Overtime, penalty rates and labour budgeting guide

Written by Roster Flow. Published 19 October 2026.

Most small businesses know their wage bill rises at weekends and on public holidays. Fewer can say by how much for next week, before the roster goes out. This guide closes that gap. It does not restate any rates, because they differ between awards and classifications and are varied over time. Instead it shows where the premium hours come from, how to count them on a draft roster, and how to price them from the rates your award sets.

If you have not set a weekly wage budget before, start with how to build a staff roster around a weekly wage budget, then use this guide to put the premium hours into it.

Where the premium hours come from

The Fair Work Ombudsman’s page on penalty rates describes them as higher pay rates for working particular hours or days, and lists weekends, public holidays, overtime, late night shifts and early morning shifts. Which of those apply, and when, depends on the award. The table shows where five awards set the times that cost more, as consolidated to 1 July 2026.

The pay rates pages set out the current rates for the Restaurant, Hospitality, General Retail, Fast Food and Clubs awards. Confirm which award covers each employee with the Fair Work Ombudsman’s Find my award tool, and check whether an enterprise agreement applies instead.

Three rules that change the arithmetic

• Casual penalty rates already include the loading. The casual columns in Table 8 of the Restaurant award, Table 14 of the Hospitality award and Table 12 of the General Retail award are stated inclusive of the casual loading, the Fast Food award notes that its casual penalty rates were calculated by adding the loading, and the Clubs award’s casual rates in clause 24.1 include the 25% loading. Multiply the base rate by the casual percentage in the table, rather than adding the loading to a penalty rate.
• Penalty rates do not stack. Where more than one penalty rate would apply to the same hours, the Restaurant award pays the higher one only (clause 24.3(a)), the Hospitality award the highest applicable rate (clause 29.3(b)), and the Clubs award the penalty to the employee’s greatest advantage (clause 24.5). The exceptions are the breaks payments: the Restaurant award pays the clause 16.6 payment for a meal break not allowed on top (clause 24.3(b)), and the Hospitality and Clubs awards make similar exceptions for their breaks clauses (clauses 29.3(c) and 24.5).
• Minimum payments turn short jobs into longer ones. Under the Restaurant and Hospitality awards, a full-time or part-time employee who works on a public holiday is paid for at least 4 hours and a casual for at least 2 (clauses 24.4 and 29.4). Work on a rostered day off is paid at the overtime rate with a 4 hour minimum under the Restaurant award, unless it is part of, or continuous on, a normal roster that started the day before (clause 23.1), and the Fast Food award sets a 4 hour minimum for Sunday overtime that is not immediately before or after ordinary hours (clause 20.5).

Count the premium hours on the draft roster

Before you price anything, sort the draft roster’s hours into buckets, and keep full-time and part-time employees apart from casuals, because the awards set different percentages for each.

1. List the buckets for your awardUse the award’s penalty table: weekday ordinary hours, any evening or late night band, Saturday, Sunday and public holidays, plus any planned overtime.
2. Split each shift into its bucketsA Restaurant award shift from 17:00 to 23:00 on a Tuesday has 5 hours in the 6:00 am to 10:00 pm band and 1 hour after 10:00 pm, so it belongs in two buckets.
3. Total the buckets by employment typeAdd up each bucket for full-time and part-time employees, and separately for casuals. The weekend and public holiday hours calculator does the day split for you.
4. Price the bucketsEnter each person’s hourly rate and the multiplier for each day into the roster cost calculator, taking the multipliers from your award’s pay rates page.
5. Add minimums and allowancesAdd any public holiday or rostered day off minimum payments, and any allowances the week will trigger, such as a split shift or meal allowance.
6. Compare with the budgetCheck the total against the week’s wage budget before you publish, and change the roster rather than the budget where you can.

Bucket cost = hours × hourly rate × multiplier

The multiplier is the percentage in the award’s table written as a decimal, so a percentage of 175 becomes 1.75. Where the award sets a late night band as an additional amount per hour, as the Restaurant, Hospitality and Clubs awards do, add that amount on top for the hours in the band.

A worked example: sorting a cafe week into buckets

A cafe covered by the Restaurant Industry Award opens seven days a week, and next week Friday is a public holiday. No shift runs past 10:00 pm, so there are no late night hours. The draft roster has four people.

Ana’s four weekdays of 7.5 hours make 30 and her Saturday 8, so 38. Ben’s four days of 5 hours make 20, Cam’s two days of 6 make 12, and Dee’s four days of 3 make 12. Half the week’s paid hours, 41 of 82, fall on the Saturday, the Sunday or the public holiday, and for the casuals the share is higher: 18 of 24. That is where pricing matters most, and where a change to the roster moves the total most.

Each bucket is priced the same way: the hours, times each person’s hourly rate, times the multiplier from the pay rates page for that day and employment type. Under clause 24.2, full-time and part-time percentages come from column 2 of Table 8, and casual percentages from column 3 or column 4, depending on the casual’s classification level.

