Overtime Agreement (New Zealand)
Employment Relations Act 2000 — Overtime and Additional Hours Agreement
This Overtime and Additional Hours Agreement (the “Agreement”) is made on [Agreement Date] between:
[Employer Name] (NZBN: [Employer NZBN]), of [Employer Address], [Employer City], [Employer Region] (the “Employer”); and
[Employee Name], [Employee Job Title], of [Employee Address] (the “Employee”).
This Agreement supplements the Employee’s Individual Employment Agreement and sets out the agreed terms for any hours worked beyond the Employee’s ordinary hours. This Agreement is made in accordance with section 65(2)(a)(iv) of the Employment Relations Act 2000 (ERA), which requires the agreed hours of work to be documented, and the duty of good faith in section 4 of the ERA.
1. ORDINARY HOURS OF WORK
1.1 The Employee’s agreed ordinary hours of work are [Ordinary Hours Per Week] per the Employee’s Individual Employment Agreement.
1.2 The Employee’s ordinary working pattern is [Ordinary Working Pattern].
1.3 The Employer acknowledges that the Employee has a right to rest and recuperation and will not require the Employee to work hours that are unreasonable in the circumstances, as required by section 65(2)(a)(iv) of the ERA.
2. DEFINITION OF OVERTIME
2.1 For the purposes of this Agreement, “overtime” means: [Overtime Definition].
2.2 Maximum overtime: [Max Overtime Hours].
2.3 The Employer acknowledges that under section 65(2)(a)(iv) of the Employment Relations Act 2000, the Employer must not require the Employee to work unreasonable additional hours. The parties agree that the maximum overtime hours specified above represents the threshold above which overtime is presumed to be unreasonable, absent exceptional circumstances and the Employee’s agreement.
3. OVERTIME COMPENSATION
3.1 Overtime worked by the Employee will be compensated as follows: [Compensation Type] at [Overtime Rate].
3.2 The Employer confirms that the overtime compensation rate, when applied to all hours worked (including overtime), results in the Employee receiving at least the adult minimum wage under the Minimum Wage Act 1983 for all hours worked.
3.3 Overtime compensation will be calculated and paid (or TOIL credited) in accordance with the terms of this Agreement, on the pay cycle applicable to the Employee under their Individual Employment Agreement.
4. APPROVAL AND RECORDING OF OVERTIME
4.1 [Approval Process]
4.2 The Employer will maintain accurate records of all overtime worked by the Employee in accordance with the Employer’s obligations to keep wage and time records under the Employment Relations Act 2000 and the Minimum Wage Act 1983. Records of hours worked, overtime approved, and overtime compensation paid or TOIL credited will be available to the Employee on request.
5. REASONABLENESS OF OVERTIME
5.1 The Employer acknowledges that the Employment Relations Act 2000 prohibits requiring an employee to work unreasonable additional hours. In assessing whether overtime is reasonable in any particular case, the parties agree to consider the following factors:
[Reasonableness Factors]
5.2 The Employee is entitled to raise a concern about the reasonableness of overtime hours with the Employer in accordance with the good faith obligations of section 4 of the ERA. The Employer will respond constructively and genuinely consider the Employee’s concerns.
5.3 Health and Safety: The Employer acknowledges its obligations as a PCBU under the Health and Safety at Work Act 2015 to ensure, so far as is reasonably practicable, the health and safety of the Employee. Extended working hours may create health and safety risks, and the Employer will manage these risks appropriately.
6. PUBLIC HOLIDAYS AND WEEKEND WORK
6.1 [Public Holiday Treatment]
6.2 The Parties acknowledge that the minimum entitlements on public holidays under the Holidays Act 2003 cannot be reduced by agreement. If the Employee works on a public holiday that is otherwise a working day for them, the Employee is entitled to: (a) time-and-a-half for the actual hours worked on the public holiday; and (b) an alternative holiday (a “day in lieu”) to be taken at a time agreed between the parties (Holidays Act 2003, ss.46–52).
7. REST AND MEAL BREAKS
7.1 [Rest Break Arrangements]
7.2 The Employee’s entitlement to rest and meal breaks under the Employment Relations Act 2000 cannot be reduced by this Agreement. The entitlement applies to all hours worked, including overtime hours.
8. GENERAL PROVISIONS
8.1 Relationship to Employment Agreement. This Agreement is supplementary to and must be read together with the Employee’s Individual Employment Agreement. In the event of any inconsistency between this Agreement and the Individual Employment Agreement on matters relating to overtime, this Agreement prevails to the extent of the inconsistency.
