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Understanding your obligations around overtime under the National Employment Standards (NES) is essential for running a compliant and successful business in Australia. Whether you manage a small team or a growing workforce, knowing when overtime applies, how it’s paid, and your responsibilities as an employer is crucial. Overtime pay isn’t just a legal requirement – it’s also a key factor in retaining talent and maintaining staff morale.
But what exactly counts as overtime, and when does it start? What about part-time employees, or overtime on Saturdays? If you’re not sure, you’re not alone. Many employers find the NES overtime rules complex and are eager to get it right. In this guide, we break down everything you need to know about National Employment Standards overtime – so you can confidently meet your obligations, avoid costly disputes, and focus on growing your business.
If you’re keen to ensure your payroll and rostering practices align with the latest requirements, keep reading – or reach out to our team for tailored legal guidance.
What Are the National Employment Standards (NES) Overtime Rules?
The National Employment Standards (NES) are a set of 11 minimum employment entitlements for employees in Australia. These apply to all national system employers, regardless of whether your business is covered by an award, enterprise agreement, or employment contract. One of the key NES provisions relates to maximum weekly hours and overtime.
Under the NES, the standard maximum weekly hours for full-time employees is 38 hours. For part-time employees, it’s their agreed ordinary hours (often stated in the contract).
Any additional hours usually fall under “overtime”. But when overtime starts, how it’s calculated, and how it’s paid can be influenced by a combination of the NES, relevant modern awards, enterprise agreements, and your own contracts or workplace policies.
If you’re new to this, our comprehensive NES guide is a great starting point.
When Does Overtime Start?
A top question we hear from employers is: After how many hours does overtime start? The answer depends on a few factors.
NES Baseline: 38 Hours for Full-Time Employees
Under the NES, full-time employees should not be required to work more than 38 hours per week unless additional hours are “reasonable.” This is your legal baseline. So, for most full-time staff, overtime may start after 38 hours – but you should always check for more specific rules in awards or enterprise agreements.
Awards and Enterprise Agreements
Most Australian employees are covered by a modern award or enterprise agreement, which usually sets out exactly when overtime rates kick in. For instance, overtime might start after 38 hours per week, or outside the “ordinary hours” of work (such as after 7pm, or weekends). The award may also cap daily hours – overtime could apply after, say, 7.6 or 8 hours in a single day.
For example, if the award states that ordinary hours are 7am to 7pm, Monday to Friday, then hours worked outside that span are likely overtime – even if the weekly total is under 38. Similarly, if an employee works a public holiday or a Saturday, higher penalty or overtime rates may apply.
If you’re not sure whether your business is covered by an award, get clarity on modern award coverage – this is a crucial step in getting overtime right.
Part-Time and Casual Employees
For part-time staff, overtime typically starts after they work more than their agreed ordinary hours (as per their employment contract or award). If a part-time employee is contracted for 20 hours per week but works 25, the extra 5 hours are generally overtime (unless otherwise set out in their agreement).
Casual staff may also receive overtime or penalty rates if they work beyond certain hours, exceed daily or weekly limits, or work unsociable hours (like late nights, weekends, or public holidays). Always check the relevant award or enterprise agreement.
We break down the differences – and legal requirements – for casual and part-time employment here.
What Counts as Reasonable Additional Hours?
You may sometimes need team members to stay late or cover extra shifts. The NES allows you to request that staff work reasonable additional hours, but this doesn’t give you unlimited scope. “Reasonable” is determined by several factors, including:
- Any risk to employees’ health and safety
- Personal circumstances, such as family responsibilities
- Needs of your business
- Whether notice is given
- Whether the employee is entitled to higher pay (like overtime or penalty rates)
You cannot pressure staff to work excessive or unreasonable overtime. Employees can refuse unreasonable requests without fear of penalty.
How Is Overtime Paid in Australia?
Overtime pay rates are usually higher than ordinary pay rates, and are intended to compensate employees for working more than is standard or desirable.
Award or Agreement Rates
Most awards specify the exact rates for overtime. For example:
- Time and a half (150% of ordinary pay) for the first few hours of overtime in a day
- Double time (200% of ordinary pay) for further overtime, or for work on Sundays or public holidays
- Specific rates for weekend overtime (e.g., overtime on Saturday vs. Sunday)
Some awards include a minimum number of hours that must be paid if an employee works overtime (even if called in for a short shift).
Always check your relevant award or enterprise agreement for the correct rates – it’s a common trap for employers to overlook!
Non-Award (Award-Free) Staff
If your employees are award-free (not covered by an award or enterprise agreement), the NES only requires that weekly hours above 38 be “reasonable”, but does not specify a rate for overtime pay. In these cases, your employment contract or internal HR policy should address how overtime is handled and paid.
