Dinosaur, no insult or attack taken.
In the case outlined above I'd have gone back to the developer for more cash for the overtime. If the archaeological contractor found itself in a position where site staff were needed to machine-watch outside of standard working hours I can think of a few scenarios how that situation developed.
a) There was more archaeology to deal with than the time allowed; surely a legitimate variation to the standing contract?
b) The developers working times for their machine drivers was longer than the agreed working hours for the archaeologists, something which should have been picked up at the tender stage and costed for accordingly.
c) If the machine drivers made an on-site decision to work longer hours thereby necessitating longer machine-watching time then that would be an unforseen cost burden on the archaeological contractor and would be a legitimate cause to argue for variation of contract.
None of the possible reasons mentioned above are cause for paying site staff overtime at flat rate. I can't think of any scenario other than cost cutting for paying overtime at less than 1.5 of standard rate.
I have to admit that I got fed up with the miserable rate of pay in commercial fieldwork a few years ago and skipped off to another part of the heritage sector. Living out of a rucksack in some grotty B&B and doing overtime at flat rate isn't the kind of career in heritage that I'm interested in persuing. I put up with it for far too many years so Jack's stand and the current unionisation push are very welcome indeed; hopefully unionisation and people of principle will be able to put a stop to flat rate overtime and other unfair and unethical contractual terms and conditions.