8.2 Variation. Any variation to this Agreement must be in writing and signed by both parties, as required by section 65(2)(b) of the ERA.
8.3 Good Faith. The parties acknowledge and agree that they owe each other the duty of good faith as set out in section 4 of the Employment Relations Act 2000. This duty applies to all aspects of the employment relationship, including the operation of this Overtime Agreement.
8.4 Minimum Entitlements. Nothing in this Agreement reduces the Employee’s minimum statutory entitlements under the Employment Relations Act 2000, the Minimum Wage Act 1983, the Holidays Act 2003, the Health and Safety at Work Act 2015, the KiwiSaver Act 2006, the Accident Compensation Act 2001, or any other applicable New Zealand legislation.
8.5 Governing Law. This Agreement is governed by the laws of New Zealand. The parties submit to the jurisdiction of the Employment Relations Authority and the courts of New Zealand sitting in [Governing Region].
8.6 Severability. If any provision of this Agreement is found to be invalid or unenforceable, the remaining provisions continue in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Overtime Agreement on the date first written above.
SIGNED for and on behalf of the EMPLOYER:
Employer: [Employer Name]
NZBN: [Employer NZBN]
Address: [Employer Address], [Employer City], [Employer Region]
SIGNED by the EMPLOYEE:
Employee: [Employee Name]
Position: [Employee Job Title]
Address: [Employee Address]
Employer
________________
Signature
Employee
________________
Signature
What Is a Overtime Agreement (New Zealand)?
An Overtime Agreement in New Zealand sets out the duties, hours, pay, leave, and termination terms between employer and employee, consistent with the minimum entitlements guaranteed by the Employment Relations Act 2000.
The Employment Relations Act 2000 (ERA) is the primary legislation governing employment relationships in New Zealand. Unlike Australia's Fair Work Act 2009, which sets a 38-hour cap on ordinary hours and requires reasonable additional hours to be paid in accordance with applicable Modern Awards, the ERA does not prescribe a maximum number of ordinary hours or set a statutory overtime rate. Instead, section 65(2)(a)(iv) of the ERA requires every individual employment agreement to include the agreed hours of work, and prohibits employers from requiring employees to work 'unreasonable additional hours'.
The means overtime in New Zealand is primarily a matter of contractual agreement, subject to the overarching requirement that any overtime demanded must be 'reasonable'. The ERA's duty of good faith in section 4 requires employers to be active, constructive, responsive, and communicative about overtime requirements, and to genuinely take into account the employee's personal circumstances and health and safety in determining how much overtime is appropriate.
The Minimum Wage Act 1983 provides a non-negotiable floor: any arrangement for overtime (including salary absorption) must result in the employee receiving at least the adult minimum wage for all hours actually worked, including overtime. An overtime arrangement that results in the effective hourly rate falling below the minimum wage is unlawful.
The Holidays Act 2003 provides statutory minimum entitlements that apply to work on public holidays and cannot be reduced by an overtime agreement. If an employee works on a public holiday that would otherwise be a working day for them, they are entitled to time-and-a-half pay for all hours worked on that day and an alternative holiday (a 'day in lieu'). This applies regardless of any overtime agreement or salary absorption clause.
The Health and Safety at Work Act 2015 (HSWA) is also relevant: extended working hours can create fatigue-related health and safety risks, and employers have a duty as PCBUs to manage those risks so far as is reasonably practicable. An overtime agreement that acknowledges these health and safety obligations demonstrates the employer's commitment to its HSWA duties.
When Do You Need a Overtime Agreement (New Zealand)?
A written Overtime Agreement is needed in several important circumstances in New Zealand workplaces.
The most common situation is where an employer anticipates that employees may regularly be required to work beyond their agreed ordinary hours, and wishes to have a clear, pre-agreed arrangement for how those additional hours will be compensated. Without a written overtime agreement, disputes can arise about whether overtime was authorised, at what rate it should be compensated, and whether the overtime hours were 'reasonable' within the meaning of the ERA 2000.
An Overtime Agreement is particularly important for roles where: the workload varies significantly (project-based roles, seasonal industries, or client service roles); the employer operates across different time zones and may require staff to be available outside ordinary hours; the nature of the role regularly requires extended hours at certain times of year (for example, retail, hospitality, or agriculture); or the employer uses a salary absorption arrangement and needs to clearly document the basis on which the salary is intended to cover overtime.
