Overtime vs ordinary hours
In Australia, the distinction between ordinary hours and overtime hours is crucial for calculating correct pay. Understanding when overtime kicks in helps both employers and employees ensure Fair Work compliance.
Ordinary hours
- Up to 38 hours per week (full-time)
- Paid at base rate
- Within award spread of hours
- Part of regular roster
Overtime hours
- Beyond ordinary hours
- 150-200% penalty rates
- May be outside spread of hours
- Can be refused if unreasonable
Most Modern Awards specify both weekly and daily triggers for overtime. For example, hours beyond 38 per week OR beyond 7.6 hours per day may attract overtime rates.
How overtime rates work in Australia
Overtime rates are expressed as percentages of the ordinary hourly rate. The specific rates depend on the applicable Modern Award, but a common structure is:
Typical overtime rate structure
To calculate overtime pay, multiply the employee's ordinary hourly wage by the applicable percentage. For example, if the base rate is $30/hour, overtime at 150% would be $45/hour.
When overtime applies
Overtime can be triggered in several ways, depending on the award:
- Weekly overtime: Hours beyond 38 per week for full-time employees
- Daily overtime: Hours beyond the daily maximum (often 7.6 or 8 hours)
- Outside spread of hours: Work outside award-specified times (e.g., before 6am or after 6pm)
- Part-time overtime: Hours beyond agreed contracted hours
- Day-off overtime: Work on rostered days off
Reasonable overtime requests
The Fair Work Act requires overtime requests to be "reasonable". Factors include risk to health and safety, employee's personal circumstances (including family responsibilities), notice given, and whether the employee would receive overtime pay. Employees can refuse unreasonable overtime without penalty.
Managing overtime effectively
Best practices for employers
- Track hours: Use time tracking to identify overtime
- Approve in advance: Require overtime pre-approval when possible
- Monitor patterns: Review for excessive overtime reliance
- Pay correctly: Apply award rates automatically
Best practices for employees
- Know your award: Understand when overtime rates apply
- Record hours: Keep your own records of hours worked
- Check payslips: Verify overtime is paid correctly
- Know your rights: You can refuse unreasonable overtime
Common mistakes with overtime
Not tracking daily overtime
Many awards trigger overtime on daily hours (e.g., beyond 7.6 hours), not just weekly. An employee working 10-hour days might accrue overtime even if under 38 hours per week.
Wrong overtime rate tier
Using 150% for all overtime when the award requires 200% after the first two or three hours can lead to underpayment claims.
Unpaid "reasonable" overtime
Some employers expect salaried employees to work unlimited overtime. Annualised salary arrangements must still cover actual overtime hours—track and reconcile annually.
Ignoring casual overtime
Casual employees are also entitled to overtime rates. The overtime is calculated on their base rate, then the 25% casual loading is added.
Key takeaways
Overtime in Australia refers to hours worked beyond an employee's ordinary hours, typically paid at 150-200% of the base rate. Both weekly and daily thresholds can trigger overtime, depending on the applicable Modern Award. Employees have the right to refuse unreasonable overtime requests.
Managing overtime effectively requires accurate time tracking and automatic application of award rates. Time and attendance software like RosterElf can identify overtime hours automatically and ensure correct penalty rates are applied for compliant payroll processing.
