Sometimes, running a business means employees need to work extra hours. This can happen during busy times, unexpected emergencies, or when you’re short-staffed. While overtime can be necessary, it’s important to ensure that employees aren’t working unreasonable hours. Often, employers pay salaries that include potential overtime, especially for management roles. Despite this, there are still overtime requirements to consider when requesting or requiring employees to work extra hours. Understanding and following these requirements is crucial to managing overtime effectively, and protecting your business from HR risks and underpayment claims. In this article, we’ll discuss what is considered overtime and what constitutes reasonable additional hours.

What’s overtime?

When planning how to handle overtime, a good starting point is checking the modern award that applies to your employees. This will outline the limits on ordinary hours, when overtime kicks in, the overtime penalty payment which must be paid, and any other relevant details.

Usually, for a full-time employee, any work performed in excess of 38 hours per week or outside the span of ordinary hours as set out in the applicable modern award, will be considered overtime. The span of ordinary hours refers to the times in which ordinary hours can be worked. For example, the General Retail Industry Award 2020 states, subject to some exceptions, that the span of hours is between 7:00 am and 9:00 pm Monday to Friday, 7.00am and 6.00pm Saturday and 9.00am and 6.00pm Sunday. In this instance, a full-time employee who works outside the span of hours will be entitled to overtime. However, it is very important that you check each applicable modern award because the rules governing span of hours and overtime will be different.

Whether employees are covered by an award or not, s 62 (1) of the Fair Work Act 2009 (Cth) (‘the Act’) states that employees can’t be requested or required to work more than 38 hours (or, for a part-time employee, outside their ordinary hours) unless those hours are reasonable.

What are reasonable additional hours?

To consider whether overtime is reasonable, s 62(2) of the Act provides a list of factors that must be taken into account, including:

• Any risk to the employee’s health and safety from working the additional hours.
• The employee’s personal circumstances, including family responsibilities.
• The needs of your workplace.
• Whether the employee is entitled to receive overtime payments, penalty rates or other compensation for, or a level of remuneration that reflects an expectation of, working additional hours.
• Any notice given by the employer of the request or requirement to work the additional hours.
• Any notice given by the employee of his or her intention to refuse to work the additional hours.
• The usual patterns of work in the industry, or part of an industry, in which the employee works.
• The nature of the employee’s role, and their level of responsibility.
• Any other relevant matter.

When managing overtime requirements set out in the Act, it’s helpful to start by clearly setting expectations for employees. Think about each overtime request individually on a case-by-case basis to decide if it’s reasonable. Besides the Act, there are also state and territory workplace health and safety laws to think about. These laws require you to keep track of employee overtime to manage fatigue and ensure a safe working environment.

A robust payroll system will help you keep track of overtime pay

With enableHR + Payroll employees are able to submit timesheets for employers to easily approve or decline, ensuring when employees work overtime, their payslips are accurate and records are up-to-date. Then you can effortlessly import timesheet data to create pay runs, with the option to edit if needed, saving valuable time for busy employers.