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# How To Calculate Overtime

## How To Calculate Overtime

Learn how to calculate overtime by using an easy spreadsheet formula, a step-by-step explanation applicable for the employers and the employees both.

Hi, my name is Grant Hobson. I work as a Finance Analyst, and today I am going to tell you through some business maths, calculations and ratios. How to calculate overtime? This calculation is useful from both business and personal perspective.

From business perspective, if we have a production company which has had problems on the line during the week, we have to run additional lines on the night shift or throughout the weekends to catch up with the production, we are going to have additional labour cost, and that is often overtime, and that is often a more expensive rate than we normally pay, because we are getting people to work over their contracted hours. From the personal perspective, as well, if you are looking for a bit of extra income in a month, you can determine how many hours you want to work at work extra and at what rate to get that required income. We will follow that through on calculation now just to demonstrate how it works.

There are several steps in calculating the overtime. Step 1, we want to determine the regular hours, the contracted hours that we have got, it is obvious that the employer will always determine how many hours we can work, so that needs to be considered. Step 2, determine your hourly rate.

A lot of extra work, let's say it is in the midweek in the evenings, is done at time and a half over the weekend, it is usually double time, so we need to get the rates for the hours that we are working. Step 3, then we need to find the difference between the hours worked and the regular hours and step 4, to determine the rate for the additional hours. Let's say a person works 40 hours, at the rate 12.

50. Now we are going to calculate the overtime work by a particular person. You can see that we have 4 weeks to represent him on his work.

Let's say that in week, 1 the person works for 44 hours, 42 hours in week 2, 40 hours in week 3 and 48 hours in week 4. In week 3, we actually worked the contracted hours, there will be no overtime paid then, but for the rest of the weeks, we need to calculate what we should be getting paid overtime. We calculate the difference, and you can see that in week 1, we have 4 hours overtime, in week 2, we have 2 hours and 8 additional hours in week 4.

Now, in week 1, this is overtime that we did during the week, for example from Monday to Friday, we did an hour extra a night, starting rate is going be a time and a half, so we write in 1.5, week 2, again, it was midweek, a time and a half, so 1.5, 0 in week 3 because there was no overtime, in week 4, we are going to say that these 8 hours were at weekend, so we came aside a shift and we want double time for that, so the rate increases and it is going to be times 2.

To get your total overtime pay, you simply need your rate timed by the overtime hours. In a month, we have got a total of 12.50.

From the company's perspective, you will be looking to see how much this overtime is costing you, because if you are in an efficient and productive process, you will have to get an extra shift of let's say 10 people on it to catch up for this production, so you have the same rate and 10 people, so the total for the company is 3,125. .