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Reducing hours at work is a sensitive topic for any Australian employer. As small business owners adapt to changes in demand, rising costs, or new business priorities, restructuring work hours may become necessary – but it also comes with important legal risks and obligations. Whether you’re considering a reduction in employee hours due to economic pressures, a shift in business focus, or in response to requests from your team, it’s crucial to follow the right legal steps.
You might be asking: Can my employer reduce my hours? Or, from an employer’s perspective, what are the legitimate reasons for reducing employee hours, and how do you protect your business from disputes? Keep reading for a comprehensive guide to reducing employee hours lawfully in Australia, including the legal framework, best practices, and the essential contracts you should have in place.
What Does It Mean to Reduce Hours at Work?
Reducing hours at work refers to an arrangement where an employee, who usually works an agreed number of hours each week (full-time or part-time), has their regular working hours lessened by their employer. This could be short-term (e.g., due to a temporary downturn) or long-term (as part of a broader restructuring).
Unlike casual workers, whose shifts and hours naturally vary, reductions to contracted full-time or part-time hours must be handled with care – and in accordance with employment law.
Why Might an Employer Need to Reduce Employee Hours?
There are lots of good reasons to reduce working hours, and they don’t always involve downsizing or financial difficulty. Common scenarios include:
- Responding to fluctuating workload: For example, a café might roster fewer staff through winter or a retail store might cut hours after the Christmas rush.
- Temporary downturns: Such as during economic slow-downs, supply chain disruptions, or unexpected events like pandemics.
- Restructuring the business: If you’re shifting your business model, automating certain tasks, or merging teams, some roles may need fewer hours.
- Employee-initiated requests: Sometimes team members request a reduction of work hours for reasons like study, caring responsibilities, or personal health.
- Compliance or legal changes: New laws, awards, or changes in the Modern Award system may affect workable hours or rostering requirements.
No matter why you might need to reduce hours, the principle is the same: always follow clear, fair, and lawful processes.
Can Employers Legally Reduce Employee Hours?
The short answer is: only in specific circumstances, and typically with employee agreement. Under the Fair Work Act 2009 (Cth) and most Modern Awards, employers generally cannot unilaterally reduce the ordinary hours of a full-time or part-time employee (that is, without their agreement).
When Can Reduction of Hours Be Lawful?
- Contract or Award Allows Reduction: The employment contract or relevant Modern Award / Enterprise Agreement may contain flexibility clauses, allowing for changes, provided a lawful process is followed.
- Mutual Agreement: Hours can always be reduced if both the employer and employee agree in writing. This is the safest and most common route.
- Genuine Redundancy: If the role itself is no longer required and redundancy processes are followed, hours may be reduced as part of creating a new role or making part-time arrangements (make sure you comply with redundancy obligations).
- Business in Crisis/Emergency: Stand downs or temporary reductions are permitted in certain emergencies (such as a government-ordered lockdown), but only under very strict conditions (employee stand down rules).
- Parental Leave or Flexible Work Requests: Employees may lawfully seek reduced hours as part of a return-to-work plan after parental leave, or if they qualify for flexible work arrangements.
If you reduce hours unfairly or without genuine agreement, you risk claims of breach of contract, unfair dismissal, or adverse action under the Fair Work Act. It’s not enough to give notice and expect employees to comply – you must follow the legal process.
How Do I Reduce Employee Hours Legally? A Step-by-Step Guide
If you’re an employer considering reducing hours at work, here are the essential steps for staying on the right side of Australian employment law.
1. Review Existing Contracts and Awards
Start by reading the employment contracts for each impacted employee. Check:
- What are the guaranteed weekly hours?
- Is there any flexibility clause addressing changes to hours or shift patterns?
- Does a Modern Award or Enterprise Agreement apply, and what are its rules for hours/overtime?
If you don’t know which Modern Award applies (many businesses are covered), you can refer to our award rates guide.
2. Identify the Reason and Business Need
Prepare documentation explaining why you need to reduce hours. Genuine business reasons (like decline in revenue, restructuring, or temporary challenges) are most defensible.
Being transparent about your rationale not only helps in discussions with staff, but also strengthens your case if challenged by a regulator or in the Fair Work Commission.
3. Consult With Employees Early and In Good Faith
Initiate a conversation with each affected employee. Australian law emphasises genuine consultation – meaning you talk to staff, listen to their perspective, and provide information about the potential changes.
- Explain why a reduction in hours is needed and how it will impact their role.
- Discuss alternatives if available (such as job sharing, redeployment, or temporary versus permanent reductions).
- Allow employees to ask questions and give feedback before anything is finalised.
If you simply issue a memo or email dictating new hours, you may breach consultation requirements.
4. Obtain Employee Agreement
It’s generally not legal to reduce hours without the employee’s consent, except in limited Award-specific cases or emergencies. Make sure you:
- Document all changes as a written contract variation, signed by both parties.
- Clearly state the new working hours, start date, and whether the reduction is temporary or ongoing.
- Record any agreements about pay, leave accrual, or other entitlements affected by the change.
If an employee refuses to agree and you force the change, this could be a constructive dismissal or an adverse action. Seek legal advice before proceeding.
