The business itself not only benefits from employees working overtime through extra work, but it also offers the options for employees to earn additional income to help feel financially secure, allowing them to fully focus on their work. Help employees with money issues: For those who are struggling financially, it can be a real benefit if a business offering paid overtime. Help to cover shifts: If employees are off sick or on holiday, then by offering overtime, the business isn’t required to hire more people and can just ask staff to do extra hours to cover those who are off. There are many positives and negatives to offering employees overtime, with many businesses seeing it as a no brainer, whilst others not offering it at all. Unfortunately, overtime is taxable and depending on how much overtime you do and how much you get paid, if this pushes you into a higher tax bracket, you will then be required to pay more tax on your earnings. So, because this employee has worked 5 hours extra and the overtime rate is time and a half, they would then need to be paid an extra £76.95.
Now you have the hourly rate for this employee, you can work out how much the employee should be paid for the overtime they do. Example overtime calculationĬontracted hours per year calculation: 37.5 x 52 = 1,950 You will first need to work out the hourly rate of each employee, then multiply this by the overtime rate, then multiply that sum by the total hour of overtime worked. If they use one of the examples above, then it is a straightforward calculation.
#Over time calc how to#
How to calculate overtimeĬalculating overtime depends on what the business decides they are willing to pay employees. They tend to keep it simple by offering a few overtime rates normal time, time and a quarter, time and a half, double time, triple time.
Most businesses that do offer overtime will pay their employees for it. This, of course, is not something we advise as you will more than likely find employees saying no to any overtime requests. That’s right, businesses are not required to pay employees for the overtime they do. There are no standard overtime rates, it is purely based on what the business wants to pay, which can be nothing if the business so chooses. There are a few stipulations around hours worked in a week that you can read here.
There is no maximum number of hours overtime an employee can work, so long as their average total hours worked, calculated over a 17-week period, doesn’t exceed 48 hours. How many hours overtime can an employee do? For example, if an employee is contracted to work 8 hours a day, and they work 9 hours, then this would mean they have done 1 hour of overtime. Overtime is defined as extra time worked in addition to an employees’ normal contracted hours. Whatever the reason, employees working extra hours is not something new and can be a real positive for businesses.įor those looking for a more in-depth understanding of what overtime is, how it works, and other areas of overtime, we have created an in-depth guide on everything you need to know about overtime. However, there are times when businesses will need employees to work a few extra hours, either because they need them to cover another employees’ shift, or they are behind on a big project that needs finishing. Most employees have a fixed number of hours they are contracted to each week, with the standard office working week being 37.5 hours.
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