What Is Overtime Pay?

Overtime pay is the extra money you earn when you work more than your standard hours. It looks simple on your paycheck, but behind that single line item there are rules, formulas and edge cases that can be confusing.

This guide walks you through:

• what overtime pay is and how it differs from regular pay
• when overtime rules usually apply
• the basic formulas for calculating overtime
• step‑by‑step examples you can follow with your own numbers
• common pitfalls and misconceptions to avoid

If you already know the basics and just want a quick estimate, you can jump straight to the Overtime Calculator. Otherwise, keep reading to understand how those numbers are produced.

Important: Overtime rules can vary by country, state/region, industry and even by your contract. This page explains general concepts only and does not replace local regulations or professional advice.

When Does Overtime Apply?

Overtime is not just “any time you work late”. It usually becomes relevant when your hours go beyond a certain threshold defined by law, a collective agreement or your employment contract.

Common patterns include:

• Weekly overtime
  In many places, overtime is triggered when you work more than a set number of hours in a week, for example over 40 hours in a workweek. Hours above that threshold may be paid at a higher rate (such as 1.5x).

• Daily overtime
  Some regions also apply overtime rules on a daily basis. For example, hours above 8 per day could be paid at 1.5x, and hours above 12 per day at 2x. In those systems you can have both daily and weekly rules interacting.

• Rest‑day and holiday overtime
  Certain days carry special treatment. Working on an official holiday, a weekend, or a scheduled rest day may earn double time or a different premium even if your weekly total is not extreme.

• Industry or union rules
  Some industries (healthcare, transportation, public safety, etc.) and union contracts define their own overtime thresholds and multipliers.

Because of these differences, there is no single global rule like “overtime always starts after 40 hours”. Instead, you can think of overtime as a general concept:

overtime hours = hours above the normal limit defined for your situation

This guide uses a simple weekly model for the examples, but you should always check what applies in your country and contract.

Overtime Pay Formula

At a high level, your pay for a period can be split into two parts:

• regular pay: what you earn for your normal hours
• overtime pay: the extra amount for hours above the normal limit

In a typical hourly model:

regularPay  = hourlyRate × regularHours
overtimePay = hourlyRate × overtimeHours × overtimeMultiplier
totalPay    = regularPay + overtimePay

Where:

• hourlyRate is your base hourly wage
• regularHours is the number of hours counted at the base rate
• overtimeHours is the number of hours that qualify as overtime
• overtimeMultiplier reflects the overtime rule, such as 1.5 for “time and a half” or 2.0 for “double time”

Visually, you can think of your pay like this:

For example, under a simple 40‑hour weekly rule:

• the first 40 hours in the week might be regularHours
• any additional hours could be overtimeHours paid at 1.5x or 2x

Our Overtime Calculator uses this same structure internally. This page explains what those inputs mean and how to reason about them.

Step‑by‑Step: How to Calculate Overtime Pay

Lets walk through a generic process you can adapt to your own situation.

1. Identify the pay period
   Decide which period you are analysing: a week, a two‑week pay period, or a month.

2. Gather your hours and rate
   Collect your hourly rate and the total hours worked in that period. If you are salaried, you may need to estimate an equivalent hourly rate first (for example annual salary ÷ 52 weeks ÷ typical weekly hours).

3. Determine which hours count as overtime
   Based on your local rules or contract, split your hours into:

   • regularHours (within the normal limit)
   • overtimeHours (above the limit, or worked on days with a higher rate)

4. Choose the correct overtime multiplier

   • time and a half → multiplier 1.5
   • double time → multiplier 2.0
   • other agreements may use 1.25x, 1.75x, etc.

5. Calculate regular pay and overtime pay
   Using the formula above:

   regularPay  = hourlyRate × regularHours
   overtimePay = hourlyRate × overtimeHours × overtimeMultiplier
   totalPay    = regularPay + overtimePay

6. Interpret the result
   Look at the overtimeShare of your income:

   overtimeShare = overtimePay / totalPay (if totalPay > 0)

   A higher share can mean you are relying heavily on overtime income, which may or may not be comfortable or sustainable for you.

If you dont want to do these calculations by hand, you can enter the same inputs into the Overtime Calculator and let it handle the arithmetic.

Examples

Example 1: Weekly overtime at time and a half

• Scenario: Hourly worker, weekly overtime above 40 hours
• Hourly rate: $20
• Regular hours: 40
• Overtime hours: 5
• Overtime multiplier: 1.5 (time and a half)

Calculations:

regularPay  = 20 × 40 = 800
overtimePay = 20 × 5 × 1.5 = 150
totalPay    = 800 + 150 = 950
overtimeShare ≈ 150 / 950 ≈ 15.8%

In this example, overtime adds $150 on top of your regular $800, so about 16% of your pay for the week comes from overtime.

