Employers shouldn’t be too quick to celebrate the Fair Work Commission’s (FWC) proposed model time off in lieu (TOIL) of overtime clause as this “big win” for employer flexibility may be hindered by the fine print.   

As part of the four yearly review of modern awards, the FWC Full Bench has set out a model TOIL clause. It purports to increase flexibility under the award system by removing barriers to negotiate TOIL between employers and their employees. The bench intends to insert this clause into the majority of modern awards that do not currently provide for TOIL.  

The FWC Full Bench model clause proposes that TOIL will be calculated using an employee’s ordinary time rate. Effectively, this means that time taken off instead of overtime will be paid on an “hour for hour” basis. The only exception is where an award already provides for TOIL at the relevant overtime penalty rate.   

The reality for employers though is that the model clause, in its current form, provides for a number of constraints for implementing TOIL arrangements. These include: 

• The employer cannot initiate a TOIL agreement. Instead, their employee must elect to do so. 
• A separate written agreement must be made between their employee and employer on   each occasion that TOIL is taken. 
• Each written agreement must include various details, as prescribed by the model clause. 
• TOIL must be taken within 12 weeks of the overtime being worked.  
• Upon termination of employment, an employee who has not yet acquitted TOIL hours is entitled to receive payment at overtime rates.   
   

The FWC has invited interested parties to make further submissions in relation to this matter by Friday August 28. 

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