Time in lieu

Under a time in lieu arrangement, if an employee works beyond their usual hours, instead of receiving overtime pay they can take equivalent time off work at a later date. For example, if an employee works two extra hours, they can take two hours off at another time, paid as if they worked. This is often an agreement between the employer and the employee and is subject to the terms of their employment contract or award.

Time off instead of overtime pay

Time off instead of paid overtime is only allowed if the employee's award, agreement or contract permits it, and most awards require the employee to agree in writing each time. Under many awards the time off is hour for hour, and if the employee asks, or the time is not taken within a set period (often 6 months) or before employment ends, you must pay the overtime at the overtime rate. For example, under the Clerks—Private Sector Award 2020, an employee who works 3 hours of overtime can take 3 hours off with pay instead, if this is agreed in writing.

Read our guide to modern awards.