Compensate Overtime
When overtime rules are configured on your account, Workstaff will automatically calculate and identify overtime for everyone in your team. In addition, Workstaff will automatically calculate extra earnings for your staff when you generate your pay runs.
How are overtime premiums calculated?
Overtime premiums are calculated based on a weighted average hourly rate, which reflects all earnings during the applicable period.
If your pay periods do not align directly with calendar work weeks (for example, if you pay monthly), overtime calculations are still based on complete work weeks within that period - unless overtime averaging is enabled.
For any given worker and work week (or averaging period, if averaging is enabled):
- Workstaff sums all earnings - including premiums - from all hours worked during the period eligible for weekly overtime.
- The total earnings are divided by the total number of hours worked to determine the regular hourly rate for that period.
- The overtime multipliers you configured in your overtime rules are then applied to that regular hourly rate.
Examples
Hourly rate constant throughout the week
Let's start with the simpler case: all hours worked during the week are compensated at the same hourly rate:
| MON | TUE | WED | THU | FRI | SAT | SUN | Total | |
|---|---|---|---|---|---|---|---|---|
| Hours Worked | 5h | 8h | 5h | 7h | 12h | 37h | ||
| Hourly Rate | 21.00 | 21.00 | 21.00 | 21.00 | 21.00 | |||
| Base Wages | 105.00 | 168.00 | 105.00 | 147.00 | 252.00 | 777.00 |
During the above week, the regular rate corresponds to:
777.00 / 37h = 21.00 per hour
For an overtime rule with a 1.5x rate, any hours worked in overtime during that week would result in an effective hourly rate of 31.50 (21.00 x 1.5), which Workstaff will calculate as additional earnings of 10.50 (31.50 - 21.00) per overtime hour.
Hourly rate constant throughout the week, but with differentials / premiums
Let's add more complexity with a case where the worker worked on the night shift on Friday with a premium of 4.00 / hour.
| MON | TUE | WED | THU | FRI | SAT | SUN | Total | |
|---|---|---|---|---|---|---|---|---|
| Hours Worked | 5h | 8h | 5h | 7h | 12h | 37h | ||
| Hourly Rate | 21.00 | 21.00 | 21.00 | 21.00 | 21.00 | |||
| Differentials/Premiums | 0.00 | 0.00 | 0.00 | 0.00 | 48.00 | |||
| Base Wages | 105.00 | 168.00 | 105.00 | 147.00 | 300.00 | 825.00 |
During the above week, the regular rate corresponds to:
825.00 / 37h = 22.30 per hour
For an overtime rule with a 1.5x rate, any hours worked in overtime during that week would result in an effective hourly rate of 33.45 (22.30 x 1.5), which Workstaff will calculate as additional earnings of 11.15 (33.45 - 22.30) per overtime hour.
Hourly rate varying during the week
If a worker works on different roles with different hourly rates, the overall calculation method stays the same:
| MON | TUE | WED | THU | FRI | SAT | SUN | Total | |
|---|---|---|---|---|---|---|---|---|
| Hours Worked | 5h | 8h | 5h | 7h | 12h | 37h | ||
| Hourly Rate | 21.00 | 24.50 | 21.00 | 21.00 | 24.50 | |||
| Base Wages | 105.00 | 196.00 | 105.00 | 147.00 | 294.00 | 847.00 |
During the above week, the regular rate corresponds to:
847.00 / 37h = 22.90 per hour
For an overtime rule with a 1.5x rate, any hours worked in overtime during that week would result in an effective hourly rate of 34.35 (22.90 x 1.5), which Workstaff will calculate as additional earnings of 11.45 (34.35 - 22.90) per overtime hour.