A guide to overtime pay
If you’re working over your expected hours, you may be entitled to overtime pay. A little extra money in your paycheck is always a good thing – but working out the exact amount is not always a straightforward process.
There are National Employment Standards that dictate when you get paid overtime and if you may be eligible for time in lieu instead. Your entitlements depend on your award (if one applies to your profession) and your employment contract. In this article, we cover national regulations outlining overtime pay, what overtime rates in Australia typically are, and how to calculate overtime pay in different situations.
What is overtime (OT) Pay?
Overtime (OT) pay is the compensation you get on top of your regular pay for working hours beyond your regular or standard scheduled working hours. For example, if you’re a shift worker, you might be offered extra shifts on top of your own, to cover for someone else taking leave. Overtime pay is the money you’d earn from working those additional hours.
What are overtime rates? When you work overtime your hourly rate increases for the hours you worked over your regular scheduled hours. Different countries have different regulations about what constitutes overtime and when overtime pay should be paid. In Australia, it depends on your industry, if you work under an award, and your employment contract.
What’s considered overtime hours?
How does overtime work? While it depends on your award and employment contract, typically if you work extra hours, you’re eligible for overtime pay. For Australian workers covered by a modern award, overtime hours means anything over your standard work hours – for many, that means 38 hours per week (or 76 hours per fortnight), or anything beyond 10 continuous hours in a single shift.
For permanent salaried workers, whether or not you’re entitled to overtime pay depends on what’s outlined in your employment contract. In general, permanent salaried workers don’t get overtime pay, and are expected to work a reasonable amount of overtime hours as needed to perform their duties. Some companies will offer time in lieu instead of overtime pay, which means for every hour you work overtime, you can ‘bank’ an hour of paid time off.
When is overtime pay given?
You can expect overtime pay whenever you work more than your regular hours (outlined by your award or employment contract). The overtime pay rate you receive depends on the conditions of your overtime: the day worked and for how many hours you worked. For example, overtime rates for a public holiday or Sunday may be higher than those for a regular weekday.
Overtime pay on a normal work day
From Monday to Saturday, Australians receive time and a half for their first two hours of overtime (or 150% of their minimum hourly rate). For any additional hours, this increases to 200% of their minimum hourly rate. Overtime generally only applies to wage workers, rather than salaried employees, depending on the individual employment contract.
Overtime pay on a public holiday
All hours worked on a public holiday are typically calculated at 250% of your ordinary hourly wage; or what’s referred to as ‘double time and a half’. Salaried employees will typically be offered time in lieu for time worked on a public holiday.
When public holiday falls on a normal work day
The same applies if a public holiday falls on a normal work day. Wage workers are entitled to double time and a half, or 250% of their minimum hourly rate, for all overtime hours worked. Permanent salaried employees usually receive paid public holidays, meaning they don’t work but are still paid for that day (at their usual rate). Some companies might allow salaried employees to work on public holidays for 1:1 time in lieu.
When public holiday falls on a rest day
The rate for a public holiday is double time and a half (or 250% of the regular pay rate) no matter when the day falls. So award workers receive 250% their minimum wage rate for every hour worked. Salaried employees who work on a public holiday, no matter when it falls, will receive the compensation that is outlined in their contract.
Overtime pay on a rest day
If you work overtime on a ‘rest day’ from Monday through Saturday, you receive time and a half (150% of your minimum wage rate) for the first two hours, then double time (200% of your minimum wage rate) for any hours worked after that. If the overtime is on a Sunday, the overtime pay rate is double time for all the hours worked. Full-time salaried employees might be exempt, depending on their contract.
Who is eligible for overtime pay?
Eligibility for overtime pay depends on your industry, award and employment contract. Typically, any employee covered by an award who works more than 38 hours per week (or 76 hours a fortnight) or for more than 10 continuous hours in a single shift. Some award-covered workers, like nurses, also get shift loading and receive overtime pay when there are less than 10 hours between shifts.
Permanent salaried workers don’t typically receive overtime pay, as they aren’t paid an hourly wage, and their total compensation package takes any overtime into account. This will be detailed in your employment agreement. Employers can reasonably request overtime from salaried employees – and employees can reasonably refuse to work overtime.
How to calculate overtime pay in Australia
Learning how overtime is calculated will help you estimate what you can expect to receive for working extra hours. To calculate overtime pay in Australia:
- Find out your minimum or base hourly rate.
- Multiply the above figure by 150% and 200% (for a standard work day) and by 250% for a public holiday.
- For a standard day, multiply the first two overtime hours worked by the 150% overtime rate. Then take the remaining hours you worked and multiply that by the 200% overtime rate. Add the two figures.
- For a public holiday, multiply the number of hours you worked by the 250% overtime rate.
Public holiday example:
Your regular minimum wage is $23 per hour and you worked 3 hours overtime on a public holiday.
23 x 2.5 = 57.5
57.5 x 3 hours = $172.50
You can expect $172.50 extra in your next pay, minus taxes and any deductions.
