Overtime policy template [free download]

Managing overtime can be a real headache for New Zealand businesses. Without clear rules, you risk payroll errors, team disputes and even legal issues. That’s why we’ve created a free overtime policy template and practical guidance to help you manage extra hours fairly and correctly.

Use our policy template to create your own version that matches your unique workplace.

Purpose of an effective overtime policy

A good overtime policy does more than just tick a box. It provides a clear framework that creates consistency, supports legal obligations and builds trust with your team.

Set clear rules for overtime hours

When everyone understands the rules, there are fewer surprises. A policy clarifies when overtime applies, how it gets approved and how it is compensated. This helps managers plan resources effectively and gives employees certainty about their work hours and pay.

Support payroll accuracy

Your policy can ensure that your company follows a specified process when it comes to overtime. Providing your guidelines are correct, this can help you with meeting your obligations under legislation like the Employment Relations Act 2000 and the Holidays Act 2003. Getting the key elements right means accurate pay for employees and reduced risk for the business.

Support culture and trust

Transparency is key to a healthy workplace culture. A fair and open overtime policy shows your team that you value their time and effort. It minimises disputes over pay and ensures everyone is treated consistently, which builds trust and morale.

Understanding overtime in New Zealand law

The legal side of overtime in New Zealand can seem complex. This section breaks down the key concepts as detailed by Employment New Zealand.

What counts as overtime in New Zealand

Overtime is any time worked beyond an employee’s agreed hours, as stated in their employment agreement. Hours of work in an employment agreement might include that an employee also does additional work, as long as it’s deemed “reasonable” legally. The agreement should include any compensation for this overtime.

Overtime pay 

Paying employees for working overtime or extra shift needs to be agreed to by the employer and employee and included in the employment agreement. It should be at least the minimum wage but some employers do pay more, such as time-and-a-half.

Record keeping requirements

Employers are legally required to keep accurate records of all hours worked by their employees for at least six years. This includes standard hours and any overtime. These records are vital for calculating pay correctly and demonstrating you have met your legal duties if a dispute arises. 

Inside the overtime policy template: key sections explained

Our template is structured to cover all the essential areas. Here’s a walk-through of what’s inside and why each section matters.

Policy purpose and scope

This section sets the scene. It explains why the policy exists—to provide a fair and consistent approach to managing overtime. It also defines who the policy applies to, which is crucial for managing expectations across your workforce.

Defining overtime and eligibility

Clarity is everything. This part of the template helps you define what your business considers overtime. It also provides a space to specify which roles or employment types are eligible, whether they are full-time, part-time or casual staff.

Approval and communication process

Unexpected labour costs can strain any budget. This section outlines the pre-approval workflow for working overtime. Requiring manager approval beforehand helps you control costs and makes sure extra hours are only worked when genuinely needed.

Compensation rules (pay or time off in lieu)

Here, you detail how employees will be compensated. The template allows you to specify your overtime pay rates or the process for accruing and taking time off in lieu. This removes any ambiguity and ensures payroll can process payments correctly.

Record keeping and responsibilities

A policy is only effective if people follow it. This section allocates responsibilities to both employees and managers. It covers the need for accurate time recording by employees and the manager’s role in reviewing and approving overtime claims.

Customising the template for your business

Your overtime policy should fit your unique business needs. Here’s how to adapt the template.

Align with employment agreements and existing policies

Consistency across your documentation is vital. Make sure your new overtime policy doesn’t contradict what’s in your employment agreements or other policies like leave and payroll.

Adjust for different roles or work patterns

Not all roles are the same. You may need to adjust the policy for shift workers, casual staff or salaried employees, versus hourly ones. 

Get legal sign-off before rollout

Before you finalise and roll out your new policy, we’d always recommend that you get it reviewed by an employment lawyer. This final check helps confirm it aligns with current New Zealand law and your specific business context.

Rolling out your overtime policy effectively

A great policy on paper can fail without a proper rollout. Follow these steps to set it up for success.

Train managers and team leaders

Your managers are on the front line of implementing this policy. Make sure they understand the rules, the approval process and their responsibilities. Effective training prevents misunderstandings and ensures the policy is applied consistently.

Communicate clearly to employees

Tell your entire team about the new policy. Use multiple channels like the company intranet, team meetings and email. An open Q&A session can also help address any questions and make sure everyone is on the same page from day one.

Track uptake and feedback

Once the policy is live, monitor how it’s working. Are there common questions or issues arising? Gathering feedback will help you see if any adjustments are needed to make it more practical and effective for your business.

Avoid these common overtime policy pitfalls

Many businesses stumble when creating or managing overtime policies. Here are some common mistakes to watch out for.

Leaving definitions vague

Ambiguity leads to confusion and disputes. Be specific about what constitutes overtime, who is eligible and how it is approved.

Skipping legal review

Employment law can be tricky and it changes over time. Not getting a final legal review before you launch a policy is a risk you don’t need to take.

Overlooking record-keeping

Failing to keep accurate time records is a common pitfall. It not only makes payroll a nightmare but also puts you on the wrong side of your legal obligations.

Not updating the policy when the law changes

Legislation isn’t static. Your policy should be a living document that you review regularly and update whenever employment laws change.

How Employment Hero streamlines overtime management

Putting your policy into practice can be heavy on the admin. Employment Hero helps you automate the process. Our all-in-one platform simplifies overtime tracking, makes it easy to build timesheets and automatically calculates pay. Plus, you get access to our comprehensive digital policy library, with loads of templates that you can use and customise. 

Download your overtime policy template

Ready to create a clear and fair overtime policy for your business? Download our free, editable template today. It’s designed for New Zealand businesses and provides a solid foundation you can customise to fit your needs.

The information in this article is current as at 30 December 2025, and has been prepared by Employment Hero Pty Ltd (ABN 11 160 047 709) and its related bodies corporate (Employment Hero). The views expressed in this article are general information only, are provided in good faith to assist employers and their employees, and should not be relied on as professional advice. Some information is based on data supplied by third parties. While such data is believed to be accurate, it has not been independently verified and no warranties are given that it is complete, accurate, up to date or fit for the purpose for which it is required. Employment Hero does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising directly or indirectly as a result of reliance on, use of or inability to use any information provided in this article. You should undertake your own research and seek professional advice before making any decisions or relying on the information in this article.