Example 2: Double time on a holiday

• Scenario: Holiday shift paid at double time
• Hourly rate: $25
• Regular hours in the week: 32
• Overtime (holiday) hours: 8
• Overtime multiplier: 2.0 (double time)

Calculations:

regularPay  = 25 × 32 = 800
overtimePay = 25 × 8 × 2.0 = 400
totalPay    = 800 + 400 = 1200
overtimeShare = 400 / 1200 ≈ 33.3%

Here the holiday overtime is a big part of the paycheck: one‑third of the total income for that period.

Example 3: Salaried worker (simplified)

Salaried overtime can be much more complex in practice, but a simplified view is:

1. Estimate an equivalent hourly rate based on your salary and expected weekly hours.
2. Apply overtime rules to hours above the normal limit using that hourly rate.

This is rarely the full legal picture, but it can help you build intuition. For actual rights and entitlements, always rely on your contract and local regulations.

To compare the first two scenarios side by side:

Weekly vs Daily Overtime

A common question is:

Is overtime calculated weekly or daily?

The answer depends on where you live and which rules apply to you.

• In some systems, overtime is primarily weekly: overtime only kicks in after you cross a weekly threshold (such as 40 hours), regardless of how your hours are spread across days.
• In others, there are additional daily rules: for example, hours above 8 per day might be paid at 1.5x, and hours above 12 at 2x, even if your weekly total is not extreme.

A simplified comparison:

Because of these differences:

• two people working the same total weekly hours can receive different overtime pay if they are in different regions;
• your paycheck might combine weekly overtime and daily overtime formulas.

If you want to compare weekly vs daily rules in more detail, look for a dedicated comparison such as /compare/weekly-vs-daily-overtime-rules once it is available.

Common Misconceptions and Pitfalls

Overtime is fertile ground for misunderstandings. Some frequent misconceptions include:

• “Overtime always starts after 40 hours”
  This is common but not universal. Your limit might be different, and daily rules or industry‑specific agreements can override the simple 40‑hour idea.

• “All overtime is paid at 1.5x”
  Time and a half is widely used, but you might encounter double time or other multipliers, especially on holidays or rest days.

• “If my paycheck shows an overtime line, it must be correct”
  Payroll systems can make mistakes too. Understanding the basic formula helps you spot obvious inconsistencies.

• “Salaried employees never get overtime”
  In some cases salaried roles are exempt from overtime rules, but not always. Exemption depends on duties, pay level and local law, not just the fact that you have a salary.

Whenever you see an overtime amount that feels off, you can:

1. Recreate the calculation using an overtime calculator; and
2. Ask your HR or manager to explain which rules they applied.

Frequently Asked Questions

How do I calculate my overtime pay?

In a simple hourly model:

1. Find your hourly rate.
2. Split your hours into regular and overtime hours based on your local rules.
3. Choose the correct overtime multiplier (1.5x, 2x, etc.).
4. Apply:

regularPay  = hourlyRate × regularHours
overtimePay = hourlyRate × overtimeHours × overtimeMultiplier
totalPay    = regularPay + overtimePay

You can use the Overtime Calculator to perform these calculations without doing the math by hand.

How does overtime work for salaried employees?

It depends on your role and local law:

• Some salaried roles are exempt from overtime rules and do not receive overtime pay;
• Others are non‑exempt, meaning they are still entitled to overtime when certain thresholds are met.

For non‑exempt salaried employees, employers may convert the salary into an equivalent hourly rate and then apply overtime rules. Because this area is highly regulated, you should always rely on your contract and local regulations, not only on simplified examples.

Is overtime calculated weekly or daily?

Both models exist. Many systems focus on weekly totals (for example >40 hours/week), while some regions also apply daily thresholds or special rules for specific days. You need to check which combination applies to you.

How much overtime will I get for working X extra hours?

There is no single answer without knowing:

• your hourly rate;
• how many of those extra hours count as overtime under your rules;
• which multiplier applies to them.

Once you know those numbers, you can plug them into the formula or use an online calculator for a quick estimate.

Disclaimer and Next Steps

This page gives a general overview of what overtime pay is and how it is commonly calculated. It does not account for every rule in every jurisdiction, industry or contract.

• Always check your employment contract and local labour regulations.
• When in doubt, talk to your HR department, payroll provider or a qualified professional.

If you want to see how these concepts translate into actual numbers for your situation, open the Overtime Calculator or explore other tools on the site.