Understanding the Difference Between Overtime VS Time in Lieu

Understanding different payment terms can be confusing. There’s ordinary time, overtime and time off in lieu to make sense of. 

Given the penalties for getting things wrong, it is important to understand when an employee is entitled to be paid overtime for the hours they have worked or whether providing time in lieu of paying overtime is available for you and an employee, and if so what rules apply.


If the employee is not covered by a modern award or enterprise agreement, then whether they can earn overtime is a matter for their employment contract. 

Very few employees not covered by a modern award or enterprise agreement get overtime in Australia. Some shift supervisors do in the heavy manufacturing sector, but this is rare.

If the employee is covered by a modern award or enterprise agreement, then whether they can earn overtime will be set out in the modern award or enterprise agreement.

When overtime applies can vary greatly between modern awards. It usually includes an employee working:

  • more than a certain number of hours each day or week
  • outside of a certain spread of hours
  • (for part-time employees) more than their usual hours each day or week.


In modern awards (and most enterprise agreements) overtime payments are based on a multiple of an employee’s ordinary time hourly rate of pay. Modern awards that provide for overtime require overtime to be paid:

  • At 150% (time and a half) of an employee’s ordinary time hourly rate for the first two or three hours of overtime worked
  • At 200% (double time) of an employee’s ordinary time hourly rate after the two or three hours of overtime worked.

Some modern awards provide different overtime payment arrangements for:

  • shift workers
  • working overtime on Saturday
  • working overtime on Sunday
  • working overtime on a public holiday.


The question is answered in the National Employment Standards. An employee does not have a right to work overtime unless you have created one through your employment contracts. Deciding that overtime is needed is a matter for the employer.

In simple terms, an employer can ask an employee to work “additional hours” each week as long as the request is reasonable. Keep in mind an employee can decline the request if it is unreasonable for them.

Additional hours are:

  • for a full-time employee: anything over 38 hours a week
  • for other than a full-time employee: the lesser of 38 a week or the employee’s ordinary weekly hours.

Clear as mud, right?

It’s a little unusual as it requires two very similar but not identical tests for the employer and employee:

  • the original request needs to be reasonable 
  • the right to refuse must be based on unreasonableness.

So it could be reasonable in the circumstances for the employer to request additional hours to be worked, but then in the circumstances of a given employee, the request could be unreasonable.

In considering what is reasonable or unreasonable in the circumstances, the legislation requires the following to be taken into account:

  • risk to health and safety
  • the employee’s personal circumstances such as family responsibilities
  • the needs of the business
  • whether the employee will be paid overtime, penalty rates or other compensation
  • whether the employee’s level of remuneration reflects an expectation of working additional hours
  • any notice given by the employer of the request
  • any notice given by the employee of their intention to refuse
  • the usual patterns of work in the industry or part of the industry the employee works in
  • the nature of the employee’s role and level of responsibility
  • whether the hours worked are in accordance with any applicable weekly averaging provisions found in all modern awards or under the Fair Work Act 2009
  • any other relevant matter.


Time off in lieu of overtime applies when an employee works additional hours and instead of being paid overtime agrees to take paid time off work during their ordinary hours of work instead of being paid the overtime payment – called “time off in lieu” or “TOIL”.

For some employers, TOIL is valuable business flexibility as it allows them to substitute a form of leave for what would otherwise be an additional payment and therefore cost.

TOIL is used quite a lot in the public sector and also in sectors like health, social welfare and personal care as well as for many clerical office roles. It tends to suit jobs where the employee can be off for a short period without disrupting the usual workflow.  

You can see this in an office environment where a clerical worker might take an early-mark on a Friday afternoon at 2pm as TOIL rather than be paid overtime earned at another time. 

This may cause little disruption to the workflow of the office, save the business from paying the overtime and provide valuable work-life balance for the employee.


In a modern award, they are similar but not always the same. Most have the following features:

  • Taking TOIL is by agreement with the employee concerned (often in writing).
  • The time off usually needs to be taken within a set period (often six months).
  • The time off needs to be taken at a mutually agreed time.
  • The employee can elect to be paid the overtime as pay at any time.
  • If there is a time period in the modern award and time off has not been taken during that period, the employer must pay the employee for the overtime worked.
  • An employer cannot put an employee under pressure to take TOIL.
  • If the employee’s employment comes to an end, the TOIL/overtime must be paid out.


One of the things you have to watch out for in modern awards is how the amount of time off is calculated. In some, it is an hour off for each hour of overtime worked and in others the hours off equal the paid hours.

For instance, if an employee worked two hours overtime to be paid at time and a half (150%) they would be entitled to three hours pay at their ordinary time hourly rate.

