Overtime Calculation Basics: How Overtime Pay Is Worked Out

Overtime is one of the most common reasons people double-check their pay. The idea is simple – hours beyond a certain limit are paid at a higher rate – but the details depend on where you work and your employment terms. This guide explains the general method so you can calculate overtime yourself and understand your payslip.

Important: Overtime eligibility, thresholds and rates are set by local law, collective agreements and employment contracts, and they differ widely between countries, states and job types. The examples below show the arithmetic only. Check your local labor rules or your employer for the rules that apply to you.

The key terms

• Regular rate: your normal hourly pay.
• Overtime threshold: the number of hours after which overtime applies. Some systems use a weekly threshold (for example, hours over 40 in a workweek is a well-known rule in the United States for many non-exempt employees), others use daily thresholds, and some use both.
• Multiplier: how much more overtime pays. Time-and-a-half is 1.5× the regular rate; double time is 2×.

The basic formula

Total pay = (Regular hours × Rate) + (Overtime hours × Rate × Multiplier)

Step by step:

1. Total the hours worked in the period, in decimal form.
2. Split the total into regular hours (up to the threshold) and overtime hours (above it).
3. Multiply each part by the right rate and add them up.

Example 1: Weekly overtime at time-and-a-half

Rate: $20/hour. Threshold: 40 hours/week. Hours worked: 46.5.

• Regular: 40 × $20 = $800.00
• Overtime: 6.5 × $20 × 1.5 = 6.5 × $30 = $195.00
• Total: $995.00

Example 2: Daily overtime plus double time

Some rules pay overtime after a set number of hours in a single day and double time after a higher daily limit. Suppose a rule pays 1.5× after 8 hours in a day and 2× after 12 hours in a day. A 13-hour day at $20/hour would be:

• First 8 hours: 8 × $20 = $160
• Hours 9–12: 4 × $30 = $120
• Hour 13: 1 × $40 = $40
• Total for the day: $320

This structure is only an example. Whether daily overtime exists at all depends on your jurisdiction.

Example 3: Minutes on the clock

Overtime math goes wrong most often when minutes are not converted properly. If someone worked 43 hours 20 minutes, the overtime is 3 hours 20 minutes = 3.33 hours, not 3.20. Read how to convert minutes to decimal hours or use the converter.

Finding your overtime rate from an annual salary

If you are paid a salary but are eligible for overtime, you need an hourly equivalent first. A common approach is annual salary ÷ 52 weeks ÷ normal weekly hours. A $52,000 salary with a 40-hour week works out to $25/hour, making time-and-a-half $37.50/hour. Whether this method applies to you depends on your contract and local law. The hourly to salary calculator converts between the two.

How to check your paycheck

1. Collect your actual start, end and break times for each day. Our timesheet tips explain how to keep a reliable record.
2. Calculate daily hours with the hours calculator or the full week with the time card calculator.
3. Apply your threshold and multiplier using the overtime calculator.
4. Compare with your payslip. If there is a difference, ask payroll how they calculated it – there may be rounding or a rule you weren't aware of.

Common overtime mistakes

• Averaging across weeks. Weekly thresholds generally apply to each workweek separately. A 50-hour week followed by a 30-hour week is not the same as two 40-hour weeks. Use the biweekly time card to keep the weeks apart.
• Counting unpaid breaks as worked time.
• Using clock minutes as decimals.
• Assuming everyone is eligible. Certain roles may be exempt from overtime under local rules.

Keep good records

Overtime calculations are only as accurate as the hours you start with. Record actual start, end and break times every day rather than estimating at the end of the week, and keep copies of what you submit. When you can show the exact times, it is much easier to resolve a difference with payroll, and you can rerun the numbers yourself in a minute with the calculators linked above. If you work variable shifts, note which workweek each shift belongs to, especially for shifts that start late on the last day of a workweek and end the next morning.

Frequently asked questions