Australia: no longer the lucky country? Rates of unpaid overtime and the decline of the 38-hour work week.

Key findings

Recommendations

In the post-war era Australia was known as the “lucky country.” The moniker reflected the fortunate lifestyle enjoyed by many Australians which combined the country’s warm weather, large suburban homes with short working hours and generous paid annual leave entitlements. For most Australian workers the working day was limited to an eight-hour day worked across a five-day work week (or equivalent hours differently distributed across a shift work pattern). The eight-hour day and five-day work week are entitlements with a long history in Australia having been first achieved by the collective campaigning of workers and their unions. The first recorded achievement of the eight-hour day was won by the Stonemasons Union in NSW in 1855 and their success sparked the eight-hour day movement which by 1948 could proudly boast it had achieved the eight-hour day for the overwhelming majority of workers in Australia. [1]

Today, the eight-hour day, despite being enshrined in legislation, is more an aspirational goal than a reality for most Australian workers. Previous studies show Australian workers in recent years perform some of the highest rates of overtime work in the OECD.[2] The decline in the eight-hour workday is in large part due to a loophole the current federal industrial relations legislation, the Fair Work Act (FW Act). The FW Act provides for minimum work standards for all Australian employees and specifies an employer must not request or require an employee to work more than 38 hours in a week. However, the FW Act also allows the employer to require the employee to work more than 38 hours if the “additional hours are reasonable.” There is no requirement in the Act that the reasonable additional hours be paid and employees who do not have paid overtime requirements in their employment contract, (Award or Enterprise Agreement) can be legally required under this provision to perform unpaid overtime as long as the overtime is “reasonable”. What is considered “reasonable” for the purpose of the FW Act is not defined in the legislation and unfortunately has been interpreted ambiguously by employment law experts and broadly by most employers.[3]

Australian workers are suffering the consequences of the FW Act’s failure to define “reasonable additional hours.” The research detailed in this report reveals on average employees are commonly expected to work 9 hours of unpaid overtime each week. Over a full year an average Australian worker can be expected to work an additional 11 weeks of unpaid overtime. The equivalent financial value of this overtime for an average Australian worker is $21,563 a year. These are alarming figures, and they challenge community expectations of what is reasonable. Despite some variation across industries and occupations the expectation by Australian employers that workers perform long periods of unpaid overtime is endemic. It is a challenging finding of this study that there is such a scarcity of the employers offering their workers a true eight-hour day that the eight-hour day has ceased to be an expectation of Australian workers and can no longer be described as a minimum standard in Australian workplaces.

Over the past 15 years there has been considerable research into the high amount of unpaid overtime engaged in by Australian workers. However, this is the largest study by sample size. The results of the research outlined in this report are consistent with the findings of previous studies into unpaid overtime and provides the first detailed analysis of unpaid overtime performed by workers in key industries and occupations.

The research for this study occurred over the course of three months beginning in November 2023 and continuing to February 2024. During this period Unions NSW surveyed over 5000 Australian workers. The survey results reveal unpaid overtime worked by Australian employees has reached crisis levels. On average Australian workers perform over an hour and a half of unpaid overtime per day. Over a full year the total amount of unpaid overtime worked by Australian employees is over 11 weeks.

Unpaid overtime has been justified as a trade-off for higher salaried wages, or a necessity for junior employees in professional occupations with potential for high bonus or promotion opportunities. However, the findings outlined in this report challenge this justification and demonstrates wage, industry, and type of employment does not impact significantly on the excessive unpaid hours a worker undertakes. Employees earning under $70,000 per year are performing an average of 7.3 hours of unpaid overtime per week. Employees working in low paid industries such as Hospitality, Retail and Clerical work are performing over 6 hours of unpaid overtime per week.

This study looked at the reasons why Australians are willing to perform such high levels of unpaid overtime. The results point to various methods used by employers to either coax or coerce their employees to work additional unpaid overtime. Coaxing methods used by employers include using workplace culture to pressure employees to “start early and finish late”, long term under-resourcing to increase employee workloads, and project led work plans that include unrealistic expectations for performance. Coercive methods include linking bonuses and promotional opportunities to performance expectations that can only be met if unpaid overtime is performed. Further our study demonstrates many schemes designed by employers and marketed as intended to alleviate unpaid overtime worktime are inadequate to address the scale of the unpaid overtime crisis. This includes the NSW public sector’s “Flex” model and Time-Off in Lieu programs, which have failed to address the high amounts of unpaid overtime performed by public sector workers and only alleviate a small amount of the total additional unremunerated work time performed.