In this example, some modern awards will say that if the employee wants TOIL:

  • they can have two hours off (because they worked two hours of overtime), while others could say
  • they can have three hours off (because they were owed three hours pay).

Many but not all modern awards provide for time off in lieu of overtime.

Industries covered by modern awards that include time off in lieu include:

  • retail
  • restaurants, cafes
  • hospitality
  • transport
  • general manufacturing.


Remember its “by agreement”.

TOIL may sound like a good option for your business, but remember it can only be used by agreement under modern awards (and likely enterprise agreements). 

If your employee works overtime and asks for TOIL but it does not suit you, politely say no. Neither you nor your employee is under any obligation to agree to TOIL.

It is important to get this right so get in touch with our Workplace Advice Line today. 

Meet Greg Gill

Meet Greg Gill

Greg Gill

Greg Gill is a new member of our committee, having only joined our national committee last year. Greg is passionate about our industry in particular securing the future of our industry. He sits on our Industry Rising Star committee and is currently involved in rebuilding the program. His experience in the industry from a very young age means he can bring a unique perspective to our committee and industry.

What is your position within your business and what do you do?

I am the APAC Business Development Manager for ECI Software Solutions. My role is to work with independent hardware and building supply retailers to improve operations by implementing and utilising new technology. ECI provides business management software with a focus on providing cloud solutions and providing mobility and visibility across the business to store owners and managers.

When and how did you enter the hardware industry?

I grew up in hardware stores, with the family owning stores it was my life before and after school. After finishing school, I spent 10+ years on the tools in the construction industry. My personal requirements changed and I required a “steady income” to purchase a house. I was offered a position on the floor at a hardware store, owned by a family member. I took the position and over a period of 10 years in the store, I was taught a lot about the hardware industry and gained so much experience in the retail hardware/trade sector.

What do you love about the hardware industry?

The people – the store owners, their families that put their lives into the business and their customers. The employees who take pride in keeping the stores up to a certain standard. I love the passion that people have for their stores and serving their customers.

Why did you join Hardware Australia and the committee?

To give something back. Since leaving the store I have been working for suppliers to the industry, acquiring knowledge now from both sides. I enjoy providing my input when asked and hope to use this opportunity with Hardware Australia to show the younger generation in the stores that further careers in our industry can come from working on the floor of the local hardware store.

What benefit do you think Hardware Australia brings to its members?

Peace of Mind – Hardware Australia is a place to keep you updated with current topics, regulations etc. allowing store owners to focus on their business, knowing someone is keeping them up to date with changes to legislation and requirements. An additional bonus is having a support line to assist with industrial relations issues that are specific to our industry.

Where do you see the future of the industry?

If the last 12 months have taught us anything, it is that independent hardware stores are a large part of the community and will continue to be in the foreseeable future. When people were stuck inside their houses during a worldwide pandemic, the local hardware store was a saviour to people’s mental health, serving the community by providing them materials to keep busy at home whilst also continuing to support the essential businesses and trades.

I hope the community has seen the value the local independent stores provide with personalised service and localised ranging, and continue to support their stores at the same level as 2020.

Any words of wisdom?

Always be willing to adapt to your environment. Don’t keep doing something simply because that is the way it has always been done. We live in an ever-changing world and people are constantly coming up with ways to improve processes. Be open to change and see if there are small changes you can make that will lead to large improvements in your businesses. Chances are competitors are already doing this and you don’t want to get stuck playing catch up.

Meet George Demourtzidis

Meet George Demourtzidis

George Demourtzidis

George has been involved in the Hardware Australia committee since the beginning 6 years ago. Previous to that he was on the board of the Hardware Association of South Australia (HASA). Over the past 2 years he has held the position of Treasurer for Hardware Australia and is the current chairman of our South Australia Committee.

This month we sat down with George to find out more about his experience in the industry and where he sees the future of hardware.

What is your position within your business and what do you do?

Business Manager for Trio Australia – a fancy name given to a family business member that ends up being responsible for everything that goes wrong. That aside, I play an integral role in the macro planning and strategic direction of the business. I love numbers and the ‘facts’. Lastly and most importantly I manage a small portfolio of key clients- which keeps me grounded and ‘in touch’ with customers, the market and the real world.

When and how did you enter the hardware industry?

I started in the business 21 years ago after completing my tertiary studies. I was welcomed with open arms into the family business after receiving my Corporate Finance degree! I thought I was destined to work in a big banking tower somewhere in London, Hong Kong or New York, however this was not my destiny. The hardware industry was calling and I guess I couldn’t resist!

What do you love about the hardware industry?

