Earning Money - Overtime, Penalties and Commissions
Not all hours are paid equally. Learn how overtime, weekend penalties, commissions and piecework can dramatically change what workers take home.
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Worksheet
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Q1 · How would you calculate pay for hours worked beyond a normal 38-hour week?
Q2 · If a salesperson earns commission instead of an hourly wage, what factors would determine whether they earn more or less?
Learning Intentions
Know
- Overtime rates (time-and-a-half, double time) and penalty rates.
- How commission and piecework are calculated.
Understand
- How multipliers affect total pay beyond the standard hourly rate.
- That different industries use different pay structures.
Can Do
- Calculate total pay including overtime and penalty rates.
- Calculate commission and piecework earnings.
Success Criteria
- I can calculate overtime pay using time-and-a-half and double time.
- I can calculate commission earnings from a percentage of sales.
- I can compare total earnings under different pay structures (wage, salary, commission).
Key Terms
Common Mistakes to Avoid
Wrong: “Overtime is always double time.” The rate depends on the award or enterprise agreement. The first block of overtime is usually time-and-a-half; double time may apply only after that or on Sundays.
Right: Always check the specific award or agreement. Time-and-a-half = $1.5 \times$ normal rate. Double time = $2 \times$ normal rate.
Wrong: “Commission means you earn less than a fixed wage.” Commission earnings vary with performance. A good salesperson on commission can earn far more than a fixed wage.
Right: Commission = percentage of sales. High sales = high commission. Low sales = low commission. Some roles combine a base wage plus commission.
When you work outside normal hours, Australian law says you should be paid more. The exact rate depends on when you work and which award covers your job.
The standard full-time week in Australia is 38 hours. Any hours beyond this are overtime. Most awards use a tiered system:
Penalty rates apply to ordinary hours worked at unsociable times, even if you have not exceeded 38 hours:
- Saturday: Often 1.25x or 1.5x (varies by award)
- Sunday: Often 1.5x or 2x
- Public holiday: Often 2x or 2.5x
- Early morning / late evening: May attract shift loadings
Real-World Anchor: Under the General Retail Industry Award 2020, a casual shop assistant working on a Sunday earns a 25% casual loading plus a 175% penalty rate on top of the base rate. A $24.10 base rate becomes $24.10 \times 1.25 \times 1.75 = \$52.72$ per hour on a Sunday.
Important: Penalty rates and overtime are added to normal pay, not included in it. Always calculate normal hours first, then add the extra pay separately.
What to write in your book
- Overtime is any time worked beyond the standard 38 hours per week.
- Time-and-a-half = 1.5 × normal rate; double time = 2 × normal rate.
- Penalty rates apply to unsociable hours such as weekends and public holidays.
- Calculate normal pay first, then add overtime and penalty pay separately.
Not everyone is paid by the hour. Some workers earn based on what they sell or what they produce.
Commission is a percentage of sales paid to the salesperson. Common structures include:
Piecework means workers are paid per item or per task. For example, a fruit picker might earn $2.50 per bin of apples picked. The formula is:
Real-World Anchor: Real estate agents in Australia typically earn 1-3% commission on property sales. On a $\$900{,}000$ house sale at 2% commission, the agent earns $\$18{,}000$. Many also have a base retainer plus a lower commission rate.
What to write in your book
- Commission is a percentage of total sales paid to a salesperson.
- Some roles use base wage + commission to guarantee a minimum income.
- Piecework pays a set amount per item produced or task completed.
- Both commission and piecework mean earnings change with performance or output.
Interactive: Earnings Breakdown Calculator
Your Turn
Question 1: Zoe works 38 hours at $32.00/hour and 3 hours overtime at double time. Calculate her gross pay.
Question 2: A sales rep earns $900 base plus 4% commission. They make $35,000 in sales. What is their total pay?
Revisit Your Thinking
Look back at your Think First response about Priya working 38 hours at $30/hour plus 4 Saturday hours at time-and-a-half. What is her actual total pay? Was your prediction close? What surprised you?
Earlier you were asked: What was your first thought on this topic?
Now that you've worked through the lesson, write a fuller answer. What changed in your thinking?
Multiple Choice
Select the best answer for each question.
1 mark A worker’s normal rate is $26.00 per hour. What is their time-and-a-half rate?
1 mark Tom works 40 hours at $30/hour plus 4 hours at double time. What is his gross pay?
1 mark A real estate agent earns 2% commission on a property sale of $750,000. How much commission do they earn?
1 mark Which statement about piecework is correct?
1 mark A casual worker on $24/hour works a 6-hour Sunday shift with a 175% penalty rate. What is their gross pay for the shift?
Short Answer
Show all working and justify your answers.
Question 6
Jasmine works 38 regular hours at $29.50 per hour. She also works 3 hours overtime at time-and-a-half and 2 hours on a public holiday at double time and a half. Calculate her gross pay for the week. Show all steps.
Question 7
A phone salesperson can choose between two pay structures:
- Option A: Fixed wage of $1,200 per week
- Option B: $600 base plus 5% commission on sales
How much must the salesperson sell in one week for Option B to equal Option A? Show your working.
Question 8
A fruit picker is paid $3.20 per bin of apples. On Monday, she picks 18 bins in 6 hours. On Tuesday, she picks 22 bins in 8 hours. Evaluate which day was more productive in terms of bins per hour, and calculate her total earnings for both days. Explain why piecework can motivate workers to be more efficient.
Model Answers
Normal pay: $38 \times $29.50 = $1,121.00
Overtime rate: $1.5 \times $29.50 = $44.25
Overtime pay: $3 \times $44.25 = $132.75
Public holiday rate: $2.5 \times $29.50 = $73.75
Public holiday pay: $2 \times $73.75 = $147.50
Total: $1,121.00 + $132.75 + $147.50 = $1,401.25
Marking guidance: 1 mark for normal + overtime, 1 mark for public holiday calculation, 1 mark for correct total.
Difference needed: $1,200 - $600 = $600
Sales required: $600 \div 0.05 = $12,000
Conclusion: The salesperson must sell $12,000 worth of phones for Option B to equal Option A.
Marking guidance: 1 mark for finding the gap, 1 mark for correct equation, 1 mark for correct sales amount, 1 mark for clear conclusion.
Monday rate: $18 \div 6 = 3 bins/hour
Tuesday rate: $22 \div 8 = 2.75 bins/hour
Monday was more productive (3 > 2.75).
Total bins: $18 + 22 = 40 bins
Total earnings: $40 \times $3.20 = $128.00
Explanation: Piecework rewards output rather than time. Workers who are faster earn more per hour, creating an incentive to improve efficiency.
Marking guidance: 1 mark for each day’s rate, 1 mark for comparison, 1 mark for total earnings, 1 mark for explanation of piecework incentive.