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.
Choose how overtime appears in payroll
By default, Workstaff records overtime as an additional premium on top of base earnings. In a compensation policy, you can select Separate regular and overtime earnings when possible to record regular and overtime hours as separate earnings instead.
Both methods use the same overtime hours and regular rate. They present the earnings differently:
| Overtime premium (default) | Separate regular and overtime earnings | |
|---|---|---|
| Base earnings | Pay all worked hours at the base rate. | Pay only regular hours at the base rate. |
| Overtime earnings | Add the premium portion of the overtime rate. | Pay overtime hours at the full overtime rate. |
| Example: 10 hours at 21.00, including 2 overtime hours at 1.5x | 10 hours × 21.00 = 210.00 2 overtime hours × 10.50 premium = 21.00 | 8 regular hours × 21.00 = 168.00 2 overtime hours × 31.50 = 63.00 |
| Total pay | 231.00 | 231.00 |
When separate earnings are used
Workstaff makes this decision separately for each worker and each work week or averaging period. It checks every shift with overtime for that worker in that period. It uses separate earnings only when each shift:
- has one unadjusted hourly base rate;
- uses that same rate as the regular rate for overtime; and
- has no travel time or paid-hours adjustment.
If any shift does not meet these conditions, Workstaff uses the overtime-premium method for that worker for the entire period. It does not affect other workers or periods. Other premiums can remain with separate earnings when they are excluded from the regular-rate calculation.
The two methods are intended to represent the same pay. Because Workstaff rounds each earnings line separately, the total can differ by one cent.
Weekly example: separate earnings are used
Assume a weekly overtime rule of 1.5x after 40 hours. The worker has one hourly base rate of 21.00, with no travel time or paid-hours adjustments. They work 44 hours: 40 regular hours from Monday through Friday, then 4 overtime hours on Saturday.
| MON–FRI | SAT | Total | |
|---|---|---|---|
| Hours worked | 40 regular hours | 4 overtime hours | 44 hours |
| Base rate | 21.00 | 21.00 | |
| Regular earnings | 40 × 21.00 = 840.00 | 840.00 | |
| Overtime earnings | 4 × 31.50 = 126.00 | 126.00 | |
| Total pay | 966.00 |
All overtime shifts meet the conditions for separate earnings: Saturday has one unadjusted hourly base rate, and that rate matches the week's regular rate of 21.00. Workstaff therefore records 40 regular hours and 4 overtime hours as separate earnings.
Weekly example: Workstaff uses an overtime premium
Use the same 1.5x after 40 hours rule, but suppose the Saturday overtime shift has a base rate of 24.00 while the Monday–Friday shifts have a base rate of 21.00.
| MON–FRI | SAT | Total | |
|---|---|---|---|
| Hours worked | 40 regular hours | 4 overtime hours | 44 hours |
| Base wages | 40 × 21.00 = 840.00 | 4 × 24.00 = 96.00 | 936.00 |
| Regular rate | 936.00 ÷ 44 = 21.27 | ||
| Overtime premium | 4 × 10.64 = 42.54 | 42.54 | |
| Total pay | 978.54 |
Workstaff uses the overtime-premium method for the whole week. The Saturday shift's base rate of 24.00 does not match the regular rate of 21.27 used to calculate overtime, so separate earnings would not represent that shift correctly. The premium is 10.64 per overtime hour: 21.27 × (1.5 − 1).
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.