How Is Overtime Calculated in Australia? The Complete Formula and Worked Examples

The basic overtime formula

Every overtime calculation in Australia comes down to the same underlying formula, applied to whichever rate tier is relevant:

The complexity comes from working out which multiplier applies — and that depends on three things: whether you're a permanent or casual employee, what day the overtime was worked, and (for weekday overtime) how many hours you've already worked that day or week.

Step-by-step: how to calculate tiered weekday overtime

Weekday overtime under most modern awards uses a two-tier structure. Here's how to work it out:

1. Find your ordinary hourly rate — your base rate, not including any allowances or existing loadings.
2. Identify your first-tier threshold — usually the first 2 hours of overtime (some awards use 3 hours).
3. Calculate tier 1 pay: tier 1 hours × ordinary rate × 1.5 (or 1.75 for casuals).
4. Calculate tier 2 pay for any remaining hours: tier 2 hours × ordinary rate × 2.0 (or 2.25 for casuals).
5. Add tier 1 and tier 2 together for your total overtime pay.

Worked example — 4 hours weekday overtime

Compare this to what those same 4 hours would earn at the ordinary rate: just $120.00. The tiered overtime structure adds an extra $90.00 for identical hours worked.

Casual employee overtime — the higher-rate formula

The formula is identical for casual employees, but the multipliers are higher to reflect their existing 25% casual loading:

Worked example — casual overtime

Weekend overtime — flat rate formula

Saturday and Sunday overtime is usually simpler to calculate than weekday overtime because there's typically no tier structure — the same multiplier applies to every hour worked, regardless of how many hours:

Worked example — Saturday overtime

Public holiday overtime — the highest rate

Public holiday work is calculated using the same flat-rate formula as weekends, but at the highest standard multiplier in the Australian award system — typically 250% (double time and a half), regardless of employment type:

What counts as your "ordinary hourly rate"

The rate used in every overtime calculation is your ordinary base rate — not your total gross pay. This specifically excludes:

• Existing penalty rates or loadings already being paid
• Allowances (travel, tools, meal allowances)
• Bonuses or commissions
• Superannuation contributions

For a salaried employee, the ordinary hourly rate is typically found by dividing the annual salary by 52 weeks, then by standard weekly hours (commonly 38): annual salary ÷ 52 ÷ 38. For example, a $75,000 salary on a 38-hour week gives an ordinary hourly rate of $37.95.

When does overtime actually start?

Overtime is triggered once you exceed your ordinary hours — the threshold set by your award, not a fixed rule for every worker. Common triggers include:

• Weekly threshold: hours beyond 38 per week for full-time employees
• Daily threshold: hours beyond 7.6 per day under many awards, even if the weekly total hasn't been exceeded
• Part-time threshold: hours beyond your specifically agreed contracted hours, even if under 38/week

Some awards use only a weekly trigger, others use only a daily trigger, and some use both — meaning an employee could trigger overtime on a single long day even without exceeding their weekly total. Always check your specific award for the exact trigger that applies to your role.

Overtime and tax — what changes on your payslip

Overtime is taxed as ordinary income, not at a special rate. Because it's added on top of your regular pay in the same pay period, the PAYG withholding formula annualises that period's higher income — meaning more tax gets withheld from that specific pay than usual. This is not a penalty; it evens out over the full financial year when you lodge your tax return, since your total annual income (including all overtime) determines your actual tax liability.

A common misconception is that overtime is taxed at a higher permanent rate — it isn't. The higher withholding in that one pay period is a timing effect of how PAYG withholding tables work, not a different tax rate applied specifically to overtime. For the full five-step formula behind how tax, the Medicare levy and any HECS/HELP repayment turn your gross pay into what actually lands in your account, see our guide on how take-home pay is calculated.

Overtime and superannuation

Whether overtime counts towards your Ordinary Time Earnings (OTE) for superannuation purposes depends on how your specific award defines OTE — this is more nuanced than the common assumption that overtime is always excluded from super. Genuine overtime — hours worked outside your ordinary rostered hours, paid at an overtime rate — is generally excluded from OTE. However, if hours that look like "overtime" are actually part of an agreed ordinary hours arrangement (common in some rostered industries), they may still count towards OTE. Check your award or the ATO's guidance on Ordinary Time Earnings if you're unsure. You can estimate your total employer super contribution with our Superannuation Calculator.

This guide covers general overtime formulas common under most Australian modern awards. Overtime rates are now protected under the Fair Work Amendment (Protecting Penalty and Overtime Rates) Act 2025 — the Fair Work Commission cannot reduce these rates. Your specific award may use different multipliers or thresholds; always verify with the Fair Work Ombudsman.