5. Update Payroll and Notify Stakeholders
Ensure your payroll system reflects adjusted hours (and rates, if applicable) to avoid underpayments. You may need to notify your HR/payroll team, and, for some changes, advise ASIC if the workforce structure changes at a corporate level.
6. Provide Ongoing Support and Monitor Fair Work Obligations
Reduced hours may impact annual leave, sick leave accrual, long service leave, superannuation contributions, and other statutory entitlements (see pro-rata leave guide). Check that you make necessary adjustments in compliance with the National Employment Standards (NES).
Consider checking-in regularly with affected staff to address any ongoing issues and keep communication open.
Employee Requests to Reduce Hours – What Are the Rules?
Sometimes, an employee may approach you with a request for reduction of work hours. In Australia, certain employees have a legal right to request flexible work arrangements, which can include fewer hours – these requests might arise from:
- Carer responsibilities (e.g., for children, elderly, or people with disability)
- Return to work after parental leave
- Disability or long-term illness
- Older workers transitioning to retirement
As an employer, you must respond to such requests in writing within 21 days and can only refuse on “reasonable business grounds”. For a deeper dive into your rights and responsibilities, see our flexible work arrangements guide.
Do I Need To Provide Notice or Pay When Reducing Hours?
Reducing hours is not a redundancy or termination, but, if not handled lawfully, it can trigger entitlements. Key points to consider:
- If written into the employment contract that hours are fixed, you will need the employee’s agreement and a new contract variation.
- For major and permanent reductions, the role may be considered redundant, which means redundancy pay may apply if obligations for a “genuine redundancy” process are met.
- Employee entitlements, such as annual leave, can be affected – ensure you calculate leave accruals and pay-outs accurately.
Be aware that simply reducing hours as a way to avoid redundancy pay, rather than following correct redundancy procedures, is risky and may be unlawful (see our redundancy law article).
Common Legal Pitfalls When Reducing Employee Hours
Here are some typical mistakes employers make when reducing hours, and how to avoid them:
- Acting without employee agreement and/or not documenting changes.
- Failing to consult as required under Award, NES, or contract terms.
- Choosing who is affected by reduced hours in a way that could be seen as discriminatory (for example, only targeting older workers or new parents).
- Not adjusting payroll, entitlements, or superannuation in line with new hours.
- Changing hours as a disciplinary step or in retaliation for complaints – this is “adverse action” and a breach of the Fair Work Act.
- Using a “sham contracting” arrangement to disguise a reduction in ordinary hours (sham contracting explained).
To minimise these risks, always seek legal input, especially if you are making large-scale or permanent changes that affect several staff.
Essential Legal Documents for Reducing Employee Hours
Having the right legal documents in place makes the process smoother and protects both you and your team. Here are the key documents to consider:
- Employment Contract: Should specify standard hours, flexibility clauses, and processes for making changes.
- Contract Variation Agreement: Outlines agreed changes to hours, pay, and conditions. Both parties should sign and date this document.
- Flexible Work Arrangement Documentation: If the reduction is at the employee’s request, document and sign the agreed changes.
- Consulting Agreements/Service Agreements: If roles are changing from employment to contracting (be careful – this has serious legal implications, see our contractor vs employee advice).
- Redundancy Letter and Documentation: If the reduction leads to redundancy, use the proper documents.
- Workplace Policies: Update staff handbooks to ensure clarity around hours, flexibility, and consultation processes.
Getting these documents drafted or reviewed by an experienced employment lawyer ensures full legal compliance and helps you avoid misunderstandings or disputes.
Frequently Asked Questions About Reducing Hours at Work
Can My Employer Reduce My Hours Without My Consent?
No, unless there’s a clear contractual or Award right allowing this, and only after a fair consultation. Most reductions require employee agreement, except in crisis or Award-specific cases.
How Much Notice Does an Employer Need To Give?
Notice requirements vary based on Award, contract, and whether the reduction is temporary or permanent. For permanent changes, best practice is to provide as much notice as possible (generally 1–4 weeks), but check your industry Award for specifics.
Can I Refuse a Reduction in Hours?
Yes, in most cases you are entitled to refuse unless your contract or Award specifically allows changes. Unresolved disputes may be taken to the Fair Work Commission for review.
Are There Alternatives to Cutting Hours?
Yes. Consider job sharing, redeploying staff, leave without pay, temporary stand downs (where allowed), or negotiating flexible hours.
What If an Employee’s Hours Are Reduced Due to Discrimination?
Reducing hours for a discriminatory reason (such as due to pregnancy, gender, race, or carer status) is unlawful and invites serious Fair Work and anti-discrimination claims.
Key Takeaways
- Reducing hours at work must be handled lawfully and usually requires employee consent unless very specific flexibility clauses or Award rules apply.
- Consultation is essential – engage employees in genuine discussions before making any changes and record all agreements in writing.
- Reductions may trigger changes to pay, entitlements, and even redundancy obligations, so always calculate the impacts carefully.
- Use up-to-date employment contracts, contract variations, and workplace policies to document and communicate changes clearly.
- Seek legal advice to avoid inadvertent breaches of the Fair Work Act, Modern Award, or discrimination laws – especially in complex or sensitive cases.
- Handling reductions the right way protects your business from costly claims and builds trust with your team.
If you would like a consultation on reducing employee hours or any aspect of employment law for your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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