Last Updated on 19/09/2025 by Damin Murdock
Hospitality is an industry that runs outside of the standard nine-to-five workday. Staff are often rostered for evenings, weekends, public holidays, and overtime hours. While this flexibility is essential for business operations, it also brings with it strict legal requirements for penalty rates and overtime. Employers who fail to comply risk underpayment claims, penalties from the Fair Work Ombudsman, and disputes before the Fair Work Commission. This article explains how penalty rates and overtime work under the Hospitality Industry (General) Award 2020 (the Award) and provides compliance tips for employers.
Penalty Rates
Penalty rates are additional payments made to employees who work unsociable hours. Under the Award, these are applied as follows:
- evenings (7pm to midnight) attract an additional $2.81 per hour,
- nights (midnight to 7am) attract an additional $4.22 per hour,
- Saturdays are paid at 125% of the ordinary rate,
- Sundays are paid at 150% of the ordinary rate, and
- public holidays are paid at 225% of the ordinary rate.
Casual employees receive these penalties in addition to their 25% casual loading.
These entitlements recognise the inconvenience of working outside of standard hours and ensure staff are fairly compensated.
Overtime
Overtime is triggered when employees work beyond their ordinary hours or outside their rostered shifts.
For full-time employees, this generally means more than 38 hours per week or more than 11 hours in a single day.
For part-time employees, overtime applies when they work more than their agreed hours.
Overtime is paid at time and a half for the first two hours and double time thereafter. Employers may provide time off in lieu (TOIL) of overtime, but only if it is agreed in writing and taken within a reasonable period. Common mistakes include assuming casuals are not entitled to overtime, failing to distinguish between penalty rates and overtime, and incorrectly calculating overtime for part-time staff. Employers must remember that overtime and penalties are separate entitlements and can, in some circumstances, apply together.
Practical Steps For Compliance
- reviewing rosters to ensure overtime is managed carefully,
- training payroll staff on Award requirements,
- issuing payslips that clearly itemise penalty rates and overtime,
- auditing payroll systems annually to ensure updates have been applied correctly, and
- consulting with staff and keep written agreements for TOIL arrangements.
Key Take Aways
Penalty rates and overtime are a major cost in hospitality, but they are also a legal obligation. Businesses that fail to pay correctly risk significant back-pay claims and fines. Getting it right protects both your staff and your business.
Feel free to contact Damin Murdock at Leo Lawyers via our website, on (02) 8201 0051 or at office@leolawyers.com.au. Further, if you liked this article, please subscribe to our newsletter via our Website, and subscribe to our YouTube , LinkedIn, Facebook and Instagram. If you liked this article or video, please also give us a favourable Google Review.
DISCLAIMER: This is not legal advice and is general information only. You should not rely upon the information contained in this article and if you require specific legal advice, please contact us.
Damin Murdock (J.D | LL.M | BACS - Finance) is a seasoned commercial lawyer with over 17 years of experience, recognised as a trusted legal advisor and courtroom advocate who has built a formidable reputation for delivering strategic legal solutions across corporate, commercial, construction, and technology law. He has held senior leadership positions, including director of a national Australian law firm, principal lawyer of MurdockCheng Legal Practice, and Chief Legal Officer of Lawpath, Australia's largest legal technology platform. Throughout his career, Damin has personally advised more than 2,000 startups and SMEs, earning over 300 five-star reviews from satisfied clients who value his clear communication, commercial pragmatism, and in-depth legal knowledge. As an established legal thought leader, he has hosted over 100 webinars and legal videos that have attracted tens of thousands of views, reinforcing his trusted authority in both legal and business communities."
