Does Overtime Contribute to Annual and Sick Leave Entitlements?

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The simplest answer to this question is no, overtime worked by an employee does not contribute additional hours to the employee’s annual or sick leave allotments. By law annual and sick leave can only be calculated on a 38-hour work week. Once an employee clocks on time that is over and above 38 hours per week, the payment for overtime is governed by the National Employment Standards. However, additional overtime agreements can be contracted for using award and enterprise agreements.

National Employment Standards

Under the National Employee Standards (NES), an award or agreement-free employee will be entitled to five weeks of annual leave for each year of service if they are either a shift worker in a business where shifts are continuously rostered and regularly work on Sundays and public holidays. 

Ordinary overtime is calculated when an employee works beyond the hours they are scheduled for during a particular shift or week. Overtime can also be calculated when an employee works outside of their hour range; for example, if you only work Monday – Friday but are scheduled for a Saturday.

Award and Enterprise Agreements

Some employees may be entitled to additional paid leave if their employment contract contains an award and/or enterprise agreement. Such agreements allow for an employee to be given additional paid leave depending upon the manner in which the agreement allows for the additional time to accrue. The particulars of how this additional accrued leave is earned will vary with each agreement. Some examples include;

  • Working hours in excess of your regularly scheduled shift
  • Hours that are scheduled outside of your ordinary work time
  • A part-time employee who works beyond their regularly scheduled part-time hours
  • Working a Saturday, Sunday or public holiday

If an employee is governed by an award and enterprise agreement their overtime rate can be calculated at time and a half or possible double time. The rate will depend upon the particulars of the employee’s agreement.

Requiring Overtime

For overtime to be a valid request by an employer, the overtime must be reasonable. And while reasonableness can sound very subjective, in this case it is not. The following are examples of reasonable overtime;

  • Legitimate employer needs
  • To meet industry standards
  • Payment for overtime is made in accordance with the contractual agreement
  • If safety and health standards are not jeopardized
  • Any personal situations which make it difficult or impossible for the employee to comply are taken into consideration

Regardless of the type of overtime you are working, or the reason for the need to work overtime, under no circumstances does your overtime allow for you to accrue additional paid leave for the time you are working. This is because the compensation for being asked to work overtime is governed by law and/or by the employer’s award and/or enterprise agreement. The law and the various contractual remedies in an award or enterprise agreement provide for an additional benefit to the employee via the increased compensation rate. Hence, as an employee who is working overtime, you are already being properly compensated for your additional time worked.

In the event that you find yourself in need of assistance regarding any legal query, please contact the offices of Owen Hodge Lawyers. At Owen Hodge, we are always happy to assist clients in understanding the full ramifications of any and all of your legal needs. Please feel free to call us at your earliest convenience to schedule a consultation at 1800 780 770.

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