Overtime rate
Workforce Management Glossary
Overtime rate
What is meant by the term overtime rate?
When an employee works more than their contracted hours they are entitled to extra compensation. This entitlement typically comes in the form of overtime pay. The exact rate of overtime pay will be highlighted in an organisation’s overtime policy. With overtime rates it’s important to note that the rate of pay will typically be higher than standard rates of pay.
When does the overtime rate come into effect?
Businesses operate under certain awards or agreements and as such these often determine when it is reasonable to pay overtime rates. Depending on the days or hours worked the overtime rate might be time and a half or double the standard hourly pay rate.
There are instances when overtime can be exchanged for what is known as time off in lieu. In essence rather than receiving extra pay for working overtime the employee is entitled to request leave.
How can a business keep track of overtime rates?
When businesses need employees to work overtime there are flow on effects to departments such as payroll. Not only do they need to be notified of the hours worked they also need to take this into account when actioning the next round of payslips.
With an integrated payroll system such as cloud payroll software from Roubler all attendance data is automatically considered whether employees have taken sick leave or worked overtime. By removing the need for manual data entry and integration mistakes can be avoided and payroll can be actioned quicker across the board.