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New Zealand only

For Australian help, click here.

Keypoints
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

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When does overtime apply?

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

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

OK, let's step you through how to set up overtime:

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title	1. Set up an overtime pay item

Set up an overtime pay item

Go to the Payroll menu and choose Pay items.
Click Create earning.
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 this earning. See the ATO guidelines for details about 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 this earning. If unsure, check with the Fair Work Ombudsman or your accounting advisor.

ATO reporting category

If you report payroll information through About Single Touch Payroll 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

Don't include in KiwiSaver contributions	Select this option if compulsory employer and employee contributions should be excluded from this earning. If unsure, check with your accounting advisor or check the IRD website.
Don't include in gross earnings when calculating leave payments	Select this option to exclude the pay item from gross earnings for leave calculations. If you're not sure which pay items to exclude, check the IRD website. Learn more 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 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:

Click Save.

Repeat these steps for each rate of overtime you pay, e.g. time and half, double time and a half, etc.

When you're done, assign the pay items to your employees as described in the next task.

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title	2. Assign the pay item to an employee

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:

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

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title	3. Pay the overtime

Pay the overtime

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

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

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

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Do a pay run

Creating pay items

Assigning pay items to employees

Changing or deleting pay items

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Key

Set up an overtime pay item

Assign the pay item to an employee

Pay the overtime

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