All you need to know about changes to the Horticulture Award – Changes to overtime for casuals
Changes must be implemented by 15 April 2019
The Fair Work Commission (FWC) has finalised changes to casual employee arrangements under the Horticulture Award.
The changes are a result of a determination by the FWC following an extensive negotiation process between industry and unions.
What are the changes?
The key points of the new system are as follows:
- The changes will have effect on the first full pay period that starts on or after 15 April 2019.
- A casual employee’s ordinary hours are limited to 12 per day and 304 per eight weeks.
- A casual employee must be paid a night loading of 15% for any ordinary hours which are worked between 8.31 pm and 4.59 am.
- This ‘night’ loading is paid in addition to the casual loading of 25%. Although the decision does not specify, in the NFF’s view these loadings should not ‘compound’; 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 daily spread of hours can be moved forward to 7.31 pm to 3.59 am for the period of day-light savings time.
- Any work performed by a casual employee outside ordinary hours 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 overtime rate is 175% x $18.93 = $33.13
- When a casual employee works a 15-hour day they are paid ($23.66 x 12) + ($33.13 x3) = $383.31
- 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.
- The eight week period will be calculated individually for each employee, commencing from when the employee starts work or when the new overtime arrangements take effect
- The ‘night’ loading is not paid where the employee is working overtime.
- 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.
What will it mean for growers?
The changes impact all horticulture growers as of April 15, 2019. Any grower who employs under the Horticulture Award, must apply these changes.
This may, have an impact on how growers choose to employ casual workers, so growers are urged to do their own due diligence and cost analysis of how this will impact their business.
When will the changes come into effect?
These changes must be implemented by 15 April 2019.
Industry requested an implementation period of a minimum of six months, but unfortunately this was not agreed by the FWC.
AUSVEG has expressed its disappointment on the short notice for industry to implement these changes; however, all growers must ensure they are compliant with the changes to the Horticulture Award or risk non-compliance.
What are my obligations as a grower?
As of April 15, 2019, it will be Australian law. Growers will be expected to abide by the law.
What was the process of negotiation?
A detailed timeline of negotiation from the NFF –
2010: The terms of the current Award were introduced during Award Modernisation.
2014: Four-yearly review commenced with the purpose of reviewing all of the modern awards.
Early 2015: The Fair Work Ombudsman raised concerns about confusion as to whether casuals in horticulture are entitled to overtime. The AWU, with support from the NUW, made a claim to clarify that casuals are entitled to overtime.
Mid 2015: NFF jointly with Voice of Horticulture engaged a barrister to oppose the AWU claim and filed over 100 pages of submissions and 27 witness statements, including experts. Evidence from an academic who conducted a survey of Voice of Horticulture members on the potential impacts of this proposed change on the industry was filed.
Mid 2016: Approximately three days of hearing contesting the AWU claim.
Mid 2017: A decision was handed down that stated that some form of overtime would be introduced for casuals. The decision recognised that casuals are seasonal employees working long hours over short periods and that onerous overtime requirements would result in employers taking measures to avoid overtime. The Full Bench set out a provisional view that overtime would be paid at a rate of time and a half with ordinary hours limited to: 12 hours per day, 6am to 6pm, 304 hours over eight weeks.
Late 2017: NFF filed further submissions and witness statements seeking no time span of hours and an expanded averaging period of 988 hours over 26 weeks.
Early 2018: A short hearing led to a conciliation process between employer and employee parties which the Fair Work Commission is reviewing.
Mid-2018: The Fair Work Commission released a Draft Determination of changes to the Horticulture Award and allowed 21-days for industry response.
Mid-2018: The National Farmers’ Federation Horticulture Council, of which AUSVEG is a member, made the decision to not contest the Draft Determination. Citing that challenging the Draft Determination would come at significant cost to growers, as well as likely end in a worse position.
April 2, 2019: The final decision was handed down from the FWC.
April 15, 2019: Changes to the Horticulture Award: Overtime for Casuals implemented.
Is there an opportunity to have these changes reversed?
No. The decision comes at the end of a lengthy negotiation and review process (as outlined above) and this is the Fair Work Commission’s final decision.
AUSVEG recognises that this change is significant for growers throughout Australia.
AUSVEG recommends growers do their own due diligence and review how they use casual workers and assess whether there are any on-farm changes that can assist.
Examples of the changes can be found here.
AUSVEG will also write to supermarkets informing them of the changes to the award and the increase costs for vegetable and potato growers.
To see the decision from the FWC in full please click here.
Growers who have any questions about how this will affect their business should seek legal advice or an industrial relations professional.