Last week, the Fair Work Commission (the “FWC”) handed down a model term proposed to be inserted into modern awards to allow for employees to take time off in lieu of payment for overtime (“TOIL”). This interesting development coincides with the current debate about flexibility in the workplace, particularly in relation to the payment of penalty rates for weekend work.

The model term provides that each hour of overtime worked by an employee may be taken as one hour of time off during ordinary time hours in the event of agreement between the employee and his or her employer. Various safeguards have been devised, including:

• an employer must not exercise undue influence over an employee’s decision in relation to TOIL; and
• an employee may request at any time to be paid at the overtime rate for any time in lieu not yet used.

The concept of TOIL is astute and has the potential to benefit both employers and employees. For example:

• employers may be able to increase operating hours without incurring the increased costs associated with overtime; and
• employees for whom time (more so than money) is at a premium may be able to structure their working hours in a way that suits their responsibilities outside of work.

As was acknowledged by the FWC in its decision, TOIL has the potential to “encourage greater workforce participation, particularly by workers with caring responsibilities”.

Further, a recent survey of the FWC revealed that 32 per cent of employees ranked flexibility to balance work and non-work commitments as the biggest driver of their overall job satisfaction. This outweighed all other drivers, including the work itself, hours and pay.^[1]

In a political context in which debate over the fundamentals of Australia’s workplace relations system appears to be intensifying, any measure that has the potential to align the interests of employers and employees is welcomed.

TOIL is just one mechanism by which employers can increase flexibility in their workplace and organisations should be proactive in determining others that may help them achieve the same. More flexible workplaces are likely to attract the best talent, have higher workplace morale and, consequently, experience increases in productivity.

If your organisation needs assistance in this area, contact one of the PCS legal team today.

^{[1] Fair Work Commission, Australian Workplace Relations Study, available at <https://www.fwc.gov.au/documents/awrs/AWRS-First-Findings.pdf>,47.}