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Time and a Half Calculation

How to Calculate Time and a Half (With Examples)

Taking care of payroll is essential to running a competent, successful business. Part of mastering payroll is understanding all the accountancy jargon.

Time and a half is a term that refers to one of the vital payroll concepts that employers should understand.

It is one of the most common rates of overtime pay.

What is time and a half?

Time and a half is an extra payment that employers make to employees. 

This extra payment is for any hours they have worked above the 38-hour week. For those extra hours, the minimum overtime pay in Australia is ‘time and a half’, meaning 1.5 times the worker’s regular hourly wage.

How to calculate time and a half

Since time and a half equates to a 50% increase in an employee’s usual hourly rate, there is a relatively simple formula to calculate time and a half.

For non-exempt hourly employees: 

Time and a half hourly rate = standard hourly rate x 1.5

The steps are as follows:

  1. Start with the employee’s usual hourly rate
  2. Calculate the overtime rate using the formula above
  3. Multiply the overtime hours worked by the overtime rate (time and a half)
  4. Add the overtime pay to the standard wage amount

Here’s an example with these steps.

An hourly employee earns $20 per hour. If this employee works 43 hours in a week, they are entitled to 5 hours of overtime pay.

The employee’s overtime hourly rate is $30 (20 x 1.5).

So, their overtime pay is $150 (30 x 5).

Add their overtime pay to their usual weekly pay. 

$38 x $20 = $760

$760 (regular weekly pay) + $150 (overtime pay) = $910 (total pay for the week)

The process to calculate time and a half for salaried employees is slightly different.

For non-exempt salaried staff:

Time and a half (salaried staff) = calculated hourly rate x 1.5

  1. Take the employee’s weekly/monthly salary figure and divide that by the number of hours contractually worked each week/month to obtain the standard hourly rate
  2. Multiply the standard hourly rate by 1.5 to obtain the overtime rate
  3. Multiply the overtime hours by the overtime rate to discover their overtime wages
  4. Add the employee’s overtime wages to their regular salary amount

Let’s now see this as an example.

Consider a salaried employee who receives a monthly salary of $4560. This works out at $1140 per week and $30 per hour based on the 38-hour work week. 

A salaried employee can be entitled to overtime pay if they work more than 38 hours in one week. If this employee works 48 hours in one week, they would be entitled to 10 hours of overtime pay to add to their month’s salary.

$30 (hourly rate) x 1.5 (time and a half) = $45 (overtime rate)

So, $45 x 10 = $450 (overtime pay)

So, this employee will add $450 to their monthly salary:

$4560 (regular salary) + $450 (overtime pay) = $5010 (total month’s pay)

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What is the difference between exempt and non-exempt employees?

Exempt employees aren’t usually eligible for overtime pay, whereas non-exempt employees are.

Non-exempt employees:

  • Can usually claim overtime for extra hours
  • Often earn an hourly wage
  • Commonly work in entry-level, junior, or mid-level positions

Exempt employees:

  • Usually can’t claim overtime for extra hours
  • Often earn a salary instead of an hourly wage
  • Will often be in management/executive positions

Who gets paid overtime?

Overtime can include:

  • Work done beyond ordinary hours of work (38-hour work week)
  • Work done over and above the agreed number of hours
  • Work done outside the agreed spread of ordinary hours (7 am-7 pm, for example)

As such, whether employees are entitled to overtime depends on specific contracts between employers and employees. 

Sometimes, an award, enterprise agreement, or registered agreement will dictate when overtime rates apply to certain businesses or industries. 

All Australian businesses must comply with overtime rates set by the National Employment Standards (NES).

Sometimes, businesses will pay more than time and a half for overtime hours. Double-time is an overtime rate where employers pay 2 times the standard hourly rate.

Automating overtime pay with QuickBooks

Sometimes, business owners can find it challenging to determine when and how to pay time and a half to their employees. 

They want to compensate employees fairly while remaining compliant with national laws.

Quickbooks Payroll offers a solution for businesses to automatically pay employees the correct overtime pay for overtime hours worked.

QuickBooks Payroll powered by Employment Hero features inbuilt automation that enables businesses to comply with all legal obligations without worrying about overpaying or underpaying employees their hourly and salaried employees.

All the maths is taken care of for businesses while employees themselves can quickly view payslips to keep track of their earnings.

Check out the Payroll price plans or try a free 30-day trial to see how Payroll can provide assistance and remove the payroll burden for business owners. 


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