Most overtime underpayments in Australia are not deliberate. They come from payroll systems configured once and never revisited, managers applying rules of thumb, and awards that are genuinely complicated. Knowing the common failure patterns makes them much easier to spot.
1. Averaging hours across weeks
An employee works 45 hours one week and 31 the next, and the employer treats it as two 38-hour weeks with no overtime. Unless the applicable award or agreement specifically permits averaging — and some do, under defined conditions — overtime is generally assessed against the actual hours in each period.
2. Assuming a salary covers everything
Paying an annual salary does not automatically discharge overtime obligations. Where an award applies, the salary generally has to leave the employee no worse off than they would have been under the award, including penalty rates and overtime. Where a salary is set without that comparison ever being done, shortfalls accumulate quietly.
This is particularly common with employees just above the award minimum working consistently long weeks.
3. Treating all casuals as ineligible for overtime
The belief that casual loading replaces overtime remains widespread. Under many awards, casuals can attract both. We cover the detail in our guide on casual loading versus overtime.
4. Getting the span of ordinary hours wrong
Awards define a window within which ordinary hours can be worked. Work outside that window can attract overtime or a penalty even when the weekly total is modest. Early starts and late finishes are the usual casualties, particularly in industries where shift patterns changed but the payroll configuration did not.
5. Not paying overtime because it was not approved
Employers can reasonably require overtime to be authorised in advance. But where an employer knows an employee is working extra hours and allows it to continue, refusing to pay for those hours on the basis that they were unapproved is a weak position. The practical test tends to be whether the work was known about and permitted.
6. Mishandling overtime that lands on a weekend or public holiday
When overtime coincides with a Sunday or a public holiday, awards vary on whether rates compound, whether the higher rate applies, or whether a specific combined rate is set. Payroll systems frequently default to one interpretation and apply it everywhere. Our guide to Sunday penalty rates covers the weekend side.
7. Time off in lieu applied incorrectly
Where an award permits time off instead of overtime pay, there are usually conditions: written agreement, a timeframe for taking the time, and payment if it is not taken. Granting an hour off for an hour of overtime worked, where the award required time off equivalent to the overtime rate, is a common shortfall.
8. Not paying out accrued entitlements on termination
Untaken time off in lieu and outstanding overtime should generally be paid out when employment ends. This is easy to miss in a final pay run.
What to do if you spot one
Gather your own records first, then raise the specific pay periods in writing. Most of these are fixed once identified. Our guide on reading your payslip sets out what you should be able to see, and the overtime calculator can help you quantify the gap.
This article is general information about Australian pay rules and is not legal, financial or industrial-relations advice. Award entitlements vary. Check your specific award or agreement at fairwork.gov.au or contact the Fair Work Ombudsman.