Overtime

Key points

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
The same approach can be used for penalty rates, weekend rates, or other additional pay rates

When does overtime apply?

Check the FairWork website to learn more about the ins and outs of overtime.

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

MYOB comes with two overtime pay items you can assign to your employees:

If you pay different rates of overtime, like 2.5x or 3x, you can easily set up new overtime pay items.

Assigning overtime to an employee

You'll need to assign the applicable overtime pay item to each employee who is entitled to be paid overtime.

Go to the Payroll menu and choose Pay items.
Click the Wages and salary tab.
Click the overtime pay item you want to assign.
Under Employees using this pay item, choose the employees entitled to this overtime.
When you're done, click Save.

If the overtime pay items which come with MYOB don't suit your business needs, you can create a new ones.

Go to the Payroll menu and choose Pay items.
Click the Wages and salary tab.
Click Create wage pay item.
Enter a Name for the pay item, such as Overtime 2x or Overtime 1.5x
If you'd like a different, more personalised, name to show on pay slips for this overtime pay item, enter a Name for pay slip, such as "Saturday rate". If you leave this blank, the pay item Name will display instead.
Choose the ATO reporting category. If you're not sure, check with your accounting advisor or the ATO. Learn about assigning ATO reporting categories for Single Touch Payroll.
For the Pay basis, choose Hourly.
For the Pay rate, choose Regular rate multiplied by and enter the overtime rate in the next field. For example, for double time you'd enter 2.
(Optional) If you want to track these overtime payments through a separate account, select the option Override employees' wage expense account and choose the override account in the field that appears. How do I create accounts?
Under Employees using this pay item, choose the employees entitled to this overtime.
Under Exemptions, choose any deductions or taxes that shouldn't be calculated on these overtime payments. If you're not sure, check with your accounting advisor or the ATO.
When you're done, click Save.

According to the ATO guidelines, overtime payments aren't part of ordinary time earnings (OTE) for super guarantee purposes.

If you've created a new overtime pay item, here's how to stop super calculating on it:

Go to the Payroll menu and choose Pay items.
Click the Superannuation tab.
Click the superannuation pay item you want to exclude from overtime.
Under Exemptions, choose the overtime pay item.
Repeat steps 3-4 for all other superannuation pay items you want to exclude from overtime.
When you're done, click Save.

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

Go to the Create menu and choose Pay run.
Choose the Pay cycle and confirm the pay dates.
Click Next.
Click the employee to open their pay.
Enter the hours of overtime being paid against the applicable overtime pay item.
Continue processing the pay as normal. Need a refresher?