The people! First and foremost the people I work with. I love them all dearly and I thank them for the 8 to 10 hours a day I spend with them! Their passion drives me and their characters keep me entertained. Secondly, the people, the customers and the communities we serve! I feel very honoured and privileged to work for a 45 year old business that has such a great reputation in the hardware market.

Why did you join Hardware Australia and the committee?

To further entrench our family and business roots and knowledge in the Australian hardware market place. To be at the forefront of change and progress of our industry. To be able to collaborate with ‘like minded’ organisations and people that see a great and bright future for hardware.

What benefit do you think HA brings to its members?

It definitely needs to be its member services and its networking events. These services and events are second to none- and I encourage everyone who hasn’t attended one of the HA events to do so this year.

Where do you see the future of the industry?

Firstly, It would be remiss to think that our industry will not be affected by the digital revolution that is upon us. Whether it is in the products and services that we offer or the way we serve our customer base or communicate and transact with each other. Technology will enhance all of these aspects and we need to embrace the changes (not resist them). Secondly, I believe there is still further room for consolidation within our market place- both on the supplier base and the retail/ shop front end. Watch this space!

Any words of wisdom?

Enjoy the ride of 2021 and beyond!  With the year that has past, we have all been very resilient, patient and optimistic – just keep it going.

Member Profile: Clint Spence, Beaudesert Mitre 10

Member Profile: Clint Spence, Beaudesert Mitre 10

Clint Spence has been involved in the hardware industry for more than 43 years at Beaudesert Mitre 10 and is a valued member of the Hardware Australia Committee, Chair of the Queensland state committee and this year was appointed our Vice-Chair.

When we caught up with Clint earlier in the month, we found out more about his career challenges, highlights and how he came to join our state & national committee.


How did you get involved in the hardware industry?

In 1976 I started with the local council in their supply- stores department with my Scout Leader as my boss. I was introduced to bolts, cement, hard hats, safety lanterns etc for a period of 7months. Don Franklin one of three brothers that owned Beaudesert Hardware which was also an ex Scout of my present boss came and asked me to join his team at the hardware store. I thought it would be a great opportunity to know more about tools and building materials, so I began working for Beaudesert Mitre 10 in May 1977.


What has been some of the main achievements or highlights in the business over the past 12 months?

Fine tuning the business in the pricing and margin area and most recently transforming the layout of the store with the help of my staff to achieve a more comfortable shopping experience for our customers. The Covid-19 event has certainly produced a history making situations. One that comes quickly to mind is, at the height of our first lockdown I have never seen a seed packet stand stripped bare of every packet in 2 days in all of my career, just amazing.


What is one of the biggest challenges you have faced in the business?

The introduction of the GST in 2000. It was unchartered waters for everyone at the time, but also a challenge. We worked with computer companies, government departments, tax office, stationary, printers, industry bodies, and accountants and most importantly explaining how it was going to work to our customers; and yet today it seems so simple and part of everyday business.


What is the one business tip you would like to pass onto another hardware store?

We spend a lot of time looking after our customers which is very important, take time out twice a year to sit down and look at your figures. Learn formulations to show how you are actually performing financially. Benchmark yourself against other stores similar to yours, if that opportunity arises. Our industry and other stores have a great deal of information that can be accessed and then implemented to better ourselves. But do not forget about balancing that work/family time. I for one failed in this arena for a period but realised that watching your family growing up is so rewarding.


When did you join the Hardware Australia committee?

I was succumbed by Brian Lee a rep for Lockwood in the early 2000, our store had been a member of Hardware Association of Queensland (HAQ) for many years and utilising their training techniques and industry information. Brian invited me to join the board of Queensland. There I was, a young guy from the bush sitting at the table with all these experienced hardware retailers, a learning experience I can honestly say. I soon realised we were all there to see that our hardware industry was tracking in the right direction and arming the retailers with information and connections that would help them in their daily business routine.

Where do you see the future of the hardware industry?

As I polish up my crystal ball and see that our future remains strong. You may be able to source products, watch YouTube, and purchase online, but the hands on experience you and your staff have will never be matched by Mr Google. The younger generation coming through are “Do it for me” and I believe that’s where our opportunity lies.


What do you think is the biggest benefit of being a member of Hardware Australia?

Since the amalgamation of all the states to form Hardware Australia, we have grown in strength and experience. Our voice for the independent Hardware members is being heard, our aim to Educate, Advocate, and Associate will always be at the forefront of all our discussions and activities. The resources that are available at present for stores/ members give a sense of partnership and a comfort blanket that you can talk to a person when the need arises.


