What a former Unloan employee’s ‘reasonable’ overtime court case could mean for startup ‘hustle culture’

Global technology companies boast some of the best employment conditions in the world, but the journey there is often peppered with late nights burning the midnight oil for founders and their employees.

Founders need to be aware of their legal obligations to staff because the regulations around how much overtime is “too much” are murky at best. Unfortunately, legislative change to clarify this doesn’t appear to be on the horizon.

What’s happening?

Former Unloan employee Luke Marraffa-Ives and Commonwealth Bank-controlled digital home loan provider are headed to the Federal Court next week hoping to settle a dispute that many startup founders and their employees can relate to.

Marraffa-Ives alleges that he was coerced into working up to 60 hours per week, juggling multiple roles, only to be handed his marching orders when he voiced concerns. Although the lawsuit in this case focuses on the company’s alleged retaliation for making a complaint about working conditions, the matter also brings up the elusive concept of reasonable overtime.

The National Employment Standards set 38 hours as the upper limit on weekly work hours but an employer can ask an employee to work “reasonable additional hours”.

What is reasonable is likely to differ in each case, as factors like the employee’s personal circumstances, the usual practices in the industry and any risk to health and safety can all be taken into account.

The ambiguity around the definition of “reasonable additional hours” is illustrated by the conflicting cultures in this case.

Startups such as Unloan will be familiar with the long hours synonymous with ‘hustle culture’ that have become cannon to the stories of countless technology success stories.

While we’re speaking generally, it’s fair to say most big corporations don’t boast the same kind of culture that high growth startups aspire to across the board.

That being said, many of them would have business units or senior management teams that work much, much longer hours than anyone in the business would consider “reasonable” because the positions have a high degree of responsibility or there’s strong competition for the next promotion opportunity.

It is worth noting that such roles are also usually (but not always) highly paid, and the expectation of long working hours is implicit in the salary package.

While there are unquestionably practices that are not acceptable in any workplace and offenders should be given a whack, it’s difficult to talk definitively because what’s “reasonable” is so often in the eye of the beholder.

These contradictions are not unique to the private sector.

The recent dispute between Independent MP Monique Ryan and former media adviser Sally Rugg, which made national headlines, raised the same issues about work-life balance and the mounting pressures borne by
employees.

That case was settled in May, with the Commonwealth reportedly paying Miss Rugg $100,000 with no admission of guilt, which means it’s largely business as usual for workplace culture in Canberra.

Unloan and Marraffa-Ives are due for a directions hearing on Tuesday and there’s a reasonable chance something similar could happen there.

What can startups do about it?

Many startups successfully implement Employee Share Plans over and above their standard employment contracts to ensure any success is shared across the business, meaning employees effectively get compensated for going the extra mile.

While employee share plans are still implemented in big corporations, in general terms the amount that employees can earn from ESPs is much greater in a startup than a large corporation because you’ve got less staff and all the growth is still ahead of you.

But this strategy doesn’t appeal to everyone. The demands of the “hustle culture” can disproportionately affect people juggling caregiving responsibilities (mostly women).

Giving someone a performance incentive that requires regular hours of overtime will only put unnecessary pressure on them if what matters to them is a firm line between work and home.

There’s a time for everyone

It’s important to remember that this workplace dynamic is not the destination. The goal of startup founders is to build businesses like Atlassian, Canva and all the other success stories that consistently rank amongst the most desirable places to work next to more traditional companies such as Commonwealth Bank.

Once that coveted unicorn status is attained, companies often have a better idea of their business goals, which puts less pressure on staff. They also have more resources at their disposal, allowing room to create a work environment that’s inclusive of everybody.

Finding a balance between your startup’s high intensity needs in the early days and its inclusive ambitions over time is a key challenge to ensuring the company doesn’t leave disappointed former employees behind.

• Elizabeth Ticehurst is an employment and industrial law specialist and of counsel with Australian-US technology legal advisory firm BizTech Lawyers. Anthony Bekker is the founder and MD, APAC.