Two checks follow from the rules above. Ben works 5 hours on the public holiday and Cam 6, both above the minimums in clause 24.4 of 4 hours for a part-time employee and 2 for a casual, so no extra paid time is added. And because no hours fall in two penalty periods at once, clause 24.3 has nothing to decide. If the owner decides before publishing that the public holiday is too quiet for two people, leaving Cam off the Friday takes 6 public holiday hours out of the draft.

Plan overtime instead of finding it

Overtime is the premium hour most often discovered after the fact. Three habits keep it in the budget.

• Know the triggers. Overtime can start at a daily limit, a weekly total, a rostered finish or a part-time employee’s agreed hours, depending on the award. How to prevent accidental overtime sets out the triggers and the checks.
• Plan the length. Overtime rates step up after the first 2 hours on weekdays and Saturdays under the Restaurant, Fast Food and Clubs awards, and after the first 3 hours Monday to Saturday under the General Retail award, with each day counted on its own (clauses 23.3, 20.6(b), 22.4 and 21.2(b)). Under the Restaurant award, 3 hours of weekday overtime shared between two people on the same rate, 1.5 hours each, all fall in the first 2 hour band, while one person working all 3 moves into the higher band for the third hour.
• Give notice the day before. The Restaurant and Clubs awards require a meal, or a meal allowance, when an employee works more than 2 hours of overtime without being told on or before the previous day (clauses 21.2(a) and 22.7), and the Hospitality award has the same rule for full-time and part-time employees (clause 26.4). The Fast Food award’s meal allowance applies to overtime of more than an hour after the usual finish without at least 24 hours’ notice, where the employee cannot reasonably go home for a meal (clause 17.4).

Overtime can also move the next shift. Under the Restaurant award, an employee who finishes overtime less than 8 hours before their next rostered start may delay that start without loss of pay, and if they do not get an 8 hour break they are paid at the overtime rate until they do (clause 23.2). A late close followed by an early open can cost more than the late close alone.

Time off instead of overtime pay moves the cost

Several awards let an employee take paid time off instead of being paid for overtime, by agreement. Under clause 23.5 of the Restaurant award, the agreement is in writing and the time off is equivalent to the overtime payment that would have been made: the award’s own example turns 2 overtime hours at time and a half into 3 hours off. The time off must be taken within 6 months, and if it is not, or the employee asks to be paid instead, the overtime is paid at the rate that applied when it was worked. An employer must not exert undue influence or pressure on the decision (clause 23.5(f)). The Fast Food award follows the same structure in clause 20.7, and the General Retail award requires the agreement to be in writing (clause 21.3).

For the budget, treat banked time off as a cost already incurred. It will be paid either as hours off, which someone else may need to cover on the roster, or as money if it is not taken within 6 months.

Set the budget by day, not only by week

Because a Sunday hour and a Tuesday hour cost different amounts, a weekly total hides where the pressure is. Set a target labour cost percentage for each day, or at least for weekdays and weekends separately, and compare each day’s costed roster with that day’s forecast sales. The labour cost percentage calculator works out the share, what is a good labour cost percentage for a cafe covers choosing a target, and forecasting staffing from weekly sales helps with the sales side.

Put public holidays into the budget before the month starts rather than in the week they fall. The public holidays page lists them for each state.

Check the budget against the hours worked

The budget is a plan, and the pay run is what happened. After each week, compare rostered and worked hours bucket by bucket. Overtime and late finishes show up here first, and so do shifts that ran into a more expensive band. The rostered versus worked hours calculator shows the difference for each person, and comparing rostered and actual labour costs explains how to read it.

Roster Flow keeps the plan and the record together: availability and leave from staff phones, the roster published to everybody at once, clock ins that become timesheets, and approved hours sent to Xero, MYOB or a CSV file.

A checklist for budgeting penalty rates and overtime

• You know which award or agreement covers each employee
• The draft roster’s hours are sorted into the award’s penalty buckets
• Full-time and part-time hours are kept apart from casual hours
• Multipliers come from the current pay rates page, not last year’s
• Public holiday and rostered day off minimum payments are added
• Planned overtime is costed on its own line, with notice given the day before
• Late closes before early opens are checked against the break after overtime
• Banked time off instead of overtime is tracked as a cost
• Rostered and worked hours are compared by bucket every week

Sources

• Fair Work Commission: Restaurant Industry Award 2020 [MA000119]
• Fair Work Commission: Hospitality Industry (General) Award 2020 [MA000009]
• Fair Work Commission: General Retail Industry Award 2020 [MA000004]
• Fair Work Commission: Fast Food Industry Award 2020 [MA000003]
• Fair Work Commission: Registered and Licensed Clubs Award 2020 [MA000058]
• Fair Work Ombudsman: penalty rates
• Fair Work Ombudsman: overtime pay
• Fair Work Ombudsman: find my award

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