Multi-hiring: when overtime's not overtime

In April 2018, we highlighted that employers and employees should not shy away from multi-hiring arrangements if this best meets the requirements of both parties (see our previous article here).

Confirming this position, the Federal Court recently affirmed the Federal Circuit Court’s ruling that an employer is not precluded from entering into separate contracts of employment where the work is regulated by the same award or enterprise agreement (EA). This decision shows how important it is for employers to clearly differentiate between each engagement when agreeing to multi-hiring.

Background

The case involved an employee who concurrently held two part-time positions with the one employer—one as a Services Officer (SO) and the other as a Delivery Officer (DO). On occasion, the employee would work as an SO and at the conclusion of that shift (after a period of rest at home), then commence work at an alternate location as a DO, where he would often work overtime. The employee argued that because his contracts of employment were regulated by a single EA, this constituted one “particular employment” when construed in light of s 52(2) of the Fair Work Act 2009 (Cth).

The employee claimed the overtime entitlements he accrued should be calculated on the aggregate hours he worked in both roles.

The employer disputed the employee’s claim, arguing each role was distinctly separate when you consider:

• there were separate contracts of employment for each role
• the employee performed each role at different locations
• there was a clear shift start and finish time for work in each role
• a unique code for work undertaken in each role was recorded on the employee’s payslip, and
• the classification and rates of pay differed between each role, which was clearly reflected on the employee’s payslip.

On this basis, the employer asserted it would be incorrect for the employee to claim entitlements based on aggregate hours and that the EA applied, so each separate employment contract should be regulated on an individual basis—not in a combined way (as the employee had contended).

The decision

The Federal Circuit Court in first instance and the Federal Court on appeal agreed that the evidence clearly demonstrated two distinct and separate employment arrangements. The Courts held that s 52(2) of the Fair Work Act operated with respect to each “particular employment” that the employee had with the employer and not in some cumulative way, as the employee had contended.

Why this is important for employers

This is a significant decision in relation to multi-hiring arrangements and demonstrates that an employee holding two distinct and separate part-time positions cannot base overtime and other entitlements on combined hours. However, to rely on this precedent, it is imperative that employers do not have multi-hire arrangements that are “bundled together”.

To minimise potential underpayment claims in light of this decision, we recommend that employers who are engaging in multi-hiring audit their arrangements to confirm they can readily demonstrate that:

• there are clear contracts of employment for each role the employee is engaged in
• each contract contains clear contractual terms of the role to be performed
• there is evidence to demonstrate the employee understands each role is entered into on an individual basis and will be treated as such
• the employee accrues entitlements (where applicable), such as annual leave, separately for each role
• each role has unique identifiers specific to that role, for example a work code that is clearly recorded on their payslip, timesheet or an employee code, and
• both parties understand the terms and effect of the relevant award or enterprise agreement that works in conjunction with the employment agreement.