Learning how to calculate overtime for salary employees is not too difficult. Firstly, it’s best to keep in mind that all hours worked in excess of an employee’s contracted work hours is regarded as overtime.
So, if an employee is contracted to work 45 hours per week, then any hours worked beyond that is considered overtime. Similarly, if an employee is contracted to work 40 hours per week, then any hours worked over those 40 hours is considered overtime.
The normal working hours in South Africa are 9 hours per day (excluding lunch break).
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How to calculate overtime
To calculate overtime, you first need to know the amount of time an employee works and their hourly wage. To do this you would take the employees normal monthly salary and divided it by the total amount of hours they are contracted to work each month, this will give you their standard hourly rate.
The legal remuneration rate for overtime must is 1,5 times the normal wage rate, so take the standard hourly wage and times it by 150%, this will give your the hourly overtime wage.
For example, if X receives R10,000 / month and works 220 hours, their hourly wage is R55.55, and their overtime will be R83.33.
Weekends and holidays
Employees who work outside of their contracted hours on a Sunday or on work public holidays, must be remunerated at twice the normal wage rate.
In short, it doubles the amount an employee would normally receive.
For example, if X receives R10,000, and the hourly wage value is R55.55, working on a Sunday or public holiday, their hourly rate would be double that amount, which is R111.10
Helpful hint: Doing your employee overtime calculation in Excel is always helpful.
It is worth keeping in mind that the maximum permissible overtime is three hours on any one day or 10 hours in any one week.
All overtime is voluntary in South Africa and employees can refuse to work overtime on short notice.
However, an employee cannot refuse to work overtime if the work which is required to be done needs to be done without delay owing to circumstances for which the employer could not reasonably have been expected to make provision (such as the sudden breakdown of equipment) and which cannot be performed by employees during the ordinary hours of work.
Learn from more free resources for South African small businesses at the QuickBooks Resource Centre.