How to calculate time and a half

Did you know, that even if an employee signs an agreement declaring they won’t ask for overtime pay, they are still able to sue your company, or file a complaint with the Department of Labor (DOL) to recover unpaid, or underpaid overtime wages?

And your company is liable to bear the brunt.

It’s best to find out how to calculate time and a half properly, i.e., overtime pay, to ensure the business does not receive any nasty surprises.

What is time and a half pay?

When staff work overtime hours, they have to be paid for the extra hours over and above their usual number of hours worked, which is usually time and a half, or 1.5 times their normal pay rate. This is also called overtime premium or overtime rate of pay.

Time and a half pay is 50% more than an employee’s regular rate of pay. For every hour of overtime an employee works, the employer must pay them their regular rate of pay plus half of that.

To calculate an employee’s overtime rate of pay, you would multiply their regular rate by 1.5.

On the side…software such as EasyRoster simplifies overtime or even non-productive time for multiple client locations.

FAQ about calculating time and a half

How many hours is full time?

The hours in a normal workweek will vary from company to company, but in general, they range from 35 to 45 hours, with 40 hours usually the most common standard. Work week hours must be stipulated in the employer-employee contract.

An employee is considered a full-time staff member when they work between 32 – 40 hours a week, or 130 hours per month.

For those employees who are entitled to overtime pay, the maximum normal working time allowed is 45 hours per week, equating to 9 hours per day which excludes lunch break if the employee works five days a week, and 8 hours a day (also excluding lunch break) if the employee works more than 5 days a week. However, it must be noted that this does not mean that the employee must work 45 hours per week normal time.

But contractual agreements may stipulate otherwise.

Anything over 45 hours (or the agreed number of hours per week) must be paid for at 1.5 times the normal rate. However, employees in some companies may be required to work a sixth day out of the week, and so then overtime pay will only be paid after those hours are fulfilled.

This is what makes contracts so important – hours must be stated clearly so everyone knows where they stand.

Is overtime calculated weekly or biweekly?

Overtime must be calculated per week.

Who is entitled to overtime?

In general, administrative, executive, professional, highly compensated employees and blue collar workers are exempt from overtime pay.

It’s important to state exemption in staff contracts.

Are overtime rates the same in every country?

Everything differs per country, so be sure to check the laws that each employer is accountable to. Hours and overtime may differ from country to country.

How do you calculate overtime pay?

Step #1: Calculate the employee’s regular earnings.

Example:

40 regular hours X $10 per hour = $400 is the employee’s normal wages; at $10 an hour.

Step #2: Calculate the overtime wages by time and a half (1.5).

Example:

$10 X 1.5 = $15 is the overtime hourly rate for this employee.

Step #3: Now multiply the overtime rate by the amount of overtime hours.

Example:

$15 (overtime rate) X 10 overtime hours = $150 in overtime wages.

Step #4: Calculate the employee’s total gross payment

Example:

$400 (normal pay) + $150 (overtime pay) = $550 total payment

How to calculate time and a half or overtime per country?

For simplicity’s sake, we’ll focus on the main markets: USA, Canada, Australia and South Africa:

How is overtime calculated in USA?

Pay 1.5 times the normal rate.

Companies in the USA are not required to pay overtime rates on weekends or public holidays, unless overtime hours are worked on such days, then it will still be 1.5 times the normal rate. Extra pay for working weekends or nights must be agreed upon between the employer and the employee.

Employees are not entitled to time and a half payments if they do not have ordinary hours of work on the public holiday.

View more information from the US Department of Labor.

How is overtime calculated in Canada?

Pay 1.5 times the normal rate for every hour worked in excess of 44 hours in a week. Overtime is only calculated on a weekly basis, or longer if there is an agreement in place.

Entitlements for public holidays vary depending on such things as whether the holiday falls on a working day or a non-working day and whether the employee works on the holiday.

Ontario provides a comprehensive guide on how to calculate time and a half for public holidays.

How is overtime calculated in Australia?

Employees are not entitled to time and a half payments if they do not have ordinary hours of work on the public holiday.

Although employees may be entitled to a higher pay rate and additional allowances should they work on weekends, public holidays, overtime, early in the morning and/or late at night, the exact rate must be agreed upon in the employee contract.

Not all workplace agreements require payment at a higher rate, but most will require an employer to pay at minimum time and a half of the normal base wage for work performed on a Saturday and double time on a Sunday.

Visit Employsure for more details.

How is overtime calculated in South Africa?

Pay 1.5 times the normal rate. However, legally, employees are only allowed to work a maximum of 3 hours overtime per day, or a maximum of 10 hours a week. In addition, overtime remuneration is twice the normal rate for Sundays and public holidays.

Employees are not entitled to time and a half payments if they do not have ordinary hours of work on the public holiday.