Money

Leap day highlights cost of unpaid overtime

Aimee Brodrick will work for free this Monday and the chances are you will too.

That's because February 29 is a leap day and anyone on a fixed annual salary will arguably work for nada.

Aimee Brodrick runs a picnic delivery service in Canberra as a side-business to her public service job.
Aimee Brodrick runs a picnic delivery service in Canberra as a side-business to her public service job. Photo: Jamila Toderas

Three out of every four years, your annual salary covers 365 days, but in a leap year the same salary covers 366 days. Unless you're paid for an extra day of work or given additional leave, you might consider February 29 a gift to your employer.

Another way to look at it is that the leap day itself is not free since the cost is averaged across a year. Instead it would bring your average daily rate down - but that still means that you're working more days for the same money.

Of course, many payroll departments calculate salary based on weeks, fortnights or months rather than days, and the number of pay periods can vary in a financial year, with or without the complication of a leap day.

In any case, leap days are not the only time people work for nothing. A far bigger issue is the amount of unpaid overtime clocked up by Australia's employees.

Advertisement

Last year, the Australia Institute report Workin' 9 to 5.30 estimated that Australians donate about $128 billion in unpaid overtime annually to their employers.

Of course, investing in your career is sensible, but you have to consider the opportunity cost and whether you could be doing more productive things with your time. Keeping fit and healthy and spending time with friends and family top the list for many people, but you could also use those hours to improve your financial wellbeing.

"These days, particularly with a more interconnected digital world, it's easier than ever to start a small side business that is completely unrelated to your normal work," says Matt Grudnoff, senior economist at the Australia Institute. "If you're at work not being paid you might as well have been at home making money in another way."

That could include further study, setting up a side business, or learning about investment and keeping track of a portfolio.

Canberra-based Brodrick is at the forefront of a trend for employees to become part-time entrepreneurs on the side. The 26-year-old has chosen to invest her time outside work in setting up Gingham and Green, a picnic delivery service selling hampers stuffed with goodies from local providores.

Despite the fact she'll work for free on leap day, as a public servant she is lucky to have an employer and managers who support work-life balance. Her work schedule is fairly consistent with only the occasional overtime required, and that has given the 26-year-old the time and space she needs to set up Gingham and Green.

Mostly, demand for her picnic boxes peaks at weekends and she had to keep a wait-list of picnic-inclined romantics at Valentine's Day. But, she adds, "I have needed the occasional long lunch to pick up stock or make a week day delivery."

Brodrick's venture is in tune with the zeitgeist, as the Turnbull government seeks to encourage more entrepreneurial activity and innovation.

There are many salaried employees who are busy developing apps and nurturing fledgling online businesses in their spare time hoping to make some extra money, or better still, a fortune.

Alex McCauley, chief executive for industry organisation StartupAUS, says: "The wonderful thing about technology-based businesses in particular, is that Aussie entrepreneurs can think globally about the opportunity from day one, but start locally."

Plus, he adds, the greater "democratisation of opportunities" offered by technology-based businesses means entrepreneurs can "investigate those opportunities without having to give up their day jobs".

But first you need to work for an employer that not only allows employees to start a business outside work, but has a culture that makes it possible.

One Sydney PR executive says she deliberately switched jobs to an agency with more of a focus on work-life balance so she could develop an online business after-hours.

The Workin' 9 to 5.30 report showed that on average each full-time worker is doing almost six hours of unpaid overtime each week and part-time workers almost four hours. Over the course of a year, that adds up to $12,607 of unpaid overtime for each full-time worker and $8105 for each part-time worker.

The Australia Institute has created a calculator, gohomeontimeday.org.au, to help people recognise the financial cost of working unpaid overtime. Take someone who is paid an annual salary of $80,000 to work a 35-hour week and does six extra hours of unpaid overtime each week. That person will clock up 312 unpaid hours or 21 weekends a year, which equates to $264 each week or $13,714 a year.

The Workin' 9 to 5.30 report found that many employees are expected to work extra hours without pay. One in three (31 per cent) workers are expected to work extra hours while another one in three (34 per cent) reported that although working extra unpaid hours is not expected, it is also not discouraged. Only one in 10 workers reported that they are actively discouraged from working extra unpaid hours.

"These figures are worse than previous years, which suggests that Australian workplaces have not only failed to improve work-life balance but they may have actually gone backwards," the report says.

There are rare employers that actively discourage their employees from working beyond their allotted hours – such as Sydney-based medical recruitment firm Wavelength International.

The company told one employee to reduce her hours and actually went so far as to make work-life balance one of her key performance indicators, linked to her bonus. When she finally made changes, she found she was more productive by sticking to her hours.

"There will be times when our recruiters do have to work beyond the normal hours but we make sure that's the exception to the rule rather than the standard," says Emma Trehy, people and culture manager at Wavelength International. 

"Ultimately, if you're looking after your employees' wellbeing, they are going to be more engaged, healthy and, naturally able to be more productive as well."

58 comments