Keep in mind Australian Consumer Law principles – misrepresentations in contracts and unfair dismissals can create legal risk.
When Do I Get Paid Overtime?
Employees are generally entitled to be paid for overtime in the pay cycle following when the overtime hours were worked – often the following week or fortnightly, depending on your pay run schedule and contract terms.
Not paying overtime correctly or on time can breach the Fair Work Act 2009 and leave your business exposed to employee claims, Fair Work audits, or fines.
As an employer, set a clear policy and process for the approval and payment of overtime hours, and ensure everyone understands how to submit timesheets or overtime requests.
How Long Is Overtime?
This depends on your rostering practices and the applicable award or agreement. There isn’t a minimum or maximum “overtime shift” by law, but some awards may require that any shift outside ordinary hours (including overtime) be a minimum of, say, 3 or 4 hours paid.
You’re also responsible for ensuring employees aren’t working excessive or unsafe amounts of overtime. Fatigue is a real workplace health and safety concern, so continuous or frequent overtime should be monitored and managed.
Does an Employer Have to Pay Overtime?
In short, yes – if an employee works beyond the agreed ordinary hours, outside the span of ordinary hours, or otherwise meets the overtime thresholds in their award or agreement, you must pay overtime rates.
Failing to provide the correct overtime pay is a breach of the Fair Work Act and could result in audits, penalties, backpay orders, or legal action. It’s important to have clear employment contracts and HR policies outlining how overtime is managed and paid.
There are a few exceptions (for instance, some high-income professionals with annualised salary arrangements that “absorb” overtime, or properly structured “time off in lieu” agreements). But these arrangements must meet strict criteria, be properly documented, and not undercut minimum award conditions.
If you’re uncertain about your obligations, our employment contract guide and legal experts can help review and update your contracts to ensure full compliance.
What About Overtime on Saturdays?
Many modern awards set out specific penalty or overtime rates for work performed on weekends, public holidays, or outside ordinary hours. It’s common to see Saturday work attracting time-and-a-half or higher rates, and even greater rates on Sundays or public holidays.
Check your award’s schedule for “hours of work” and “penalty rates” sections so you can budget rostered hours – and cost of labour – accurately. Not paying correct Saturday overtime is a frequent cause of disputes, especially in hospitality, retail, and trades.
How Do I Manage Overtime Compliance?
To manage overtime properly – and minimise risks of disputes, backpay, or compliance issues – employers should:
- Keep accurate records of all hours worked, including overtime (payroll, rosters, timesheets)
- Ensure employment contracts reflect overtime entitlements and approval processes
- Follow any award or agreement requirements for rostering and overtime notification
- Have clear policies about overtime approval and when overtime can be worked
- Ensure overtime is paid in the next pay cycle, at correct rates, or appropriately banked as “time off in lieu” (if allowed)
Businesses with complex rostering or varying pay rates should consider specialist payroll software and regular HR or legal reviews.
Failure to manage overtime properly is one of the top small business mistakes in Australia, so it’s worth getting the right process in place sooner rather than later.
Essential Legal Documents for Overtime Compliance
Having the right documents protects both your business and your team. Consider:
- Employment Agreement: Clearly sets out ordinary hours, overtime entitlements, approval processes, and pay structure. More on employment agreements.
- Workplace Policy or Staff Handbook: Outlines the rules for requesting, approving, and recording overtime, as well as expectations and responsibilities for staff and managers.
- Payslip & Record-Keeping System: Ensures all overtime hours and rates are itemised and compliant with Fair Work requirements.
- Modern Award or Enterprise Agreement: Ensure you have a copy of the relevant award for your industry, as this is your reference for legal overtime entitlements.
- Payroll Software/HR System: Not a legal document, but critical for tracking, approving, and reporting on overtime – and preventing underpayment errors.
Tailoring these documents and processes to your business, rather than using generic templates, reduces legal risk and can save significant time and resources if disputes arise.
Key Takeaways
- National Employment Standards set a baseline for maximum weekly hours – overtime often starts after 38 hours for full-time staff, or outside agreed ordinary hours for part-time and casual staff.
- Overtime rates and hours are usually specified by relevant awards or enterprise agreements, so always check the current terms for your industry and staff level.
- Overtime must be paid at higher rates (time-and-a-half, double time, etc.) and in the next pay cycle unless your employment contracts or awards state otherwise.
- As an employer, you must keep records, establish clear approval processes, and ensure all overtime claims are paid or banked lawfully.
- Not paying correct overtime is a legal risk – reviews, updates, and tailored contracts or policies help keep you compliant and protect your reputation.
- Getting professional advice on overtime compliance is a wise investment – Sprintlaw can help you avoid common payroll and award pitfalls, and tailor solutions to your unique business.
If you would like a consultation on managing NES overtime obligations for your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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