With daylight savings coming to an end, HR leaders risk accidental underpayments and wage theft claims if they don’t understand how “pay by the clock”
With daylight saving set to end on Sunday, 5 April, HR leaders are being warned that the time change is far more than a calendar curiosity – it is a compliance risk that can quietly trigger underpayments, wage theft concerns and rostering chaos, particularly for overnight and rotating shifts.
‘Pay by the clock’ and the risk of underpayment
Many employers still don’t realise that the clock change can directly affect what employees are owed, according to Peninsula Australia.
Laurence McLean, director of operations at Peninsula Australia, said: “When daylight savings ends, many employers don’t realise the time change can affect what employees are owed – especially for overnight and rotating shifts. Only five states adjust their clocks, with Queensland, the Northern Territory and Western Australia not participating. Under the ‘pay by the clock’ rule, staff are paid according to the time displayed, not the actual hours worked. That means when clocks go back, an employee may work an extra hour but still only receive payment for their rostered shift. Without checking the correct award or agreement, businesses risk paying staff incorrectly and creating potential exposure to wage theft concerns.”
The concept of “pay by the clock” is often used as a simple way to think about hours worked when the clocks move, but it is not a licence to ignore legal obligations.
Gazelle Kalk, associate director of content and training at Peninsula Australia, described it as “a best practice rule” that helps employers measure pay during the transition. “It just means that, in particular, in the context of daylight savings, the employee must be paid for the actual hours they have worked as measured by the clock, even when daylight savings starts or when daylight savings ends,” she said. “And it doesn’t necessarily mean that daylight savings overrides any pay obligations under the Fair Work Act or, of course, any relevant modern award. It’s just a good way of measuring that pay.”
Awards, penalty rates and conflicting rules
HR leaders also need to be aware that different awards and agreements can treat daylight saving differently.
Peninsula noted that “pay-by-the-clock is the default rule, but some industries may have their own rules around daylight saving”. For example, the Manufacturing Award includes specific terms around daylight saving that essentially echo the pay‑by‑the‑clock approach. By contrast, the Airline Operations–Ground Staff Award says employees should be paid for the actual hours they worked in their shift, even when the clocks change.
For HR, this means careful instrument‑by‑instrument analysis. Where shifts span the changeover – especially on Sundays or public holidays – penalty rate calculations can be directly affected. Getting this wrong can multiply the impact of a one‑hour discrepancy across higher-paid hours, compounding backpay exposure.
Who is most exposed: overnight and weekend shift workers
The biggest risks sit with employers who rely on night shifts, weekend work and 24/7 coverage.
Explaining how the time shift works in practice, Kalk said: “When the clocks go forward… one hour skips all of us, and two o’clock becomes three o’clock. And the shift may appear longer on the roster, but it’s actually technically shorter. So the employees [are] paid for the hours they have worked. So if they have worked seven hours, in this instance, they are not paid for eight, they are paid for seven. And then the converse happens six months later."
She expects “definitely the shift workers who would be working, anyone who would do some sort of night overnight shift” to be most affected. Industries such as distribution, transportation, health, retail and other round‑the‑clock operations are therefore on the frontline of daylight saving risk.
From three time zones to five: cross‑border complexity
For HR leaders in national businesses, the challenge is compounded by Australia’s patchwork approach to daylight saving.
Only some jurisdictions move their clocks, which, as McLean noted, “becomes even more complex for interstate businesses – such as logistics operators, retailers, or health services – that suddenly move from managing three time zones to five.”
Kalk pointed to Queensland as a prime example of how this complicates operations: “In our instance, April daylight savings ends, clocks go back. But there are some other states that actually… don’t adhere to it. So it’s like, what happens there? Now I have to think about all the different, in addition to what the employee should be paid, if they’re working overtime, shift work, rates, et cetera, all of those normal considerations. Now we have some who are actually working seven hours, but they [are] roster[ed] for eight hours. And now we have some who are doing the normal eight hours. It’s just such an administrative burden, really.”
Her advice for employers with cross‑border operations is to simplify wherever possible: “If you have businesses that operate across borders, maybe the easiest thing is… just have your employees work in Queensland, for example, for that particular shift, rather than have New South Wales and Queensland. It’s just simplify it is my takeaway message, as much as possible for yourself as a business owner. By preparing well in advance and utilising your rosters to your advantage to negate any potential risk of an error.”
Systems, record‑keeping and planning ahead
Both McLean and Kalk stressed that strong systems and forward planning are the best defence against inadvertent non‑compliance.
McLean urged employers to review “awards, enterprise agreements, and employment contracts to see whether there are any specific daylight savings provisions,” and to ensure “payroll systems are set up correctly” so that errors are prevented before they occur.
Kalk emphasised the importance of operational discipline: “It really goes to show you must have really good record keeping. You must have really good rosters in place and plan in advance… really map it out well in advance.”
For HR, practical steps in the lead‑up to 5 April include:
- Identifying staff rostered on overnight and weekend shifts that cross the time change
- Checking how each applicable award or enterprise agreement treats daylight saving, including any special clauses
- Testing payroll and timekeeping systems to confirm they handle the clock change correctly
- Working with line managers to adjust rosters that are unnecessarily complex – especially cross‑border overnight shifts
Don’t forget the people side: communication is critical
Beyond the technicalities of awards and rosters, HR leaders also have a crucial communication role.
Kalk noted that daylight saving changes often “come and go” without employees fully registering that anything has shifted, which can fuel confusion about start times, meeting schedules and pay.
“The better the communication is, the better it is,” she said, suggesting that employers “could even have some sort of memorandum go around… to make sure that your employees are also aware of the change, understand the implications it means.”
This extends to white‑collar staff and interstate teams as well. For workers in non‑daylight‑saving states coordinating with a head office that does move its clocks, traditional start times may no longer make sense. “You really have to go back to basics and figure out your rosters. And understand how your managers can help you with that, and how your employees understand that obligation, too,” Kalk added.
A proactive test of HR’s compliance muscle
Kalk is “very sure that companies have gotten themselves into hot water by forgetting” daylight saving, which is why the firm proactively alerts clients ahead of the change.
“So all of these little bits and pieces are something that we really endeavour to inform clients about, so they are really well informed,” she said. “If you’re operating in Queensland, WA, nothing really to think about other than the kind of admin that you have to adhere to. But if you’re in New South Wales… be aware that this is happening."
For HR leaders, the end of daylight saving is therefore more than a one‑night issue. It is a live test of payroll governance, cross‑border coordination and internal communication – and a timely reminder that even a one‑hour clock change can have outsized consequences if it is not managed with care.
