How to Accurately Pay Overtime Under the SCHADS Award
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Introduction
This video explains how overtime must be applied and paid under the SCHADS Award. It covers when overtime applies, how to determine whether overtime is reasonable, and the specific overtime rates that apply to full-time, part-time, and casual employees. The video also explains when employees can refuse overtime, how time off instead of overtime works, and the rules around consecutive hours of rest and breaks during overtime. The focus is on applying the SCHADS Award correctly to avoid underpayments, back pay claims, and compliance issues.
Key Takeaways
- Employees must be paid overtime when they work more than their maximum ordinary hours under the SCHADS Award.
- Overtime must be reasonable, taking into account health and safety, personal circumstances, workplace needs, notice, and industry patterns.
- Overtime rates differ by sector and employment type, with different rules for full-time, part-time, and casual employees.
- Part-time employees are paid overtime after exceeding weekly or fortnightly hour limits, not their usual rostered hours.
- Casual employees are entitled to overtime after working more than 10 hours in a shift, in addition to casual loading.
- Time off instead of overtime, minimum rest breaks, and paid meal breaks must meet specific conditions set out in the award.
Transcript
Introduction and compliance risks
How to ACCURATELY Pay OVERTIME Under the SCHADS Award
Some employers assume that if they pay an employee above the minimum wage, then whatever is in the award in terms of other payments does not apply. That is incorrect, and you risk a heavy underpayment claim.
Not knowing what overtime rates you should be paying can mean that your business may be subject to major back pay claims, penalties, and scrutiny by the Fair Work Ombudsman. Not to mention potential bad publicity and reputational risks. Fair Work love to name and shame.
What this module covers
So, in this fifth part of our SCHADS online course, we will break down what is reasonable overtime, how overtime rates are calculated, how time off instead of overtime works, consecutive hours off, and breaks during overtime. All things that catch business owners off guard.
Also, make sure you check out our playlist containing the rest of the course. I have left a link in the description box below. And if you work in a business under the SCHADS Award and you need to include this as part of your CPD, or you need a certificate, we have a paid version of the course that will also issue you a certificate when you complete it. It also includes bonus tools like our SCHADS compliance checklist to help you with processing payroll, and we keep the course 100% updated as changes come through with the SCHADS Award. I have also left links to access it below.
Let’s get into it.
When overtime applies under the SCHADS Award
Under the SCHADS Award, you can ask an employee to work reasonable overtime. An employee must get paid overtime rates if they work more than their maximum ordinary hours. SCHADS shift workers do not have a set spread of hours, but if a day worker works outside their spread of hours, they should also receive overtime.
What is reasonable overtime
So, what is reasonable overtime? Overtime can be reasonable as long as you take the following factors into account before asking an employee to work beyond their ordinary hours.
Number one, health and safety risks.
Number two, the employee’s personal situation, like family responsibilities. Do they have children they need to pick up from school?
Number three, the workplace needs. Is it entirely necessary for the employee to work overtime?
Number four, overtime rates, which we will discuss later in this video.
Number five, notice of overtime. It could be unreasonable to ask an employee 30 minutes before their shift ends to work another three hours.
Number six, has your employee previously mentioned that they can never work overtime?
Number seven, the usual patterns of work in the industry.
If your employee does not feel like you have considered these factors and that overtime is unreasonable, then they are allowed to refuse to work the overtime you have requested.
Paying the correct overtime rates
Once you have established that the overtime is reasonable, you will need to pay your staff the proper overtime rates. You cannot just pay them a little bit extra and hope for the best. You need to pay them according to the specified rates in the award.
Full-time employees working in the day care, home care, and disability services sector must be paid 150% of their ordinary rate for the first two hours and 200% after that if they work overtime between Monday and Saturday.
Full-time employees working in the social services, community services, and crisis accommodation sector must be paid 150% of their ordinary rate for the first three hours and 200% after that if they work overtime between Monday and Saturday.
The overtime rate for full-time employees working under either of these sectors should be paid at 200% regardless of how many hours they work on Sundays.
Overtime for part-time employees
With part-time employees, they must get paid overtime if they work more than 38 hours in a given week or 76 hours per fortnight. The rates are the same, 150% of the ordinary rate for the first two hours and 200% after that.
For example, Katie is a part-time employee in the home care sector and she usually averages around 32 hours per week. Last week, though, she ended up working around 40 hours. So for six of those hours, she will be paid her normal rate, and for the extra two hours after that, she will need to be paid 1.5 times her normal hourly rate.
On Sundays, however, it will be 200% for the entire overtime period, and 250% if the overtime period is on a public holiday.
Overtime for casual employees
Now, you may not realise it, but casual employees are also entitled to overtime. If your casual employee works more than 10 hours per shift, they must also be paid an overtime rate of 150% of the ordinary rate for the first two hours and 200% after that, plus their casual loading of 25%.
Time off instead of overtime and required breaks
If you or your employee would prefer time off instead of overtime payment, you can agree to do so, but there are a few conditions. The employee must be allowed to take time off equal to the number of overtime hours worked. For example, two overtime hours at a penalty rate of 150% would still mean two hours off. The employee must take time off within three months from the time the overtime was worked.
Another condition of overtime work is that the employee should get at least 10 consecutive hours off from the time they finish their overtime until the next shift starts, so start times might need to be adjusted.
You will also need to give them breaks while working overtime. If your employee works more than four hours of overtime, they must have a 20-minute meal break, and another 20-minute break for each upcoming five hours of overtime. All of these breaks must be counted as time worked, and the meals must be free of charge.
Closing
So there you have it, all the overtime rules and regulations so that you can make sure you are compliant under the SCHADS Award. See you in the next module.
Continue the SCHADS Award course
This video is part of our SCHADS Award training series, designed to help employers and payroll teams understand how the award works in practice.
You can watch the other modules in the series to see how hours of work, overtime, penalties, allowances, and compliance requirements fit together under SCHADS.
Watch the full SCHADS Award course.