For salary-absorbed roles — where the employee's annual salary is intended to cover all hours worked, including overtime — an Overtime Agreement is essential to: document the basis of the salary absorption and confirm that the effective hourly rate for all hours worked meets the minimum wage; specify the anticipated level of overtime the salary covers; and establish a process for reviewing the arrangement if actual overtime consistently exceeds the anticipated level.
For hourly-paid employees or employees with clearly defined ordinary hours, an Overtime Agreement is needed to specify the overtime rate, the TOIL arrangement (if applicable), and the approval process, so both parties have a shared understanding of how overtime will work before it arises.
An Overtime Agreement is also needed when existing employment agreements are silent or ambiguous about overtime, and the employer wants to regularise the position — either because the employee has been working overtime on an informal basis or because the business is restructuring and overtime will become a regular feature of some roles.
Finally, an Overtime Agreement provides practical protection for both parties in the event of a dispute about overtime entitlements, providing clear evidence of what was agreed at the time the arrangement commenced.
What to Include in Your Overtime Agreement (New Zealand)
A well-drafted New Zealand Overtime Agreement must contain the following key elements to be effective, compliant, and practically useful.
The definition of overtime is the starting point. The agreement should specify precisely what constitutes 'overtime' — for example, any hours worked beyond 40 hours per week, any hours worked outside the ordinary working pattern, or any hours worked on weekends or outside a specified daily window. Without a clear definition, disputes can arise about which hours attract overtime rates.
The maximum overtime provision is strongly recommended, even though New Zealand law does not prescribe a statutory maximum. Setting a threshold above which overtime is presumed unreasonable absent exceptional circumstances protects both the employer (by documenting a genuine limit on their expectations) and the employee (by establishing a clear right to raise concerns about excessive hours). The threshold should reflect the genuine operational requirements of the role.
The compensation arrangement must be clearly specified. This should state whether overtime will be compensated by additional pay, TOIL, salary absorption, or a combination, and must specify the applicable rate. If pay is provided, the rate must result in the employee receiving at least the adult minimum wage for all hours worked. If TOIL is provided, the agreement should specify how TOIL is accrued, when it must be taken, and what happens if it cannot be taken within the specified period.
The approval and recording process establishes the administrative framework for the overtime arrangement. The agreement should specify who must authorise overtime, whether pre-approval is required, and how overtime hours are to be recorded. Accurate records are essential for calculating entitlements and for compliance with the ERA's wage and time recording obligations.
The reasonableness acknowledgment is essential for compliance with section 65(2)(a)(iv) of the ERA. The agreement should set out the factors the parties will consider in assessing whether overtime is reasonable, and confirm the employee's right to raise concerns about overtime hours under the good faith obligation.
The public holiday clause must reflect the statutory minimum entitlements under the Holidays Act 2003, which cannot be reduced by agreement. The agreement should clearly state that time-and-a-half plus an alternative holiday apply to public holiday work, regardless of any other overtime arrangements.
The minimum wage warranty confirms that the overtime arrangement, in all circumstances, results in the employee receiving at least the adult minimum wage for all hours worked. This is particularly critical for salary absorption arrangements. The forms-legal.com Overtime Agreement (New Zealand) provides a ready-to-use template that meets New Zealand legal requirements.
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Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Overtime Agreement (New Zealand) (New Zealand) [Legal document template]. Forms Legal. https://forms-legal.com/new-zealand/employment/contracts/overtime-agreement-new-zealand
"Overtime Agreement (New Zealand) (New Zealand)." Forms Legal, 2026, https://forms-legal.com/new-zealand/employment/contracts/overtime-agreement-new-zealand.
@misc{formslegal-overtime-agreement-new-zealand,
author = {{Forms Legal}},
title = {Overtime Agreement (New Zealand) (New Zealand)},
year = {2026},
howpublished = {\url{https://forms-legal.com/new-zealand/employment/contracts/overtime-agreement-new-zealand}},
note = {Free legal document template. Based on Employment Relations Act 2000}
}Also available for these jurisdictions:
Frequently Asked Questions
Unlike Australia, where the Fair Work Act 2009 sets a maximum of 38 ordinary hours per week, New Zealand does not have a statutory cap on ordinary hours or a prescribed maximum overtime limit. However, section 65(2)(a)(iv) of the Employment Relations Act 2000 (ERA) provides that the employer must not require the employee to work 'unreasonable additional hours'. What is 'unreasonable' is a factual question that depends on all the circumstances, including the nature of the role, the employee's personal and family commitments, health and safety considerations, whether the overtime is regular or occasional, and whether the employee consented. The Employment Relations Authority and Employment Court have held that consistently requiring long hours without adequate compensation or rest can constitute a breach of the ERA and grounds for a personal grievance. A written overtime agreement that specifies a maximum threshold above which overtime is presumed unreasonable, absent exceptional circumstances and the employee's agreement, helps manage this risk.