Standard day example:
Your regular minimum wage is $45 and you worked an extra shift of 8 hours.
45 x 1.5 x 2 = 135
45 x 2 x (8-2) = 520
135 + 520 = 655
You earned an extra $655 in overtime pay.
The specific overtime rates Australia has put in place are governed by your individual award. It’s best to check the Fair Work Ombudsman website for information specific to your role.
Overtime pay regulations in Australia
The Australian Government National Employment Standards outlines the legal requirements for overtime in Australia. This includes guidelines for business advising them how they can request overtime.
Legal requirements
In Australia, overtime pay is regulated under modern awards or enterprise agreements. Employers must provide reasonable notice for overtime requests, considering factors like safety, operational needs and employee circumstances. If you have any concerns about your overtime pay, the Fair Work Ombudsman can guide you on the process for your state.
Rules and exceptions
Overtime rules and exceptions differ from industry to award. Here are some examples of basic guidelines for various industries and awards in Australia. (This is not a full list – more information can be found on the Fair Work Australia website.)
Overtime for builders
Under the Building and Construction General On-Site Award (MA000020):
- Full-time, part-time and casual employees who aren’t shift workers get overtime rates for extra time worked outside of their normal hours and outside Monday to Friday.
- Shiftworkers receive overtime rates if they work more than the maximum number of ordinary hours of work per day or per week, which is determined by the award.
- Workers who are called back to work after the completion of their work day must be paid for a minimum of three hours of work, whether the employee works for a full three hours or not.
Overtime for hair and beauty workers
Under the Hair and Beauty Industry Award (MA000005):
- Full-time and part-time employees are eligible for overtime if they work more than the maximum number of ordinary hours of work per week, outside the spread of ordinary hours or more than the maximum daily ordinary hours.
- A request for employees to work a second 10.5 hour day in a week must be in writing.
- Casual employees are eligible for overtime rates if they work more than 38 hours per week, for more than 38 hours a week averaged over a roster cycle, or for more than 10.5 hours a day.
- Employees who work overtime on a rostered day off must be paid a minimum of 4 hours of work at double time.
Overtime for fast food workers
Under the Fast Food Industry Award (MA000004):
- Full-time employees get overtime rates for working more than the maximum number of ordinary hours of work, as well before or after rostered hours.
- Part-time employees receive overtime rates if they work: more than the maximum number of ordinary hours of work per day or per week; outside of ordinary hours; outside of agreed or rostered times of work; more than agreed hours, or more than any agreed changes to their hours of work.
- If there’s no written record of the agreement to change an employee’s specific rostered shift, overtime rates are granted for hours outside of their regular pattern of work.
- Casual fast food workers get overtime rates for working: more than 38 hours per week; more than 38 hours a week average over a roster cycle; or when working for more than 11 hours in a day.
Overtime is a great way for employees to earn some extra money, especially when those additional hours fall on a public holiday. It’s important to know what award you’re covered by, so you know all your entitlements regarding overtime pay and how it’s calculated. You can find a full list of awards and overtime regulations at the Fair Work Ombudsman website.
FAQs
What is the maximum number of hours that qualify for overtime pay?
When work is required outside of the maximum number of hours outlined in your contract, you may qualify for overtime. This varies depending on the role and industry, but will typically be any hours over 38 hours per week.
Can salaried employees receive overtime pay?
Permanent salaried employees don’t usually receive overtime pay, as they aren’t paid an hourly wage and their total compensation package is negotiated with any overtime in mind. However, salaried employees can receive overtime pay if it’s in their employment contract. Salaried employees are sometimes offered paid time in lieu instead of overtime pay.
Are there different overtime pay rates for weekends and holidays?
Yes, there is a different overtime rate for working overtime on weekends and holidays. The Fair Work Ombudsman outlines overtime:
- on a Sunday: 200% of the minimum hourly rate for all hours worked
- on a public holiday: 250% of the minimum hourly rate for all hours worked
How do I calculate overtime pay for part-time employees?
You can calculate overtime pay for part-time employees the same way as you calculate it for any other employee. Multiply the standard hourly rate by 1.5 to find the overtime rate for the first two hours of overtime, and multiply it by 2 for the remaining hours of overtime worked.
Are overtime pay regulations the same across different industries?
No, overtime pay regulations differ depending on the award. To find out the pay regulations in your industry, you can search your award on the Fair Work Ombudsman website.
What should I do if my employer refuses to pay overtime?
If an employer refuses to pay overtime and you have confirmed you are eligible for overtime pay, you should contact the Fair Work Ombudsman for advice. Each state has slightly different processes for workplace relations and reclaiming unpaid wages.
Is overtime pay mandatory or can employers choose not to offer it?
Employers are not mandated to offer overtime pay. Salaried employees are usually exempt from overtime entitlements. At the same time, employees aren’t obligated to work overtime. The employment contract may outline unpaid, paid or time in lieu for reasonable overtime worked.
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