From today, horticulture growers are required to pay their casual employees overtime, as a result of changes to the Horticulture Award.
The Fair Work Commission made the decision only two weeks ago, giving farmers what the National Farmers’ Federation says is a ‘totally unsatisfactorily’ short time to prepare.
“This is a monumental failure of the system which will hurt both growers and workers,” NFF Chief executive Officer Tony Mahar said.
“The NFF has raised concerns about the short time frame directly with the Minister responsible and the Fair Work Ombudsman. However, the decision is final and binding and industry now has no choice now but to comply.”
The NFF has designed the below information to assist growers to quickly adapt to the new wage system.
Horticulture Award changes in summary
- The Commission’s determination, and therefore the change, “does not take effect until the start of the first full pay period that starts on or after the date of the operation”. Therefore, if a pay period straddles 15 April 2019 the change will not apply until the next pay period.
- A casual employee’s ordinary hours are limited to 12 per day and 304 per eight weeks.
- Any work performed by a casual employee outside ordinary hours (i.e. outside the 12 hours per day or 304 hours over 8 weeks) will be considered overtime.
- When working during overtime, a casual employee must be paid an overtime rate of 175%; i.e. the standard time-and-a-half plus the casual loading.
- If, during an 8 week period, an employee works a number of days/shifts which exceed 12 hours, those extra (i.e. overtime) hours do not count towards the 304 ordinary hours they can work in an 8 week period and are not paid (again) as overtime.
If the hourly base rate is $18.93, then
The casuals overtime rate is 175% x $18.93 = $33.13
When an employee works a 15-hour day they are paid ($23.66 x 12) + ($33.13 x 3) = $383.33
When an employee works 400 hours over 8 weeks but has worked for 15 hours on 14 of those days – that is, has already worked and been paid for 42 overtime hours – then the amount of overtime for the calculation of the 8 weeks period does not include those 42 hours i.e. is 54 hours.
- A casual employee must be paid a night loading of 15% for any ordinary hours that are worked between 8.31 pm and 4.59am.
- The ‘night’ loading is not paid where the employee is working overtime.
- This ‘night’ loading is paid in addition to the casual loading of 25%. This means that the 15% ‘night’ loading is calculated on the base rate, the 25% casual loading is independently calculated on the base rate, and the amounts of the two loadings are then added to the base rate:
If the hourly base rate is $18.93, then:
The ‘night’ loading is 15% x $18.93= $2.84
The ‘casual’ loading is 25% x $18.93 = $4.733
Final rate is $18.93 + $2.84 + $4.73 = $26.50
- In states and territories which do not observe daylight saving time, by agreement between the employer and a majority of affected employees, the period during which the “night loading’ must be paid can be moved forward to 7.31 pm to 3.59 am for the period of day-light savings time.
- Nothing in this decision affects the (way or amount of) payment of a casual employee on a piecework agreement. This means that the piecework does not get overtime or the night loading, and neither the overtime rate nor the night loading are factored into the calculation of the piece rate (i.e. of the “minimum hourly rate” for the purpose of clause 15.2 of the Award).
- For the purposes of approving an enterprise agreement, the Commission needs to be satisfied that, as at “the time the application for approval of the agreement by the FWC was made”, the employees concerned are “better off over all” under the agreement. The change “comes into operation from 15 April 2019”. Accordingly, it appears that the Commission should assess any proposal for an enterprise agreement against the ‘pre-change’ Award up until 15 April 2019.
- The superannuation guarantee is payable on “ordinary times earnings” which are basically all amounts earned for working during “ordinary hours”. That means that all overtime payments (i.e. any payment for working hours exceeding 12 per day or 304 hours over 8 weeks or) would not attract super but the night loading would.
The Fair Work Ombudsman has publish a page outlining the changes and linking to a tool which may assist with calculating the applicable rates. The page can be accessed at: https://www.fairwork.gov.au/about-us/news-and-media-releases/website-news/changes-to-the-horticulture-award
The NFF has already had discussions about this decision and its consequences with the Fair Work Ombudsman. We will continue those discussion, but if growers have any feedback or ideas on how to make this work, or feel they are being unfairly targeted, please notify your peak body or the NFF.