How to calculate overtime rate

Written by catherine lovering
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How to calculate overtime rate
Are you keeping track of your overtime? (3D dollar sign with multiple smaller dollar signs. image by Steve Johnson from Fotolia.com)

Employees are sometimes placed in the position where they must work overtime. Depending on your workplace, the premium placed on overtime hours can be as much as double your regular hourly wage. Start by finding out how much extra you should be paid for overtime before you calculate the overtime rate. If you're in a union, ask a union rep or read your collective agreement to get the information. If you are not in a union, contact your state government's Division of Labor Standards.

Skill level:
Easy

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Instructions

  1. 1

    Calculate the number of overtime hours you will work in a day. If your situation requires you to be paid different overtime rates, categorise the hours into "Overtime Rate One," and "Overtime Rate Two." For example, if you are working a 13-hour day, and labour standards require that any hours worked in excess of an eight-hour day are paid at time and one half, and any hours worked in excess of a 12-hour day are paid at double time, you would categorise four hours as "Overtime Rate One (time and a half)," and one hour as "Overtime Rate Two (double time)."

  2. 2

    Write down your regular wage onto a sheet of paper. Alternatively, you can type your regular wage into a calculator or into a cell in a spreadsheet. For example, if your regular wage is £13, write that down.

  3. 3

    Multiply your regular wage by the premium placed on overtime. For example, if your regular wage is £13 per hour, and the overtime premium is time and a half, multiply £13 by 1.5. The result, £19, is the overtime rate. If the premium is double time, multiply £13 by two. This result, £26, is the second overtime rate.

  4. 4

    Use all of these rate calculations to determine your earnings for the day. If you are working the 13 hour-day used as an example in Step 1, you would be paid a regular wage for eight hours, which would mean earnings of £13 multiplied by eight, or £104 for those hours. You would receive £19 multiplied by four, or £78, for the first four hours of overtime. You would receive £26 multiplied by one, or £26 for the last hour of work. Your total earnings before deductions for the day would therefore be £104 + £78 + £26 = £208.

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