It has been a key factor in many underpayments across many industries and how to communicate and manage Guaranteed Hours for staff has been a point of confusion for many industries. What are the requirements to set Guaranteed Hours for permanent staff? What happens if there is not enough work to be done that day? What happens if the roster changes at the last minute? When does overtime apply? What if Guaranteed Hours were not set properly on initial employment? These are the questions that fuel retail and wholesale businesses have faced for years, and ACAPMA has assisted countless members with these enquiries, this important but poorly understood area is the focus of this weeks HR Highlight.
What are Guaranteed Hours?
Guaranteed or Standard Hours is a term utilised within the Fair Work Act and outlines the times the business and the employee have agreed that the employee will be working. This is given further detail in the Awards, with clauses in all fuel industry Awards placing very specific requirements around Guaranteed Hours requirements and communications.
For example, in the Award that covers the engagement of all permanent (full time or part time) fuel retail staff there is specific requirements pertaining to the communication of Guaranteed Hours. Clause 10.3 of the Vehicle Repair, Service and Retail Award 2020 (https://library.fairwork.gov.au/award/?krn=ma000089#viewer-page-heading ) specifically states that “At the time of engagement, the employer and the part-time employee will agree in writing….which days of the week the employee will work…the actual starting and finishing times each day…the hours worked each day”. This clause also notes that “all time worked in excess of the agreed hours is paid at overtime rates” and that “any agreed variation to the hours of work will be recorded in writing”
Similar clauses exist in the Award that covers the engagement of permanent (full time or part time) fuel wholesale and transport workers (see Clause 10.2 of the Road Transport and Distribution Award 2020, https://library.fairwork.gov.au/award/?krn=ma000038#viewer-page-heading) and fuel admin workers (see Clause 10.2 of the Clerks – Private Sector Award 2020,https://library.fairwork.gov.au/award/?krn=MA000002)
What are the requirements around Guaranteed Hours?
When engaging staff it is a requirement under the Act that the Guaranteed Hours be communicated in writing. This is requirement for communication in writing differs from many of the other engagement level requirements…which just call for communication.
This need for the Guaranteed Hours to be communicated in writing makes the use of Engagement Documents a must, but the requirements don’t stop at providing this communication in writing. There is a specific format that is stipulated for the communication of Guaranteed Hours. That is, that the Guaranteed Hours must be written showing the specific the day, start time and finish time of each shift.
“This is an area that has not traditionally been done well. Where Engagement Documents are used, and where they do refer to Guaranteed or Standard Hours, they almost always simply state a number, rather than stipulating the day, start time and finish time of each shift. So rather than stating ‘The Standard Hours for this role will be Monday to Friday 08:00-17:00 with a 1-hour lunch break each day’, they simply state ‘the Standard Hours for this role will be 40 hours a week’. While this is common practice, and it is a start, it is technically and practically inadequate” explains ACAPMAs Elisha Radwanowski.
Why do Guaranteed Hours matter?
It is important that the Guaranteed or Standard Hours are communicated, and communicated correctly, for several reasons.
The agreement between the business and the employee is for them to work a certain number of hours on certain days. The business has an obligation to pay staff for those agreed hours and days each week, and cannot unilaterally reduce those hours. So if the employee was engaged to do 21 hours that is what they need to be paid for as a minimum. The unilateral reduction of hours can trigger adverse action and exploitation concerns, as well as common law breach of contract.
This agreement also extends to situations where the employee works outside of the Guaranteed or Standard Hours. Anytime an employee is unilaterally directed to work outside of the agreed Standard Hours that work is overtime and should be treated and paid as such.
“Ultimately the concept behind these Guaranteed Hours is that there is an agreement between the business and the employee as to when they will work. This allows the employee to plan their life and the business to plan its coverage” explains Elisha.
“This fundamental agreement on when to work has implications on minimum hours and overtime that need to be well understood. The contract of employment is a contract, and the agreement about when the employee will work is the core of that. The business is promising to pay the employee for work for those times, and the employee is promising to be there to work for those hours” adds Elisha.
“Outside of these agreed hours any work would be overtime, to be paid at the overtime rate, and to be rejected by the employee if it doesn’t work for their life. If the employee agreed to work 10:00-14:00 Monday to Friday, then any time the employee is asked to work before or after these hours, even on a weekday, is overtime” continues Elisha
Can I send an employee home if there is not enough work for them to do?
The employee is promised pay for all of those Guaranteed Hours – they have potentially rejected other work to make themselves available (if they are part time) – so while the business can in fact send them home if there is not enough work the employee MUST STILL BE PAID for all agreed Guaranteed Hours – because that is the agreement that they made with their staff on engagement – that is what permanent employment is.
