What is overtime

Overtime is a term commonly used in employment contexts to refer to work performed outside the regular or ordinary hours specified in an employment contract, award, or agreement.

Overtime is defined as work performed by an employee outside their ordinary hours as set out in an award, enterprise agreement, or employment contract. Overtime rates are usually higher than the ordinary rate and are determined by the relevant award, agreement, or contract. Employees can be required to work overtime, but they can refuse if the request is unreasonable.

Ordinary hours

Ordinary hours represent an employee’s normal and regular working hours, which do not attract overtime rates. For full-time employees, the typical maximum is 38 hours per week, unless an employer requires them to work reasonable extra hours.

Overtime rates

When employees engage in overtime work, they may be entitled to receive overtime rates, which are often higher than their regular hourly pay.

The specific overtime rate is determined by the Modern Award or Industrial Instrument governing the employment relationship. These higher payments aim to compensate employees for the inconvenience of working additional hours and provide a reward for their extra effort.

Overtime rules

Different industries and employment agreements have their own set of rules regarding overtime, commonly known as penalty rates. Employers must familiarize themselves with the specific overtime rules applicable to their sector to avoid disputes and ensure compliance with regulations.

When overtime rates apply

Overtime rates typically apply when an employee works beyond their ordinary hours, outside the agreed number of hours, or beyond the spread of ordinary hours. The spread of ordinary hours refers to the times during which regular work hours can occur.

Reasonable overtime

Employers may request employees to work overtime, but this request must be reasonable, taking into account factors such as the employee’s health and safety, personal situation, workplace needs, compensation for extra hours, prior agreements, and industry norms.

Overtime above maximum weekly hours

Employers can request or require employees to work beyond their maximum weekly hours, provided the additional hours are deemed reasonable. Employees have the right to refuse overtime that unreasonably exceeds the maximum weekly hours, considering health and safety implications.

Time off instead of overtime pay

Some awards and agreements allow employees to opt for paid time off instead of receiving overtime pay. This arrangement, commonly referred to as ‘time in lieu’ or ‘time off in lieu,’ must be established in writing with the employee’s consent and should comply with award or agreement requirements.