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 entitlements. By law, annual and sick leave can only be calculated on a 38-hour work week.
How does this work?
Provisions for overtime and leave under the National Employment Standards
Once an employee clocks time 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 in award and enterprise agreements.
Ordinary overtime is calculated when an employee works beyond the hours they are scheduled for during a particular shift or week. It can also be calculated when an employee works outside of their hour range; for example, if they only work Monday to Friday but are scheduled for a Saturday.
In regard to annual leave, the general rule is that all full-time employees are entitled to four weeks of paid leave per year. It is important to keep in mind that casual employees are not entitled to this benefit. However, if an employee is a shift worker it is possible that the worker might be entitled to additional paid leave under an award or enterprise agreement.
Provisions for overtime and leave in award and enterprise agreements
Some employees may be entitled to additional paid leave if their employment contract is based on an award or enterprise agreement. Such agreements may 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 a regularly scheduled shift.
- Hours that are scheduled outside of an employee’s 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 or enterprise agreement, their overtime rate can be calculated at time and a half or possibly double time. The rate will depend upon the particulars of the employee’s agreement.
When is overtime warranted?
For overtime to be a valid request by an employer, it 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 jeopardised.
- Any personal situations which make it difficult or impossible for the employee to comply are taken into consideration.
Regardless of the type of overtime an employee is working, or the reason for the need to work overtime, under no circumstances does this allow an employee to accrue additional paid leave for the time they are working. This is because the compensation for being asked to work overtime is governed by law and/or by the employer’s award 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, an employee who is working overtime, is already being properly compensated for their additional time worked.
