• Overtime is time worked in addition to normal working hours, usually paid at a higher rate

• To add overtime to an employee's pay, set up a new pay item (see below for instructions)
• The same approach can be used for penalty rates, weekend rates, or other additional pay rates

When does overtime apply?

In Australia the FairWork website is a good place to start. In New Zealand check the Employment New Zealand website.

If an employee takes time off instead of receiving paid overtime, see Time off in lieu.

Set up an overtime pay item

1. Go to the Payroll menu and choose Pay items.
2. Click Create earning.
   
3. Set up the earning:
   1. For the Type, select Standard earning.
   2. Enter a Name for the earning such as "Overtime 2x".

   3. If you'd like a different, more personalised, name to show on payslips for this earning, enter a Name for payslip. Otherwise, this can be the same as the Name field.

   4. For the Rate, select Multiplier of normal rate.
   5. Enter a value in the Multiply by field. This will multiply the hourly rate by this value. For example, to pay double time you'd enter 2.
   6. Choose whether the overtime is Taxable or Non-Taxable. If unsure, check with your accounting advisor or the ATO/IRD.

   7. Select your country-specific options.

      If you're in...	this option...	means this...
      Australia	Pay super on this earning	Select this option if superannuation should be paid on

      the overtime

      this earning. See the ATO guidelines for details about

      what

      which earnings should be included in super calculations.
      Accrue annual and sick leave on this earning	Select this option if annual leave and sick leave should accrue on

      the overtime

      this earning. If unsure, check with the Fair Work Ombudsman or your accounting advisor.
      ATO reporting category	If you report

      to the ATO via

      payroll information through About Single Touch Payroll

      , select the applicable

      reporting, all pay items need to be assigned an ATO reporting category. If unsure, check with your accounting advisor or the ATO. Learn more about Assign ATO reporting categories for Single Touch Payroll.

      New Zealand

      Exclude CEC

      Don't include in KiwiSaver contributions

      Select this option if compulsory employer and employee contributions should be excluded from

      overtime payments

      this earning. If unsure, check with your accounting advisor or check the IRD website.

      Exclude from

      Don't include in gross earnings

      for

      when calculating leave

      calculations

      payments

      Select this option to exclude

      overtime

      the pay item from gross earnings for leave calculations.

      As the IRD considers overtime part of gross earnings, you probably wouldn't select this. but

      If you're not sure which pay items to exclude, check the IRD website. Learn more

      about 

      about Leave calculations.
      Don't accrue annual leave on this pay item for pro-rata employees	Select this option if you don't want employees to accrue pro-rata annual leave on

      overtime

      this pay item. Note that employees with a fixed annual leave entitlement will never accrue leave on pay items.

   Here's our example overtime pay item:
   
4. Click Save.
5. Repeat these steps for each rate of overtime you pay, e.g. time and half, double time and a half, etc.
6. When you're done, assign the pay items to your employees as described in the next task.

Assign the pay item to an employee

To include an overtime pay item in an employee's pay, you need to assign it to them. Here's how:

1. From the Payroll menu, choose Employees.
2. Click the employee's name.
3. Click the Pay items - earnings & deductions tab.
4. In the Earnings section, click the dropdown arrow next to the Add earning... field.
5. Choose the overtime pay item to be assigned to the employee. The pay item is assigned to the employee.
6. Repeat step 5 if you need to assign any additional pay items to the employee.
7. Click Save.
8. Repeat from step 2 to assign pay items to another employee.

OK, you're now ready to pay overtime when you do a pay run. See the next task for details.

Pay the overtime 

When an employee works overtime, enter the overtime hours on their pay.

1. Go to the Payroll menu and choose Enter Pay.
2. Select the employee to be paid then click Start Pay Run.
3. Enter the Hours of overtime being paid. Here's an example of 2 hours double time being paid:
   
4. Continue processing the pay as normal.

If you've previously set up pay items using a set rate you can delete these and use the new multiplier method above. See Modifying Changing or deleting pay items for detailed instructions on deleting pay items.