Averaging of hours is a provision under the Australian Fair Work Act 2009 that allows employers to average an employee’s working hours over a set period — typically up to 4 weeks — rather than measuring compliance against a single week’s hours. It means an employee can work 50 hours one week and 30 the next, and as long as the average across the averaging period stays within the legal limits, no overtime or breach has occurred.
The mechanism is essential for any Australian business with variable shift patterns, because strict weekly limits would trigger overtime or Working Time Regulation breaches in weeks where demand spikes.
Key Takeaways
- Averaging of hours lets Australian employers smooth working hours over a defined period rather than measuring each week in isolation.
- Under the National Employment Standards (NES), the default averaging period is 4 weeks, though modern awards and enterprise agreements may allow longer periods.
- Averaging applies to ordinary hours and does not override overtime entitlements for hours worked beyond the averaged maximum in any given week.
- The arrangement must be authorised by an award, enterprise agreement, or individual flexibility arrangement — employers cannot impose it unilaterally.
- Averaging of hours differs from annualised hours, which smooth pay over a full year rather than hours over a shorter reference period.
What Is Averaging of Hours?
Under the Fair Work Act 2009, the standard maximum weekly hours for a full-time employee are 38 hours, plus “reasonable additional hours” (Section 62). Without averaging, any week where an employee works more than 38 hours immediately raises the question of whether those additional hours were reasonable.
Averaging provides a practical alternative. Instead of assessing each week against the 38-hour benchmark, you measure the average across a defined period. If an employee works 42 hours in week one, 36 in week two, 38 in week three, and 36 in week four, the average is 38 hours per week — exactly on target, despite the week-one spike.
The Fair Work Ombudsman confirms that averaging arrangements are available under the NES, modern awards and enterprise agreements, but each instrument defines its own rules about which averaging periods are permitted.
How Does Averaging of Hours Work?
The Standard 4-Week Period
The NES provides for an averaging period of up to 4 weeks. This is the default for most employees covered by the national system, unless their award or enterprise agreement specifies otherwise.
| Week | Actual Hours | Weekly Limit | Status |
|---|---|---|---|
| Week 1 | 42 | 38 | Over by 4 |
| Week 2 | 36 | 38 | Under by 2 |
| Week 3 | 38 | 38 | On target |
| Week 4 | 36 | 38 | Under by 2 |
| Average | 38 | 38 | Compliant |
No overtime is triggered because the 4-week average does not exceed 38 hours per week.
Longer Averaging Periods
Some modern awards allow averaging over longer periods. For example:
- Retail Award (General Retail Industry Award 2020) — Averaging over 4 weeks for full-time employees, with provisions for rostered days off.
- Hospitality Award (Hospitality Industry (General) Award 2020) — Averaging over 4 weeks, with additional flexibility during peak periods.
- Enterprise agreements — May specify averaging periods of up to 6, 8 or even 12 weeks, subject to Fair Work Commission approval.
Longer averaging periods give employers more scheduling flexibility but require a compliant industrial instrument — you cannot simply decide to average over 8 weeks without a modern award or enterprise agreement that permits it.
The Right to Request
Under Section 65 of the Fair Work Act, employees can request flexible working arrangements, including changes to their hours. An averaging arrangement does not override this right. If an employee’s averaged hours create an unreasonable pattern — for example, consistently long hours that affect their wellbeing — the employee can still make a request, and the employer must consider it genuinely.
Averaging of Hours vs Annualised Hours
These two concepts are frequently confused, particularly by employers new to Australian employment law.
| Feature | Averaging of Hours | Annualised Hours |
|---|---|---|
| Reference period | Short-term (typically 4 weeks) | Full year (12 months) |
| Purpose | Smooth weekly hour variations for compliance | Smooth pay across seasonal hour variations |
| Legal basis | Fair Work Act Section 62, modern awards | Contractual arrangement, no specific legislation |
| Pay implications | Hours are averaged for overtime/threshold purposes only | Pay is equalised monthly regardless of weekly hours |
| Common in | Shift work, hospitality, retail, healthcare | Education, local government, healthcare |
| Industrial instrument required | Yes (award or enterprise agreement for periods >4 weeks) | No — contractual agreement is sufficient |
In short: averaging of hours is a compliance tool that lets you schedule variable shifts without breaching weekly hour limits. Annualised hours is a pay-smoothing arrangement that spreads a worker’s salary across the year regardless of when the hours are worked.
Practical Considerations for Employers
Rostering
Averaging of hours only works if your rostering is deliberate. Random scheduling with averaging as a safety net is a recipe for overwork and burnout. Plan rosters so that high-hour weeks are balanced by low-hour weeks, not stacked on top of each other.
Record-Keeping
Under the Fair Work Act’s record-keeping obligations (Section 535), employers must keep accurate time-and-wage records, including the hours actually worked each day and week. Averaging does not reduce your record-keeping obligations — it changes how compliance is assessed, not how hours are documented.
Interaction with Overtime
Averaging only applies to ordinary hours. If an employee works 50 hours in a single week, the 12 hours beyond 38 may still attract overtime pay depending on the applicable award or enterprise agreement. The averaging arrangement confirms that the average is compliant; it does not automatically exempt the individual week from overtime entitlements.
Employee Consent
An averaging arrangement that goes beyond the default 4-week NES period requires authorisation through a modern award, enterprise agreement, or individual flexibility arrangement under Section 202 of the Fair Work Act. The employee must genuinely agree — you cannot impose a longer averaging period through contract terms alone.
Frequently Asked Questions
Can I average hours over 8 weeks for all employees?
Only if your employees are covered by a modern award or enterprise agreement that permits it. The NES default is 4 weeks. Without a specific industrial instrument allowing a longer period, extending the averaging period beyond 4 weeks is not lawful.
Does averaging of hours affect leave accrual?
No. Annual leave and personal/carer’s leave accrue based on the employee’s ordinary hours of work, not on the averaging arrangement. An employee who averages 38 hours per week over a 4-week period accrues leave as if they worked 38 hours each week. Leave is calculated on ordinary time, not actual weekly hours.
What happens if an employee works excessive hours in one week under an averaging arrangement?
The averaging arrangement confirms the average across the period is within limits, but the employer still has an obligation under Section 62(2) to ensure additional hours are reasonable. If a single week involves clearly unreasonable hours — for example, 60+ hours without adequate rest — the averaging arrangement does not shield the employer from a breach claim.
Do casual employees get averaging of hours?
Casual employees are paid a loading in lieu of leave entitlements and do not have set weekly hours in the same way as permanent employees. Averaging of hours is primarily relevant to full-time and part-time employees with rostered hours that vary week to week.
How does averaging interact with the 48-hour Working Time limit?
Australia does not have a statutory 48-hour weekly limit equivalent to the UK’s Working Time Regulations. The 38-hour standard under the NES is an ordinary hours benchmark, and the “reasonable additional hours” provision is assessed case by case. Averaging provides flexibility within that framework without a hard cap.
Getting Averaging Right
Averaging of hours is a practical tool for any Australian business with variable shift patterns. It keeps you compliant without freezing your roster into rigid weekly blocks. But it only works when the averaging period is authorised by an award or enterprise agreement, the rostering is planned rather than reactive, and the records are accurate. Pair it with a leave management system that tracks actual hours against the averaged target so you catch overruns before they become problems.
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