Overtime pay, time in lieu and what your award says

What counts as overtime

The Fair Work Ombudsman describes overtime as work outside the ordinary hours set by your award, agreement or contract. That usually means one of three things: hours beyond your maximum daily or weekly ordinary hours, hours beyond what a part-time employee has agreed to work, or hours outside the "spread of hours", the window of the day in which ordinary hours can be worked.

The spread matters because it can turn a short shift into overtime without you working long. Under the Clerks award, ordinary hours fall between 7.00 am and 7.00 pm on weekdays and 7.00 am to 12.30 pm on Saturdays. Under the Retail award the spread is wider, running to 9.00 pm on weekdays. The same hour of work could be ordinary in one job and overtime in another.

What the law sets, and what your award sets

The NES say an employer must not ask or require a full-time employee to work more than 38 hours a week unless the extra hours are reasonable. For anyone else, the limit is the lesser of 38 hours or their agreed ordinary hours. Some awards and agreements average those hours over a longer period, so a 60-hour week is not automatically overtime if it balances out across a roster.

Paying a higher rate for overtime is a different matter. That comes from your industry or occupation award, an enterprise agreement, or your contract. If you are covered by an award or agreement, look at its overtime clause. If nothing covers your job, the Fair Work Ombudsman says you have no entitlement to a higher rate for overtime, only the National Minimum Wage and the NES.

Fair Work's pay calculator (PACT) can find your award and work out pay rates, including penalty rates. It is worth using rather than searching a name, because your employer can be covered by an award that does not match your job title.

Reasonable additional hours

Even where overtime is paid, you may not have to agree to every extra hour. An employer can ask you to work more than your maximum weekly hours only if the extra hours are reasonable, and you can refuse hours that are not. Fair Work lists what must be weighed up:

• any risk to your health and safety
• your personal circumstances, including family responsibilities
• the needs of the workplace
• whether you receive overtime, penalty rates or a level of pay that reflects an expectation of extra hours
• the notice the employer gave you, and any notice you gave of refusing
• usual work patterns in the industry
• your role and level of responsibility
• any other relevant matter

No single item decides it. A request to stay two hours tonight, made at 3 pm, is different from a rostered week that everyone knew about. Pay counts too: a higher salary or paid overtime can make longer hours more reasonable, which is one reason the question is harder for salaried staff. Our article on work-life balance and the rules on hours covers after-hours contact and flexible work in more detail.

Overtime rates in three awards

Awards set both the trigger for overtime and the rate. The table shows how three of the biggest awards handle it. If you are a casual, your loading and your overtime rate are linked, which is covered in casual employment rights.

Some details do not appear in a headline rate. In the Clerks award, overtime is calculated daily, an employee has to reach half an hour of overtime in a week to be paid it, and someone recalled to work after finishing for the day is paid at least 3 hours at overtime rates. In the Hospitality award, overtime on a rostered day off carries a 4-hour minimum. Work out your own number using the award's own pay schedule, or the pay calculator above.

For example, a full-time clerk at Level 2, Year 1 earns $29.45 an hour on ordinary weekday hours from 1 July 2026. If they finish their ordinary hours and stay three extra hours on one day, the first two are paid at $44.18 an hour and the third at $58.90, a total of $147.26 before tax. The same three hours worked on a Sunday would pay $58.90 each.

If you are on a salary

A salary does not by itself mean you cannot be paid overtime, but it can absorb it in some cases. There are three situations.

• Annualised wage under an award. Some awards let an employer and employee agree in writing to a fixed annual wage rather than hourly pay for each hour. The Hospitality award, for instance, allows an annualised wage that is at least 25% above the minimum for the work and covers overtime and penalty rates, but it sets outer limits: an average of 12 overtime hours a week in a roster cycle. Hours past the limit are paid separately. The employer has to compare the wage with what the award would have paid at least every 12 months, keep a record of starting and finishing times signed or acknowledged by the employee each pay period, and make up any shortfall.
• Contract salary that offsets award entitlements. An employment contract can set a salary that is intended to cover award minimums, including overtime. The Fair Work Ombudsman calls this a contractual offsetting arrangement. Employers still have to pay in full each pay period and at least monthly, and the pay slip must show your annual rate. The Fair Work Ombudsman's guidance reflects a Federal Court decision of September 2025 involving Woolworths and Coles, so this is an area where it is worth asking for advice if the numbers look thin.
• High income and award-free. If an employer has given you a written guarantee of annual earnings above the high income threshold, awards stop applying. From 1 July 2026 that threshold is $190,100, and overtime counts toward it only when it is guaranteed. Many managers and professionals are award-free, but the Fair Work Ombudsman says it is a myth that all of them are, because some are covered by an industry award or the Professional Employees award.

If the honest answer is that your salary no longer reflects the hours you work, how to ask for a pay rise covers making that case. If you invoice as a contractor instead, whether you are a contractor or an employee decides which rules apply.

Time off in lieu

Time off in lieu (TOIL), also called time off instead of overtime pay, lets you take paid time off instead of being paid for overtime. It is only allowed where your award or agreement provides for it, and the three awards above set out the same core rules:

• You and your employer agree in writing, for a particular amount of overtime. An exchange of emails is enough under the Clerks and Hospitality awards.
• Each batch of overtime worked in a pay period needs its own agreement, stating the hours and when they were worked.
• The time off must be taken within 6 months of the overtime, at a time you both agree.
• You can ask to be paid at any time, and the employer must pay in the next pay period at the overtime rate that applied when you worked the hours.
• If the 6 months pass without the time being taken, the employer must pay you for it. Any unused time must be paid out when your employment ends.
• The employer cannot pressure you into an agreement.

The rate of exchange is where awards differ. Under Clerks and Hospitality, two overtime hours earn two hours off. Under Retail, two hours worked at 150% earn three hours off. If your award does not provide for TOIL, an informal arrangement to bank hours does not change what you are legally owed, and you can still ask to be paid.

Checking your pay and raising a problem

Keep your own record of the hours you work. The Fair Work Ombudsman's free Record My Hours app stores start and finish times and exports timesheets, and it recommends employees keep their own records because missing employer records make underpayments hard to prove. Employers must keep a record of all their employees' hours, including overtime, but your own copy lets you check it. Compare your record with the hours and rates on your payslip against the award's pay schedule. The salary calculator can show what an hourly rate looks like after tax, though it does not calculate overtime.

If it does not add up, the Fair Work Ombudsman suggests checking the rules, gathering the key information, talking to your employer, and putting it in writing if a conversation does not fix it. After that you can contact Fair Work on 13 13 94. For underpayments up to $100,000, you can apply to the small claims court, within 6 years of the date the underpayment happened.

State and territory differences

Overtime rules do not change by state within the national system, which covers most private-sector employees in every state and territory, and most employees in Victoria and all in the ACT and Northern Territory. The exceptions are the workers the national system does not cover.

Employees of state public sectors in New South Wales, South Australia, Queensland, Tasmania and Western Australia, and local government employees in all those states except Tasmania, work under state industrial systems. In Western Australia, private-sector sole traders, partnerships and other non-trading or unincorporated employers are in the state system too. If that describes your employer, your overtime rules come from a state award or agreement instead, and the state's industrial relations body is the place to check.

If you work in a public sector, read your enterprise agreement itself, because its overtime and time in lieu terms can differ from a private-sector award.