When are Staffing Agencies Required to Pay Overtime to Temporary Staff and Contractors?

Overtime Rules Rates calc

How do I figure out what to pay whom? How do I determine what is and isn’t overtime? And how do I know if I am liable to pay overtime to contractors and temps? Not to mention contingent staff and the gig economy!

There are 5 common errors made by temp, contract and contingent staffing agencies that often come up when creating quotes and running payroll in the temporary recruitment placement field. The answer is complicated – dependent on the type of worker/ industry and many other variables. Col Levander of ratescalc.com and Rec Tech Solutions explains what you need to look for when it comes to over-time and meal allowances!

Define Over-time

Firstly, let’s get a definition of what over-time is from a legal perspective. According to Fair Work, over-time is defined as being payable when a worker works beyond ordinary hours, i.e. outside of their normal agreed hours.


Over-time is often dependant on the engagement of your temporary worker and the agreement in which the worker is engaged. Based on this, overtime may be payable to your contract workers. The standard working week in Australia is based on 38 hours across the national Modern Award system/ payment scheme. Some agreements allow for a 40-hour week with a 0.4 hour per day accrued for a RDO – Rostered Day Off. A good example of this is in the construction industry. However, this can be a little tricky on some sites due to other agreements in place such as a Union Enterprise bargaining agreement.


There is a myriad of certified agreements in the Australian market in which some workers are engaged on a contract basis as party to the conditions contained in these agreements.

These agreements may be any of the following:

  • Certified agreements
  • EBA’s or Enterprise Bargaining agreements – usually negotiated with a union for a specific site or project. There is no hard and fast rule as to what are contained in these agreements and they have many permutations and may include some of the factors listed above
  • Modern Awards
  • PAYG (pay as you go)
  • Contractors with an ABN
  • Freelancers

Some other handy hints

  • If a PAYG employee works beyond a 38-hour week and the worker is employed under a modern award then overtime is payable
  • If an employee is engaged under a company certified agreement it will depend on what conditions constitutes the payment of overtime and what the standard hours of work are
  • If an individual is employed as a contractor – that is, they hold an (ABN) or Australian Business Number.  Again, depending on the contract of engagement, a variance of the paid hourly rate may come into effect. This is usually negotiated at the time of engagement
  • With the rise of the Freelancer / Gig economy, many individuals chose to work as contractors for a negotiated rate on an hourly rate basis or even on a per task or even outcome based work

As the employment landscape continues to evolve, it is argued that overtime may become a moot point as more and more people set up their own ABN’s and look to blend flexibility with their lifestyle choices.

It is critically important these days to ask the question of any individual you are looking to hire/recruit or second to your organisation – how they would like to be paid and under what circumstances. Of course if you are to engage a “Contract” or ABN’er then this may bring unknown risks to your business. Ensuring that you have appropriate insurances to protect you and also sighting evidence from the individual that they are in fact a legitimate entity with the appropriate insurance coverage in place to protect them and you! Lots of boxes to tick here folks so tread carefully. Download our checklistto help you along!


How Ratescalc.com can help!

Ratescalc.com is like having your own personal payroll team in one application.  With all modern Australian Awards and Certified Agreements translated, we have you covered. Ratescalc.com is a cloud based technology that supports your existing business by removing some of the manual human intervention tasks that are open to mistakes. Ratescalc.com has been designed by expert recruitment industry professionals who have experienced these problems themselves, run their own businesses and understand the challenges surrounding this complex landscape.



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