A shift allowance is an additional payment made to employees who work outside standard business hours—such as evenings, nights, weekends, or public holidays. This extra compensation is typically mandated by a modern award, enterprise agreement, or an individual employment contract, and is designed to compensate for the inconvenience, disruption, or increased risk associated with working atypical hours.
In Australia, shift allowances are an important part of award interpretation and payroll compliance, especially in industries such as healthcare, hospitality, manufacturing, retail, and transport.
Fair Work Ombudsman – Penalty Rates and Allowances
Working late or irregular hours can disrupt sleep patterns, impact social/family life, and increase fatigue. Shift allowances help balance these disadvantages by offering financial incentives to employees.
For example, a hospitality worker rostered to start at 11:00 PM may receive a loading or shift penalty in addition to their base hourly rate.
Each industry or award may define these shifts slightly differently.
Shift allowances are calculated as either:
This depends on the applicable modern award, enterprise agreement, or contract terms.
For example, under the Hospitality Industry (General) Award, employees working between 7:00 pm and midnight may be entitled to a 10% loading, and those working midnight to 7:00 am may receive a 15% loading.
In some awards, these may be used interchangeably or applied together.
Microkeeper’s payroll software includes built-in award interpretation capabilities that automatically apply relevant shift allowances based on the employee's timesheet and rostering data.
Case Study: Jess works in retail and is rostered to start work at 5:30 AM on weekdays.
According to her award, she is entitled to a 10% shift allowance for any hours worked before 6:00 AM.
Jess’s employer uses Microkeeper to automatically detect her early start and apply the correct allowance during payroll processing.
Managing shift allowances manually is error-prone and time-consuming. Microkeeper automates the entire process through:
This ensures your business stays compliant while paying staff correctly.
Yes, if outlined in an employee’s award or agreement. Employers must comply with relevant Fair Work provisions.
Yes, if their award or agreement includes shift penalties or loadings for casuals.
Yes, they are considered ordinary income and taxed accordingly.
Yes. Shift allowances apply based on the time of work, while overtime pay applies when working beyond standard hours.
Shift allowances are a critical component of fair and compliant payroll management in Australia. Employers must ensure they interpret awards correctly and apply the right rates to avoid underpayment risks. For employees, shift allowances provide a fair return for the inconvenience of working irregular hours.
With Microkeeper’s award-compliant HR and payroll platform, calculating and applying shift allowances becomes seamless, ensuring compliance, transparency, and efficiency.
Disclaimer: This article is for informational purposes only and does not constitute legal or industrial relations advice. Please consult the Fair Work Ombudsman or an employment law specialist for guidance specific to your business.
