Over-award payments – when will they discharge overtime liability?

In an employment context, the law of set-off stipulates that where an employment contract provides that the employer pays an employee a sum of money towards a specific purpose (e.g. wages), the employer cannot afterwards claim that the payments made satisfy other award entitlements (e.g. overtime). In other words, when there are outstanding award or enterprise agreement entitlements, a payment designated by the employer as being for a purpose other than to satisfy the award entitlement cannot be regarded as having discharged monetary obligations under an award or enterprise agreement.

Set-off disputes are usually resolved by characterising the payment on which the employer relies for the claimed set-off and the purpose (usually the agreed purpose) for which it was made. It's not enough for the employer to simply say it intended an over-award payment of wages to discharge an award entitlement to overtime. The employer needs to convey that intention to the employee.