If the employee works outside of the Guaranteed Hours does overtime apply?
Yes…but…it can be nuanced. To better understand the concept it is helpful to think for a moment about a permanent employee who works 38h a week. If the business requires the employee to work an extra day it is clearly requiring the employee to work MORE than usual and at a time that may be inconvenient to the employees life, so overtime is required. Where the nuance comes into it is when we look at the difference between a business requiring the employee to work overtime and an agreement being made between the employee and the employer to change the initial agreement that was made. If there is a genuine agreement to change the Guaranteed Hours of a part time worker then overtime will not apply.
For example;
FuelBiz advertises a permanent part time position. I interview for the position and let them know my availability. We come to an agreement that, based on my uni and childcare duties, I will work 10:00-14:00 Monday, Tuesday, Wednesday and Thursday. Those are my Guaranteed Hours.
- If someone calls in sick and FuelBiz have tried everything to get someone to volunteer to cover the sick persons shift, and they call me and require me to attend work on Friday, which is outside of my Guaranteed Hours, I would receive overtime (I would also retain the ability to say no to the overtime based on family and personal reasons if I really couldn’t do the shift, and my employment can not be impacted because I said no).
- However, if my uni dates change and I let FuelBiz know that I can now work Fridays if they need me, and a Friday shift or even a sick shift on a Friday turns up they can call me and let me know that there is a shift available if I want it, and if I say yes that would be at ordinary rate not overtime because there had been a genuine agreement to vary the Guaranteed Hours, either temporarily (just for this one shift) or permanently (for all future Fridays).
- Similarly if I am at work on Thursday and the next staff member calls in sick with no notice FuelBiz may ask me if it is ok for me to stick around for an hour while they arrange a cover to do the shift, and if I am ok with that and we agree then that is at ordinary rate not overtime because there has been a genuine agreement to vary Guaranteed Hours, but if FuelBiz require me to stay without my agreement, then that would be overtime.
Does that mean rosters can never change?
ACAPMA is often asked this question. The short answer is no, this does not mean that rosters must be fixed. But the longer answer is that businesses need to be engaging with staff to ensure that any changes to the Guaranteed Hours are agreed and not unilateral.
Guaranteed or Standard Hours can change over time by agreement. The agreement part is key. The business can set up a framework for an agreement to occur. Some businesses use formal variation to Standard Hours forms, others use Hands Up Agreements for additional hours at ordinary time rates, while others set up a roster proposal and acceptance system whereby changes to the Standard Hours are taken to be made “by agreement” through the posting of, and acceptance, of a roster.
In a setting where these Standard or Guaranteed Hours may change over time, such as a retail environment, it is also advisable to clarify how these hours may be varied over time, such as the inclusion of a notation into the Letter of Offer (Contract or Confirmation of Employment) to the effect of; “these standard/guaranteed hours may change over time by mutual agreement, agreement will be taken to have been made through the posting of and acceptance of a roster or other communications as agreed”.
This creates a clear pathway of agreeing general minor roster changes as variations to the Guaranteed Hours, while also providing an avenue to address last minute changes.
From a practical standpoint it is important to remember;
- An employee can not have their employment or opportunities impacted because they said no to overtime or refused to change their guaranteed hours (either temporarily or permanently)
- If the business is forcing the change (requiring) overtime payment applies
- If there is agreement for the change of guaranteed hours (either temporarily or permanently) the overtime rate does not apply (unless the employee reaches over 38h, at which point the overtime rate always applies)
- Rosters and other methods of agreement (like additional hours request forms, availability change forms, text messages etc) are employment documents and should be retained for 7 years after they no longer have effect
What about Casuals do they have Guaranteed Hours?
Casual staff are employed and engaged by the hour and as such, they have no Guaranteed or Standard Hours, or to put it another way, the Guaranteed Hours for a Casual employee are zero.
It is beneficial, in the interests of clarity, for Engagement Documents to specifically recognise this reality with a clause to that effect – “as a casual employee there is no firm advance commitment to ongoing employment and there are no guaranteed or standard hours, rather you will be offered work as needed by the businesses. As a casual employee you receive a casual rate of pay that includes compensation for this lack of advance commitment to ongoing employment and for the lack of guaranteed hours”
Here to Help
HR Highlights are things to consider, implement and watch out for in your business. They are provided as general information for you to consider and do not constitute advice. You should seek further advice on your situation by contacting your legal advisor. ACAPMA members can access resources and receive advice, guidance and support from the ACAPMA employment professionals via employment@acapma.com.au , it is free for members. ACAPMA Membership delivers this and more benefits, see; https://acapma.com.au/membership/ for more information.
Elisha Radwanowski BCom(HRM&IR)
ACAPMA
