Australian court expands scope of overtime authorisation

It has long been accepted that overtime worked must be requested or required by the employer in order to attract an entitlement to overtime rates, on the basis that overtime comes at a greater cost to employers.

The Federal Court of Australia recently held that 1,100 junior doctors were entitled to overtime for work that was authorised impliedly by their employer. That entitlement was ordered despite the overtime hours being beyond the doctors’ rostered finish time, and the employer having a written authorised overtime policy that did not provide for implied authorisation. 

This decision is likely to have significant implications for employers who do not strictly monitor employee hours and workloads, including exposure to potentially significant overtime and underpayment claims from employees who may claim that they were entitled to overtime, even if they were not directed to work overtime hours.

In light of this decision, we recommend that employers manage this risk by:

• issuing a reminder to all employees about the processes which are required to be followed for any overtime, including any relevant policies or implement a policy if one does not exist;
• ensuring compliance with any policy to avoid an argument that the policy can be circumvented;
• reviewing the current processes followed by employees to work outside of their ordinary hours, and address any issues where it appears employees might be able to argue that they are being impliedly authorised to work overtime.

We anticipate that Peninsula Health will be looking closely at its appeal options, and that this is an issue that may be overturned or further clarified by the Full Federal Court.

The case

The central issue in the case – a class action brought by a large cohort of junior doctors against Peninsula Health – was whether overtime hours worked by junior doctors could be “authorised” by implication, meaning the employees determined according to their workload without an express request or requirement from Peninsula Health.

Peninsula Health argued that any entitlement to overtime pay for the junior doctors would require authorisation from Peninsula Health for hours worked in excess of their rostered hours. It argued that it had clear, detailed processes for working overtime, and that there was no authorisation consistent with those processes for the overtime that was the subject of the proceedings. Accordingly, Peninsula Health said there was no scope for the implication of any authorisation for the junior doctors to work hours in excess of their rostered hours.

The Court determined that under the doctors’ enterprise agreements, authorisation to work overtime in excess of scheduled hours could be impliedly granted by Peninsula Health.

Judge Bromberg held that Peninsula Health delegated the power to supervise and issue directions to junior doctors to registrars, and that if junior doctors were requested or required to carry out tasks by a registrar over the course of a shift, that ought to be considered as a direction by Peninsula Health to work beyond the rostered end time, unless the registrar did not have authority to give that direction. 

In practice, this meant that junior doctors could work beyond their rostered hours; justify that they had work to complete beyond that time and were therefore impliedly authorised to do so; and be entitled to overtime rates, despite the express policy and guideline specifying the process for employer authorisation.