Averaging of hours is a rostering arrangement where an employee’s working hours fluctuate week to week, but the total hours over a specified reference period average out to a standard weekly load. This is distinct from annualised hours in that the reference period is typically shorter (often four to eight weeks) and the arrangement is governed by specific Modern Award provisions in Australia. It gives employers scheduling flexibility while protecting employees from excessive hours in any single week.
Key Takeaways
- Averaging of hours is primarily an Australian concept embedded in several Modern Awards
- The Fair Work Act permits averaging of hours provided maximum weekly hours and reasonable additional hours provisions are respected
- Employers must keep accurate records of hours worked each week to verify compliance with average and maximum thresholds
What Averaging of Hours Means for Employers
Averaging of hours is valuable in industries with cyclical demand patterns. Retail and hospitality businesses can schedule longer shifts during peak trading periods and shorter shifts during quieter weeks, as long as the average over the reference period matches the agreed weekly hours. This avoids the inefficiency of paying overtime for every above-average week while still giving employees predictable total hours.
Under the Fair Work Act 2009 (Cth), section 62, an employer must not request or require an employee to work more than 38 hours per week, unless the additional hours are reasonable. When averaging applies, the test is whether the average over the reference period meets the 38-hour threshold and whether any individual week does not exceed the reasonable additional hours limit without agreement.
Several Modern Awards explicitly include averaging provisions. The General Retail Industry Award 2020, for example, allows averaging over a two-week cycle. The Hospitality Industry (General) Award 2020 permits averaging over a four-week cycle. These provisions override the standard 38-hour week for the purposes of rostering, but the employer must still ensure minimum engagement periods and rest break requirements are met.
Averaging of Hours Rules by Region
| Country | Rule | Detail |
|---|---|---|
| UK | Working Time Regulations 1998 | Average hours are calculated over a 17-week reference period; no individual week can exceed 48 hours unless an opt-out is signed |
| AU | Fair Work Act 2009 s.62 | Maximum 38-hour week averaged over the applicable reference period in the relevant Modern Award |
| US | FLSA | No averaging of hours is permitted for overtime purposes; non-exempt employees must be paid overtime for any hours over 40 in a single workweek |
How Averaging of Hours Works in Practice
A regional hotel uses a four-week averaging cycle under the Hospitality Industry (General) Award. A front-desk employee is contracted for 38 hours per week average. In Week 1 (low occupancy), they work 30 hours. In Week 2 (school holiday), they work 46 hours. In Week 3, they work 38 hours. In Week 4, they work 36 hours. The total over four weeks is 150 hours, averaging 37.5 hours per week, which meets the Award requirement.
Crucially, the hotel’s rostering software flags any single week where the employee exceeds the reasonable additional hours threshold. Without averaging, the employee would be entitled to overtime for every hour above 38 each week, creating unpredictable labour costs. With averaging, the employer can plan staffing levels more accurately while the employee receives consistent pay across the cycle.
Common Mistakes with Averaging of Hours
- Applying averaging without checking whether the specific Modern Award permits it for the employee’s classification
- Failing to keep weekly hour records and only tracking the cycle total, which makes it impossible to identify weeks where maximum hours were breached
- Assuming averaging eliminates rest break obligations; minimum break requirements still apply between shifts
- Using averaging to avoid paying overtime in jurisdictions (like the US) where averaging is not permitted under the FLSA
- Not including the averaging arrangement in the employment contract or written agreement
FAQ
What is averaging of hours?
Averaging of hours is a rostering method where an employee’s working hours vary week to week, but the average over a specified reference period equals their agreed weekly hours. It is commonly used under Australian Modern Awards.
Can I use averaging of hours in the UK?
Yes. The Working Time Regulations 1998 allow employers to average hours over a 17-week reference period. Individual weeks can exceed 48 hours provided the average does not, unless the employee has signed an opt-out.
Does averaging of hours apply to overtime?
In Australia, whether overtime applies during an averaging cycle depends on the specific Modern Award. Some awards set an overtime threshold within the cycle, while others only require that the average meets the standard hours.
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