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IS AN OVERTIME CLAUSE ENFORCEABLE?

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Most contracts of employment contain an overtime clause which states that the employee agrees to work overtime “as and when needed”. But is the overtime clause enforceable? The answer is that in most cases it is probably not!

Key points

  • Hours worked in excess of ‘ordinary’ hours of work are regarded as overtime.
  • While an overtime agreement does not have to be in writing, it is preferable to have an overtime clause in the contract of employment.
  • An agreement to work overtime lapses after one year (mostly).
  • Employers should implement mechanisms to remind them to renew overtime agreements with employees.
  • An instruction to work overtime should be reasonable.
  • Employees should not be dismissed, unless they deliberately and repeatedly refuse to work overtime.

 

What is overtime?

The Basic Conditions of Employment Act of 1997 (BCEA) states that “[a]n employer may not require or permit an employee to work more than –
(a) 45 hours in any week? and
(b) nine hours in any day if the employee works for five days or fewer in a week? or
(c) eight hours in any day if the employee works more than five days in a week.”

In some bargaining council agreements, ordinary working hours have been reduced to 40 hours. Employers and employees may also agree to a ‘compressed work week’ or that ordinary and overtime hours are averaged over a period of up to four months.

The key point is that hours worked in excess of ordinary hours of work are regarded as overtime.

There must be an agreement

The BCEA states that “[a]n employer may not require or permit an employee ... to work overtime except in accordance with an agreement”. This does not have to be a written agreement, but to avoid any doubt, it is common practice to include an overtime clause in the contract of employment. Such a clause would typically read that the employee agrees to work overtime “as and when needed”. The question is whether such a clause is enforceable. The chances are that such a clause is – more often than not – unenforceable. So, why would an overtime clause be unenforceable?

Lapses after one year

One of the most overlooked provisions of the BCEA is that an agreement with an employee to work overtime when the employee commences employment, or during the first three months of employment, lapses after one year [section 10(5) of the BCEA].

In simple terms, this means that when an employee signs a contract with a provision that the employee agrees to work overtime, it becomes unenforceable after one year of employment (unless the agreement to work overtime was entered into after the first three months of employment). The employer and employee will therefore have to agree to a new overtime agreement; something which rarely happens in practice.

It is arguable that if an employee continues to work overtime after the first year of employment, the employee has implicitly or tacitly agreed to work overtime indefinitely. But this is a matter of interpretation – the employee may argue that he or she only agreed to work overtime on those specific occasions.

An employer would want to be sure that when they require employees to work overtime, the request or instruction is legitimate and enforceable.

The ANDRU Mining- case

In the Labour Court matter of AMCU obo Mkohonto & others vs ANDRU Mining & others (2023) the judge was faced with a similar conundrum. A team of five employees had been charged with and dismissed for gross insubordination when they refused to obey the instruction from their site manager to work an extra two hours (overtime) on a particular day in order to meet production targets.

Unlawful instruction

While there was a dispute as to whether they actually agreed to work on that particular day, their contracts of employment contained a clause that they would work overtime “as and when required”. The court found that in the majority of cases, the agreements to work overtime had lapsed several years before. The instruction to work overtime was therefore unlawful, unreasonable and unenforceable.

Progressive discipline

There was only one employee whose overtime agreement was enforceable. However, the court found that there was no evidence that the employee had acted wilfully and repeatedly. Although his refusal to work overtime appeared to have been based on the ill-considered belief that it would have been unsafe to work, a progressive disciplinary sanction in the form of a warning or final written warning would have been more appropriate.

All five employees were reinstated with full back pay (i.e. almost six years’ pay).

How to address the problem

Most employers are unlikely to think of getting all employees to sign a new overtime agreement towards the end of the first year of employment. However, if it is operationally important for employees to be available to work overtime, then employers should implement a system that reminds them to sign a new overtime agreement, or add an addendum to existing contracts of employment.

In addition, to ensure that an instruction to work overtime is more robust and less vulnerable to challenge:

  • the overtime clause should contain a notice period; for example, that the employer will give at least a certain number of days’ notice of the need for employees to work overtime or otherwise refer to a specific period in which overtime will regularly be worked (e.g. where the business is seasonal by nature);
  • the need for overtime work must be reasonable; i.e. be supported by sound operational reasons; and
  • employees should not be dismissed unless they have repeatedly and deliberately refused to work overtime.

What if employees refuse to sign a new overtime agreement?

If employees refuse to sign an agreement to work overtime, the employer may consider retrenchment as an option. Retrenchment will only be justified if an employer is able to demonstrate sound operational reasons for needing employees to work overtime. The employer would also have to follow the retrenchment process prescribed by the Labour Relations Act of 1995.

Jan Truter for www.labourwise.co.za

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