Payjoey.

Award and agreement term · not the NES

Time off in lieu is hour for hour

Which means the overtime penalty is the part you hand back. Work out what the trade costs before you agree to it — and what the clause lets you do afterwards.

FY 2026-27 rates · verified

Award clause verified against the official sources — how we check.

From your award or your payslip. Time-and-a-half is 1.5, double time is 2. We do not guess at this — overtime rates are an award term and they change with the hour, the day and the agreement.

The penalty you would hand back

$168

Taking 8 hours off instead of $504 of overtime pay.

Value of the time off $336Penalty given up $168

How it’s made up

Paid as overtime$504
Hours off you are entitled to8 hrs
Those hours at your ordinary rate$336
Penalty surrendered$168
Hours off if the penalty carried across12 hrs

That is 33.3% of what the overtime was worth.

Money against time

General information only, and based on the model award clause rather than your award. Check your own award or agreement, or use Fair Work’s Pay and Conditions Tool, before relying on it.

The one line that decides it

The Fair Work Commission put a standard clause into most modern awards, and this is the sentence that matters: “The period of time off that an employee is entitled to take is the same as the number of overtime hours worked.”

Hour for hour. The overtime penalty is not carried into the time off — two hours at time-and-a-half is worth three hours of pay, but buys two hours away from work. The award’s own example is deliberately plain: an employee who worked 2 overtime hours is entitled to 2 hours' time off.

This is why time off in lieu can feel like a worse deal after the fact. It is not that anything went wrong — it is the clause working exactly as written.

What the clause gives you back

Three rules run the other way, and together they mean agreeing to time off is not a one-way door.

  • 23.3(c) — If the employee requests it AT ANY TIME, the employer must pay for overtime covered by the agreement but not yet taken as time off, at the overtime rate applicable when the overtime was worked.
  • 23.7 — If it is not taken within those 6 months, the employer must pay it out in the next pay period after them, at the overtime rate applicable when the overtime was worked.
  • 23.11 — On termination, any overtime taken as time off but not yet taken is paid out at the overtime rate applicable when it was worked.

So the practical position is that you keep the choice. Ask for the money and it must arrive in the next pay period, at the rate that applied when you worked the overtime. Forget about it entirely and the same thing happens automatically after 6 months. The only way to actually surrender the penalty is to take the time off.

What has to be in writing

  • 23.1 — The employee and employer may agree IN WRITING to time off instead of payment for a particular amount of overtime.
  • 23.2 — Each amount of overtime in a pay period needs its own separate agreement. It is not a standing arrangement.
  • 23.8 — The employer must keep the agreement as an employee record.
  • 23.9 — An employer must not exert undue influence or undue pressure on the decision to make, or not make, such an agreement.

There is no compulsory form. The award notes a sample agreement at Schedule E but says plainly that an agreement can be made by an exchange of emails, or by other electronic means.

If it is being presented as compulsory: Section 345(1) of the Fair Work Act: a person must not knowingly or recklessly make a false or misleading representation about another person's workplace rights under this clause.

This is not the NES, and that matters

Time off in lieu is NOT a National Employment Standard. Fair Work's own words: 'Some awards and registered agreements allow an employee to take paid time off instead of being paid overtime pay.' If your award or agreement has no such clause, there is no entitlement to it at all — the same shape as annual leave loading.

It is the same shape as annual leave loading, which is also an award term rather than a statutory minimum, and which this site treats the same way: the rule comes from your award, and the calculator takes the numbers from you rather than inventing them.

The overtime multiplier itself. Overtime rates are award and agreement terms — time-and-a-half for the first hours, double time after, different again on a Sunday or a public holiday, and different again under an agreement. This site does not compute award rates and will not guess at one; the multiplier is yours to read off your award or your payslip. Fair Work’s own Pay and Conditions Tool is authoritative on what your award says. If you are working out what the overtime is worth in your pay overall, the pay calculator handles the tax on it.

Frequently asked questions

Is time off in lieu hour for hour, or do I get the penalty as extra time?
Hour for hour, under the clause the Fair Work Commission put into most modern awards. Its words are that "the period of time off that an employee is entitled to take is the same as the number of overtime hours worked", and its own example is an employee who works 2 overtime hours being entitled to 2 hours off. So the penalty does not travel with the time. Two hours at time-and-a-half is three hours of pay if taken as money, and two hours away from work if taken as time — the difference is the penalty, and agreeing to time off is agreeing to give it up.
Do I have to take the time off, once I have agreed?
No, and this is the least known part of the clause. If you request it at any time, your employer must pay you for overtime covered by the agreement that you have not yet taken, at the overtime rate that applied when you worked it — not at your ordinary rate, and not at whatever the rate is now. The payment has to be made in the next pay period after you ask. So an agreement to take time off is reversible on your side, right up until you take it.
What happens if I never get around to taking it?
It turns back into money by itself. The clause requires the time off to be taken within 6 months of the overtime being worked, and if it has not been, your employer must pay it out in the next pay period after those 6 months — again at the overtime rate that applied when you worked it. It is not forfeited and it does not roll on quietly. The same applies if you leave: anything untaken is paid out at the overtime rate when your employment ends.
Does my employer need my agreement in writing?
Yes, and a fresh one for each amount of overtime rather than a standing arrangement. The agreement has to record how many overtime hours it covers and when they were worked, that you may take time off instead of being paid, and that you can ask for the money at any time. There is no compulsory form — the award notes a sample but says an exchange of emails, or other electronic means, is enough. Your employer also has to keep it as an employee record.
My workplace just banks my extra hours automatically. Is that TOIL?
Probably not, and the distinction matters. What the clause describes is a specific written agreement about a specific block of overtime, made after that overtime is worked, with a record kept. An informal running tally of extra hours that nobody signed anything about is not that — it is unpaid overtime with a spreadsheet attached. The test is whether you could point to an agreement naming the hours and when they were worked. If you cannot, the question is not how much time off you have banked; it is whether overtime you have already worked has been paid at all, which is a different and more serious problem to raise.
Is time off in lieu part of the National Employment Standards?
No. It comes from awards and registered agreements, not the NES. Fair Work puts it as "some awards and registered agreements allow" it, which means if your award or agreement carries no such clause there is no entitlement to time off in lieu at all — the same position as annual leave loading. Check your own award before assuming the version on this page applies to you.

Where these rules come from

Quoted here as the worked example of the clause the Fair Work Commission inserted into most modern awards. It is an EXAMPLE, not a universal rule — your own award governs, and a registered agreement can differ again. How we check sets out how every figure on this site is verified.