No. There is no statutory requirement in New Zealand to pay overtime at a premium rate such as 'time-and-a-half' for ordinary overtime hours (Monday to Friday, outside public holidays). The overtime rate is a matter of agreement between the employer and employee and must be documented in the employment agreement or an overtime agreement. However, there are two important statutory exceptions. First, any overtime must result in the employee receiving at least the adult minimum wage under the Minimum Wage Act 1983 for all hours worked, including overtime. If a salary absorption clause applies, the employer must requires the effective hourly rate for all hours worked (including overtime) does not fall below the minimum wage. Second, if an employee works on a public holiday that is otherwise a working day for them, the Holidays Act 2003 requires the employer to pay time-and-a-half for hours worked and provide an alternative holiday — this is a statutory minimum that cannot be reduced by agreement. In practice, many New Zealand employers pay time-and-a-half or double-time for overtime as a matter of policy, but this is contractual rather than statutory.
Time off in lieu (TOIL) is an arrangement where, instead of receiving additional pay for overtime worked, an employee is given equivalent time off at a later date. TOIL is legal in New Zealand and is a common alternative to overtime pay, particularly in professional, managerial, and public sector roles. For TOIL to be lawful, it must be genuinely agreed between the employer and employee and must be clearly documented in the employment agreement or an overtime agreement. The key legal requirements are: (1) the TOIL arrangement must be genuinely voluntary — it cannot be imposed by the employer as a substitute for overtime pay without the employee's agreement; (2) any TOIL arrangement must result in the employee receiving at least the adult minimum wage under the Minimum Wage Act 1983 for all hours worked; (3) the TOIL entitlement cannot be used to reduce statutory minimum entitlements under the Holidays Act 2003 (such as annual leave, sick leave, or alternative holidays for public holiday work); and (4) if TOIL cannot be taken within a reasonable period due to operational requirements, the employer should pay out the TOIL accrual at the applicable overtime rate. The TOIL rate (for example, 1 hour TOIL for each hour of overtime, or 1.5 hours TOIL for each hour) should be clearly specified in the agreement.
The Employment Relations Act 2000 expressly prohibits employers from requiring employees to work 'unreasonable additional hours' (section 65(2)(a)(iv)). The ERA does not define what 'unreasonable' means; this is assessed on a case-by-case basis by the Employment Relations Authority or Employment Court. Factors that are typically considered include: the nature and urgency of the business need that requires the overtime; whether the employee consented to working the hours; the employee's personal and family responsibilities, including commitments as a carer; any health and safety implications of extended hours, including fatigue risk; the frequency and regularity of the overtime (occasional overtime during busy periods is more likely to be reasonable than persistent, structural overtime); whether the employee is being adequately compensated for the additional hours; whether adequate rest periods are provided between shifts; and the standard practice in the relevant industry. The ERA's good faith obligation in section 4 requires employers to be responsive and communicative about overtime requirements and to genuinely consider employees' personal circumstances. Employers who have a documented overtime agreement that specifies the circumstances in which overtime may be required and the compensation arrangements are better placed to demonstrate that their overtime requirements are reasonable.
Yes. A 'salary absorption' clause — where the employee's agreed salary is intended to compensate for all hours worked, including overtime — is lawful in New Zealand, but it must satisfy certain requirements to be valid. The Employment Relations Authority and Employment Court will scrutinise salary absorption clauses to ensure they are not used to circumvent the minimum wage or the ERA's good faith obligations. For a salary absorption clause to be valid: (1) it must be clearly and expressly stated in the employment agreement or an overtime agreement — it cannot be implied; (2) the effective hourly rate for all hours worked (including overtime) must meet or exceed the adult minimum wage under the Minimum Wage Act 1983 for all hours worked; (3) the expected hours of work (including anticipated overtime) should be specified so the employee understands what the salary is intended to cover; and (4) the employer should monitor actual hours worked and review the salary if overtime consistently exceeds the anticipated level. A salary absorption clause does not reduce the employee's entitlements under the Holidays Act 2003 (annual leave, sick leave, or alternative holidays for public holiday work). Courts in New Zealand have declined to enforce salary absorption clauses where they effectively result in the employee being paid below the minimum wage for their actual hours worked.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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