You were awarded the Brian Lee Hardware Industry legend award last year (2019), how did you feel about winning the award?

The Legends Award last year was an honour to receive in front of my fellow hardware suppliers, retailers, family, and friends. I’m a quiet achiever normally, but to be acknowledged for my work to date for the industry was rewarding. To receive the Brian Lee Award was quite ironic as I have mentioned above as Brian introduced me to the fold many years prior.


Was there anyone that helped shape your hardware career?

You never stop learning and the people you meet always teach you something different. My mangers before me (Allan & Phil) at the store, passed on their skills to me as well as Don Franklin. Don challenged everyone to do better and learn, he was a businessman through and through and I thank them all for seeing the potential in me in those early years.

Member Profile: Paul Stewart, Barrow & Bench Mitre 10

Each month we will be interviewing our board and members to find out more about them and where they see the future of the hardware industry in Australia. This month we had a virtual catch up with our Chair Paul Stewart, who together with his wife Amanda owns Barrow & Bench Mitre 10 in South Australia.


How did you get into the Hardware industry?

I have been immersed in the hardware industry since childhood.  My father was a carpenter, later establishing a hardware store.  Like the children of many family businesses, I worked in the shop as a school student.  With no intention of a career in retail, I undertook a carpentry apprenticeship and then worked for myself for around 5 years. When I received a phone call from Dad offering me a job, I realised how much I missed the social aspect of working with people.  Six years ago, in 2013,  I purchased the business with my wife Amanda. We now employ around 40 personnel, ranging from salaried full time staff, to school students who work as casuals for stock fill.


Do you have one area of the business that is more successful? If so, what do you think makes it better than others?

Our garden department is certainly the strongest part of our business.  Homeowners in our demographic take great pride in their gardens.  We fill a niche market offering plants across all price points from cheap and cheerful potted colour, through to advanced trees and clipped topiary.  Our garden department adapts quickly to changing trends and customer requirements.  For example, in the last 5-6 years, we have expanded our range of indoor pots and plants, as well as our organic garden care options.


What’s one of the biggest challenges you’ve faced in your business?

A constant challenge in our business is the staff.  Finding the right people; keeping them; communicating to them and inspiring them to keep helping others, even when times are difficult isn’t always easy.  Keeping abreast of workplace legislation, OH&S, training, and so on are all part of that challenge. I would have to say operating throughout the COVID 19 pandemic has also had its challenges.  In the early days, before strict health guidelines were introduced, keeping staff and customers safe was a huge concern to us.


What is the one business tip you would like to pass onto other hardware store owners and managers?

Talk to other people within the industry, either at a state level if you are comfortable, or to people interstate. Understand that others do things differently, and seek to find out how and why they do that.  Likewise, share the things that work for you with others, and be generous with your time.  Just one idea out of ten shared could save you time and money.


When did you join the Hardware Australia committee?

I was invited to join the SA State Committee (HASA) around 2005. In 2011 took over the role as President of that committee from the very capable Rod Evins. As President of the HASA, I sat on the Board of HA (formerly known as HFA).  I have remained on the Board, in various capacities, since 2011.

Where do you see the future of the hardware industry?

Helping people find solutions to home renovation and maintenance remains integral to living in a property, whether you own it or not.

I believe there will always be a need for home hardware and DIY solutions in one form or another.  As a business, I feel we need to continually challenge ourselves and the way we operate.  It’s important to look at our competitors, and at how other industries are managing these challenges.    Of course, hardware, like all industries, needs to be receptive to the changing needs of their customers.   At the moment having a strong presence online, together with trusted advice in store, allows you to help people find solutions to their problems.


What do you think is the biggest benefit of being a member of HA?

There are many benefits in being a member, and it’s very hard to list one, so I will keep it short and list a few

  • Networking – As I mentioned before talking to other people in your industry is extremely valuable. I believe ‘People need People’. It’s where we get our energy, our ideas, and our support.
  • Having easy access to some basic legal advice is important – there is no excuse for not understanding the awards our industry operates under.
  • Being part of an industry body gives us strength so that we can have an impact with our decision making.


What do you get up to in your downtime?

When I am not working on our hobby farm, you will generally find me mountain biking or trail running my way across the Adelaide Hills.    In the warmer weather, when the wind is just right, I try to get to the beach for a spot of windsurfing.

If you could change something in the world, what would it be?

Tolerance of other people’s views.


Are you involved in any other community organisations?

When our children were younger I was very involved in local sporting clubs, however, my Hardware Australia obligations remain my only community commitment at the moment. This allows me to work on the imminent upgrade of our own store, and to focus on our business after Bunnings opened their largest store in Australia just 10 minutes drive away.