The impacts reported in this survey go beyond frustrations of unfair renumeration and reveal the severe emotional, mental and physical toll taken on a constantly stressed workforce. The vast majority of workers report decreased sleep quality, poor mental health, impacts on their family life and their ability to socialise. This is felt too in the broader community as workers report their excessive overtime hours are impeding their participation in society, including community volunteering and care.

The survey highlights the deeply painful social and familial impacts of unpaid overtime, with 77% of respondents reporting their life outside of work is being negatively impacted by their excessive work hours. Almost 70% reported family and friends commenting negatively on the amount of unpaid hours they are performing, with qualitative responses speaking to the reduced time spent with family, the pressure put on personal relationships and the decline in social activities associated with the unpaid hours they are having to work.

The findings of this study demand a need for legislative reform and enforcement methods to reduce and stem the tide of increasing hours of unremunerated work time. Primarily Unions NSW recommends legislative reform restore the right of workers to a true 8-hour workday. To achieve this goal Unions NSW proposes the Fair Work Act be amended to ensure that if a worker is required by their employer to work longer than 38 hours per week they receive additional remuneration for the performance of these hours. Currently employers are permitted to require their workers to perform “reasonable additional hours” beyond 38 hours a week for no extra pay. Introducing a requirement to pay workers for the overtime work they perform will ensure workers are properly remunerated for the work they perform and will also create a disincentive for employers from requiring workers to perform excessive amounts of overtime. Unions NSW’s proposes that the requirement to pay workers for overtime be limited to workers earning less than high income threshold as defined in the Fair Work Act (for financial year 2022/2023), which is an annual salary of $162,000. Limits on unpaid overtime are common in other jurisdictions, for example in the United States under the Fair Labor Standards Act requires employers to pay employees for overtime work where those employees annual earnings are less than $58,656 USD ($88,741 AUD).[4]


[1] https://tradeshallsydney.wordpress.com/2020/04/21/trades-hall-and-the-eight-hour-movement/

[2] https://www.oecdbetterlifeindex.org/topics/work-life-balance/

[3] https://www.abc.net.au/news/2024-02-26/overtime-overwork-burnout-what-are-reasonable-office-hours/103483722

[4] https://www.federalregister.gov/documents/2024/04/26/2024-08038/defining-and-delimiting-the-exemptions-for-executive-administrative-professional-outside-sales- and https://www.epi.org/blog/explaining-the-department-of-labors-new-overtime-rule-that-will-benefit-4-3-millionworkers/#:~:text=Overtime%20pay%20protections%20are%20included,the%20extra%20hours%20they%20work

Key Findings

  • Over 85% of respondents reported working unpaid overtime each week.
  • On average respondents reported working 9.08 hours of unpaid work each week. In an average work year (48 weeks) this would represent 58.1 days or 11.6 weeks of unpaid work.
  • The financial value of unpaid work is $21,563 per year for an average worker on a yearly income of $96,660.
  • Over 70% of respondents reported working overtime on weekends. Almost half of this number reported they worked more than two weekends per month.
  • Respondents reported that on average they were skipping lunch breaks at least three times per week.
  • More than three quarters (77%) of respondents believe doing unpaid hours is having a negative impact on their life outside of work.
  • 79% of workers reported their mental health is negatively impacted by their overtime hours.
  • 69% of respondents have had friends and family comment negatively on the unpaid work they do outside of regular hours.
  • Only 17.4% of respondents believe their workplace would be able to function without the use of unpaid overtime.
  • The majority of survey respondents (64% of respondents) believed that refusing a request to perform unpaid overtime was career limiting.
  • Almost half of those surveyed said they would participate more in community volunteering if they performed less unpaid overtime work.

Recommendations

  1. Re-introduce the 38-hour week. The introduction of a legislative protection for employees to refuse to perform unpaid overtime. Limited to employees earning less than the High-Income Threshold as defined in the Fair Work Act;
  2. Improve employer record keeping obligations. The current requirement under the Fair Work Act that employers record the amount of paid overtime their employees perform should be extended to include a requirement employers record the amount of unpaid overtime their employees perform.
  3. Introduce transparent employer reporting requirements. Employers of employees who earn less than the High-Income Threshold should be required to report annually on the amount of overtime, paid and unpaid, staff have performed.
  4. Mandatory Paid Volunteer/Social Support Leave. All employees be provided with a hundred hours paid leave a year to be used when volunteering for a not-for-profit, community or social justice organisation.
  5. Amend the National Employment Standards to include 5 weeks annual leave for all workers. As a reflection of the overtime hours being performed by workers that would not attract annual leave accrual, annual leave should be increased to 5 weeks. A standardised week of additional leave would
    also start to redress the work-life imbalanced experienced by the majority of Australian workers.