Overtime pay is additional compensation for hours worked beyond a standard threshold. Rates and rules vary by country, employment contract, and industry — but the calculation method is consistent.
Standard Overtime Formula
Overtime pay = Overtime hours × Overtime rate
The overtime rate is typically expressed as a multiple of the regular hourly rate:
| Multiple | Rate | Common name |
|---|---|---|
| 1.5× | 150% of regular | "Time and a half" |
| 2.0× | 200% of regular | "Double time" |
| 2.5× | 250% of regular | "Double time and a half" |
Calculating Regular Hourly Rate
For salaried employees, find the equivalent hourly rate first:
Hourly rate = Annual salary ÷ (52 × weekly hours)
Example: £36,000 salary, 37.5 hours/week:
Hourly rate = 36,000 ÷ (52 × 37.5) = 36,000 ÷ 1,950 = £18.46/hour
Worked Example: Weekly Overtime
An employee works 45 hours in a week. Standard week = 40 hours. Overtime rate = 1.5×.
Regular hourly rate: £15.00
Regular pay: 40 hours × £15.00 = £600.00
Overtime hours: 45 − 40 = 5 hours
Overtime rate: £15.00 × 1.5 = £22.50
Overtime pay: 5 × £22.50 = £112.50
Total pay: £600 + £112.50 = £712.50
UK Rules on Overtime
The UK has no statutory right to overtime pay beyond National Minimum Wage compliance — your employment contract sets the rules. However:
- Workers must receive at least the National Minimum Wage averaged across all hours worked
- Overtime can be compulsory if stated in your contract
- Many employers pay 1.25×, 1.5×, or 2.0× for weekend/bank holiday work
US Fair Labor Standards Act (FLSA)
In the US, non-exempt employees must receive at least 1.5× their regular rate for hours over 40 in a workweek. Exempt employees (typically salaried professionals earning above $684/week) are not entitled to overtime.
Overtime for Irregular Hours
If pay varies week to week, calculate the weighted regular rate before applying overtime:
Regular rate = Total pay for week ÷ Total hours worked
Then apply the 0.5× overtime premium on top for hours over the threshold.
Total Compensation Check
Always verify that your effective hourly rate doesn't fall below the minimum wage when overtime is included:
Effective hourly rate = Total weekly pay ÷ Total hours worked