The Fair Work division of the Federal Court has recently handed down an important ruling on how overtime may be authorised by employers.

In Australian Salaried Medical Officers' Federation v Peninsula Health [2023] FCA 939, a class action, the court has determined that employees who worked regular and extensive overtime without obtaining formal permission did so with "implied' authorisation from their employer.

Proceedings for unpaid overtime were brought by a group of junior doctors, against their employer Peninsula Health – a metropolitan public health service in Victoria. The group members alleged that they were not paid their entitlements for overtime worked, even though it was not formally authorised by the employer, and despite the fact they had previously signed timesheets that did not include the extra hours worked. It was contended that this overtime work was performed with the authority of Peninsula Health, and as such the doctors were entitled to payment for these hours at overtime rates.

The relevant Enterprise Agreement ('Agreement') that covered the employees contained a clause stating that overtime was payable including for working "authorised hours in excess of rostered hours." This raised the question of what 'authorisation' meant, which was considered by the court in two parts.

Firstly, the court considered whether the Agreement made it possible for Peninsula Health to impliedly authorise overtime even where detailed protocols for obtaining authorisation were in place. It was determined that the Agreement provided scope for Peninsula Health to give authorisation to overtime hours impliedly, and that it was obliged to pay employees for overtime work that was authorised impliedly.

Secondly, the court considered if in fact the employer had given implied authorisation to the overtime hours worked by the employees. Here, implied authorisation was found to have been given as a result of the practices that were adopted in the workplace. In particular, representatives of the employer and the employees had developed an understanding as to how overtime work would be carried out, which amounted to an implied authorisation from the employer.

The policies in place regarding overtime approval were found to be irrelevant, as the employer had not made sure that the employees were aware of such policies and understood their operation.

Ultimately, Peninsula Health was found to be in breach of its obligations under the Agreement and the Fair Work Act as it had not paid employees for overtime work that it had authorised. The lead employee applicant in the matter was found to be entitled to approximately $8,000 in back payments for overtime worked. This finding will now be applied to the other employees, and Peninsula Health will be required to make further back payments for overtime entitlements.

What this means for Employers

As a class action, this decision is significant as it sets a precedent that will apply in many other circumstances.

The courts' approach highlights the importance of having strong procedures and policies in place regarding approval for overtime and ensuring that these are implemented and worked to.

Employers should first review and consider the terms relating to overtime of the applicable employment contracts, awards and/or enterprise agreements.

If protocols and procedures relating to the authorisation of overtime are not presently in place, such should be prepared and implemented. It is crucial that employees are clearly educated and understand the policies in place regarding overtime and that the policies are adhered to in practice. Otherwise, circumstances may arise where employers are required to pay for overtime that is impliedly authorised.

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