Overtime can be a boon for some employees whereas some consider it a bane. After all, it takes more than the usual hours of work to complete an assigned task. Whether it’s a boon or a bane, the good news is that it means more money for the employee. Use this overtime calculator to determine how much extra pay you’ll receive for working overtime.
How to use the overtime calculator?
This overtime pay calculator or time and a half calculator is a simple tool which is easy to understand. With it, you can determine the total salary you can expect to receive after working overtime. Follow these steps to use this online tool:
- First, enter the monetary value of your Regular Pay then choose the unit of measurement from the drop-down menu.
- Then enter the monetary value of your Regular Worktime and choose the unit of measurement from the drop-down menu.
- Finally, enter the monetary value of your Total Regular Pay per month.
- After entering all of the required values, the overtime calculator automatically generates for you the Total Pay you will receive.
How do you calculate overtime pay?
Almost all employees know about overtime pay as it is common in most of the professions. IT personnel, construction workers, banking employees, plant managers, and all others have this type of pay. This means that people of different professions can use this overtime pay calculator.
Defined in its simplest form, overtime refers to how much time the employee worked beyond his regular hours. For instance, if you’re on an 8-hour a day work schedule, any work you do beyond that time is overtime. You can also use your work as a reference to payment received for any excess working hours.
When a person gets employed by a business establishment, the normal number of working hours for that position is usually defined to balance the health aspects of the employee, his productivity in the workplace, and other economic factors.
Human Resources know that people are naturally limited and in general, can’t sustain the same productivity level they had at the start of their shift. After their regular hours, they tend to be more sluggish and unproductive.
Depending on what the job requires, employers may determine the number of working hours by:
- The profession’s best practices
- The agreement between both sides
No matter what it is, the number decided on will have to comply with local or national labor laws. Generally, the most common practice for a workday is 8-hours, which computes to 40-hours each week.
Most countries are strict about labor laws and they designed these laws to help prevent employees from getting forced to work for more hours than they should. If the workers need to extend work hours, the laws provide regulations on compensation for overtime. Here are the most common formulas in the computations of overtime pay:
HOP = HRP x m
HOP refers to Hourly Overtime Pay
HRP refers to Hourly Regular Pay
m refers to a constant multiplier which is usually 1.5
Once you have determined the HOP or the Hourly Overtime Pay, you can readily calculate the OP or the Overtime Pay
OP = HOP x n
OP refers to Overtime Pay
n refers to Number of OT hours per month
Finally, you can find the total salary at month’s end by adding the employee’s Regular Pay and the Overtime Pay.
TP = RP + OP
TP refers to Total Pay
RP refers to Regular Pay which you can determine by multiplying the employee’s regular pay (per hour) and the number of working hours each month.
Here are the basic steps used in calculating overtime pay:
- First, specify the employee’s regular pay. As an example, let’s assume this to be $20/hour.
- Determine the actual hours that the employee worked for the month. Assuming a period of 4 weeks at 40-hours per week. That would give you a total of:
4 x 40 = 160-hours
- Determine your multiplier “m” which you can see in the overtime policy of the company. For instance, if the policy states a time-and-a-half rate, this means that m = 1.5
- Calculate the number of overtime hours the employee worked for the month. Let’s assume that the employee worked for 30-hours.
- The overtime calculator automatically finds all the other values including the overtime pay, regular pay, and the sum which is the total pay the employee receives for the month.
Now that you have found the total pay, what should you do next? As an employee, you can either invest it or spend it.
Is overtime after 8 hours or 40 hours?
Employers have the obligation to pay employees overtime when the latter exceeds their number of regular hours of work time. In the US and in most of the countries, the typical threshold is 40-hours each week. Other countries can adopt different thresholds but whatever limit they set, employers must provide compensation for each hour which exceeds those normal limits.
However, not all employees qualify for overtime compensations. In the USA, for instance, according to the Fair Labor Standards Act or FLSA, there are exclusions of certain jobs from overtime compensation. For these jobs, employers aren’t obligated to pay their employees such.
Those eligible for OT compensation are also known as non-exempt workers. Furthermore, there are also overtime laws that list the industries where employers don’t have to comply with overtime requirements.
Is overtime calculated on basic salary?
Employees who receive their compensations on a salary basis are those who get paid a predetermined amount of money every payday. Some of these “salaried” personnel are usually considered “exempt,” meaning they’re not covered by the minimum wage or overtime provisions of the FLSA. For non-exempted salaried employees:
- They’re subject to the provisions of the FLSA and should, therefore, receive overtime compensation for the extra hours worked exceeding the 40-hours. This is not a requirement for exempted employees
- You can calculate the equivalent hourly rate for salaried nonexempt employees from their salaries.
Nonexempt employees who get paid salaries must work the number of hours every week as stated in their employment agreement.