Think you understand overtime? Think again

Members should be reminded that it is the modern Award or Enterprise Agreement that determines whether overtime is payable. This is because the Award or Agreement will prescribe the maximum duration of ordinary hours for a particular shift as well as the spread of hours during which these may be worked, and state that an employee may not work more than 38 ordinary hours per week.

All work performed outside of the prescribed ordinary hours will generally be paid as overtime.

What about casual employees?

All employees who perform work outside the ordinary hours prescribed in the Award or Agreement are generally entitled to be paid overtime. An important exception, however, applies in relation to casual employees covered by the General Retail Industry Award 2010 (GRIA).  

The GRIA provides that casual employees will not be entitled to overtime irrespective of the days and times they perform work. This is particularly useful for retailers during Christmas trade, who utilise a large Christmas casual workforce.

It is important that you check the Award or Agreement that covers your business as this is the exception, rather than the rule.

Is overtime calculated daily or weekly?

Whether overtime is calculated daily or weekly will depend on the relevant Award of Agreement. For example, the GRIA provides that overtime is paid on a daily basis, and each day stands alone.  A retail employee covered by the GRIA who performs two hours of overtime Monday to Friday would be paid at the rate of time and a half for all 10 hours of overtime worked, not three hours at time and a half and seven hours at double time, as each day stands alone. Once an employee works 38 hours in any one week, the additional hours are generally paid as overtime.

Members should check the Award or Agreement that covers their business as exceptions may apply.

Can I give time off in lieu?

While Awards and Agreements will generally provide for time off in lieu instead of paying the prescribed penalty rates, a range of conditions apply.

For example, although the GRIA provides for time off in lieu instead of the payment of penalty rates, your employee must elect to take the time off and the time in lieu must equate to the applicable overtime rate. One hour of overtime under GRIA would therefore equal one and a half hours’ time off in lieu where it is to be paid at the rate of time and a half.

What this means for members

With the heightened focus on employer underpayments and Award contraventions, it has never been more important to understand your obligations with respect to overtime.




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