What is the employee's regular hourly pay?
Calculate overtime pay for your employees
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Our overtime calculator below will help you work out how much you should be paying your employees for their overtime hours.
Simply provide information about your employees hourly wages and it will calculate what pay should be due to receive this month in overtime
Hourly overtime wage
Total overtime pay
What is the employee's regular hourly pay?
What is your business' overtime pay rate?
How many hours of overtime has the employee worked this month?
What is the employee's monthly salary?
First, calculate your hourly overtime wages:
HOP = HRP * m
HOP stands for hourly overtime pay, whereas HRP stands for the hourly regular pay; m stands for the multiplier. This is typically time and a half (1.5), but can be any rate you see fit.
For example, where the hourly pay is £9 an hour, overtime pay will be £13 an hour:
9*1.5 = HOP (13)
Once you know this value, you can then calculate the total overtime pay:
OP = HOP * n
In this scenario OP is the overtime pay, and n is the number of overtime hours in a month.
For example, where the hourly overtime pay is £13 and the amount of overtime hours worked in a month is 15, then the monthly overtime pay will be £195.
13*15 = OP (195)
If at the end of a month you want to calculate an employee’s total salary, including overtime pay, simply add it to their regular salary figure:
OP + RP = TP
Here TP stands for total pay and RP stands for regular pay. OP again stands for overtime pay, and is equal to the hourly regular pay multiplied by the number of working hours per month.
There are actually number of different types of overtime to be aware of, these include:
This is when an employer specifies overtime hours as part of the employment contract. Any overtime required as compulsory must comply with the Working Time Regulations directive, of which we’ll talk more about later.
According to ACAS:
'Non-guaranteed overtime does not have to be offered by an employer. However, when it is offered, the worker must accept and work it.'
For example, if an employer knows that their business will be busier at certain times of the year, but does not know how much overtime they will need. The employer should include in the employment contract that workers will have to work extra hours during these busy periods.
With voluntary overtime you can ask an employee to work overtime hours, but they are not obliged to accept it. This is because there is nothing in the contract stipulating that you offer overtime, or that the employee has to accept it.
In the UK you are not legally obliged to pay your employees for overtime. However, if your employees do work overtime, you have to ensure that their total pay for their time does not fall below minimum wage.
Ultimately the decision to pay overtime is up to you as an employer. If you do choose to pay overtime, you can choose the amount, so long as it matches or exceeds the national minimum wage.
Time off in lieu (TOIL)
Instead of paying employees for their overtime, some employers take the decision to give back these hours as time off in lieu (TOIL).
If you wish to offer this to your employees, you’ll need to come to an agreement with your employee and agree on terms. These will include how many days can be accrued and when the time off should be taken by.
'An employer may offer overtime to cope with an increase in demand for their products or services. For example to satisfy a large customer order, or during staff shortages.'
However, in the UK there is no legal requirement for an employer to pay or offer any time back as TOIL, unless it is specified in the employment contract.
The employee is also not entitled to a statutory minimum amount of overtime pay. However employers should be aware of the working time directive, as this stipulates that an employee should not work any extra hours to the point where their wage falls below the national minimum. It also states that no employee should work for more than 48 hours a week.
If you're going to pay your employees for their overtime, you're most likely going to pay them an ‘overtime premium’. The most common rate for this overtime premium is the employee’s usual rate, plus half their rate again. This is 50% more than your employees standard wage and means that for every hour of overtime they work, they receive 1.5 of their regular hourly rate.
However, as long as you are in the UK you are free to pay your employees whatever rate you deem fit. Just make sure it's above the minimum wage.
With Breathe you can easily keep informed of project timelines, record when overtime hours are needed to aid crucial business decision-making, and make last minute changes when needed. Manage your people and not the paperwork with Breathe’s award-winning HR Software.Start your free trial