only refuse on ‘reasonable business grounds’ (for example, that the employee working more ordinary hours was in fact a temporary measure due to another employee being absent from work);
- before refusing the request, the employer must discuss the request with the employee and genuinely try to reach an agreement that provides predictability and reasonably accommodates the employee’s circumstances;
- if an agreement is reached to increase the ‘guaranteed hours’, the written response from the employer must record the agreed increase; and
- if an agreement is not reached, the written response from the employer must include the grounds for the refusal and how these grounds apply.
Employers should be preparing for these changes by ensuring their payroll systems are equipped to handle this kind of flexibility. In addition, employers should ensure it has processes in place to record agreed variations to part-time hours.
We will continue to update employers with regards to the review process, including any amendments affecting the hospitality sector.
If you require further advice on this Draft Determination and how it might affect your business, please contact one of our team on 03 9448 9600.
[1] Note that an agreement cannot result in the part-time employee working 38 or more ordinary hours per week (i.e. full-time hours).
The above is general information and should not be taken as legal advice.
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