August 2016.
Do you have a time off in lieu policy or want to offer this to your employees?
As we have explained in previous updates, the Fair Work Commission (FWC) has decided to amend a large number of Modern Awards to insert a model clause to enable employers and employees to agree that an employee can take time off in lieu of overtime worked (TOIL), rather than being paid for it. The decision acknowledges that a large group of employees value time off more than additional remuneration and provides more flexibility to employers and employees.
This change only affects employers who already offer employees TOIL or would like to do so. If this is you, please read on to understand the changes and how they affect you.
We are still waiting for the Modern Awards to be formally updated on the FWC’s website, so you may not be able to see the changes in the Modern Awards yet, but we want to ensure you are ahead of the game.
I have a TOIL policy in my handbook, what should I do?
If your Employee Handbook already contains a TOIL policy and your business or employees are covered by one of the Modern Awards listed here, please contact our Advice team on 1300 651 415 to discuss whether you need to make any changes to your policy or processes to comply with the model clause. We will be able to explain the changes and prepare any agreements or documents you need.
I do not have a TOIL policy in my handbook, but may like to (or already do) offer TOIL to my employees. What should I do?
If you would like to start offering TOIL to your employees, please call our Advice team on 1300 651 415 to discuss the introduction of a TOIL policy and required procedures for your business.
A TOIL arrangement is where you formally agree that an employee can take time off instead of being paid for overtime worked (eg one hour off for every hour of overtime worked). This is not the same as flexible working arrangements where you simply agree that employees must work a set number of hours a week, but you allow them flexibility on when the work is performed. For example, they stay late one day so come in later the next day.
Salaried employees also do not typically receive overtime payments or TOIL. They are paid a set salary for all hours worked, which includes any reasonable additional overtime worked.
So what does the model clause say?
The changes take effect from the first full pay period starting on or after 22 August 2016 and impact 72 Modern Awards, including:
- 26 Modern Awards that previously did not contain TOIL provisions
- 46 Modern Awards that did previously contain TOIL provisions, but have been replaced with a new ‘model’ clause
The Awards affected are listed here.
The new clause allows employers and employees to agree to take time off in lieu of overtime on a time for time basis (ie if you work an hour of overtime, you get to take an hour off).
Employers cannot force employees to take TOIL instead of payment for overtime, but you can refuse a request by an employee (unless the request is actually a request for flexible working arrangements, in which case there must be reasonable business grounds for the refusal).
If you and your employee agree they can take TOIL, you will need a written agreement, containing specific requirements, which are summarised below.
- A separate written agreement must be made for each pay period in which overtime is going to be taken as time off in lieu and these agreements must be kept as an employee record
- The TOIL must be taken within 6 months of the overtime being worked
- If the TOIL is not taken within 6 months, or the employee makes a request for payment, then the overtime accrued and not taken as time off must be paid in the next pay period at the applicable overtime rate
- On termination, you must pay out any TOIL not taken at the applicable overtime rate
Please contact our Advice team on 1300 651 415 for assistance.
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