Shift Penalties and Overtime.

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What Is Shiftwork?

The definition of shiftwork can vary. However, in general, shiftwork takes place outside of ordinary work hours as stipulated in an award, registered agreement, or employment contract.

Many businesses rely on shiftworkers to keep things running seamlessly 24 hours a day, 7 days a week. Some of the roles that may involve shiftwork include customer service and security.

Businesses that operate 24 hours a day require employees to work different shifts. In many cases these are arranged as follows:

  • morning shift
  • night shift
  • weekend shift

These schedules may be fixed (the employee is expected to work the same schedule each week) or variable (the employee is expected to work a rotating schedule of different shifts at different times of the day). They may also be required to be available to work upon request at any time of day (on-call).

The nature of the schedule – and what an award, agreement, or contract deems as ‘ordinary hours’ – will affect the type of penalties an employee receives.

Shift Penalties

Given the antisocial nature of shift work, many awards and agreements provide shiftworkers with an increased rate of pay. The increased rate of pay is frequently referred to as a penalty rate.

Whether or not a penalty will be applied and how it will be applied depends on the modern award, enterprise agreement or contract of employment.

As a general rule, penalties are applied in two ways:

  • Shift penalty applied to the entire shift. A shiftworker might receive an additional penalty applied to all hours worked, even if not all the hours worked fall outside of the standard span of hours.
  • Shift penalty applied to some hours of the shift. In some cases, only those hours worked outside of the standard span of hours will attract the additional penalty payment.

Depending on the nature of the work, employers may also need to include allowances to reimburse shift workers for additional expenses they have incurred during their employment – such as meals, travel, and accommodation.

They might also have to give shiftworkers additional breaks.

It is also the employer’s responsibility to ensure that shift workers are paid the right amount, in accordance with the terms of the relevant award, registered agreement, or employment contract.

There should also be transparency on how shift penalty is calculated. This can be done by including the details in employment contracts and employee handbooks.

Night Shift Penalty Rates

To determine if night shift workers are entitled to penalty rate is dependent on how a ‘night shift’ is defined in the award or agreement. Employers should refer to their respective award or registered agreement for clarity on night shift penalty rates.

Overtime Rates

Overtime refers to work performed outside of ordinary hours. The spread of ordinary hours should be reflected in the respective award, registered agreement, or employment contracts.

Employees are typically considered to be working overtime if they work beyond 38 hours for the week. This will apply to both shiftworkers and non-shift workers. While this is conventionally the understanding of ‘overtime’, there may still be variations depending on the nature of the job and modern award, including maximum hours per day and times in which the employee can work.

Some agreements may allow an employee to take paid time off, instead of receiving overtime pay. This is commonly known as ‘time off in lieu.’ If employers opt for this approach, it needs to be established in writing with the employee’s consent and meet any Award requirements.

Employsure can advise you on shift penalties and overtime for your employees. For peace of mind, please call our 24 hour Advice Line now on 1300 207 182.

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