How to Calculate Time and a Half (With Examples)

Updated 7 May 2023

Knowing how to calculate time and a half is an important part of managing payroll. Human resources frequently make these calculations to determine overtime salaries accurately. Understanding the basics of time and a half and other overtime calculations can help you if you work in human resources or plan to work in this field. In this article, we explain how to calculate time and a half, discuss what it is and explain to who it applies.

What is time and a half?

Time and a half is extra remuneration that non-exempt employees get for working additional hours to the 38 hour maximum per week. The National Employment Standards (NES) sets these guidelines. Any additional hours employees work is called overtime. Overtime is generally paid at a higher rate than the employee's regular amount. While companies have different overtime rates, a standard policy is for a company to pay 1.5 times an employee's regular hourly wage per extra hour that they work

How to calculate time and a half

Time and a half equates to 50% more than an employee's regular hourly pay rate. Here are the steps for calculating overtime for different types of employees:

Hourly employees

For non-exempt hourly employees who work more than 38 hours a week, you can calculate time and half as follows:

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

Begin with the employee's standard rate per hour.
Calculate their overtime rate by multiplying their standard rate per hour by 1.5.
Multiply the overtime hours worked by the overtime rate (also referred to as time and a half).
Add the employee's standard wage figure to the overtime wage amount.

Salaried employees

For full-time employees who are eligible for overtime but work for a fixed salary rate, you can calculate time and half using the following steps:

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

Divide the employee's weekly salary figure by how many hours they usually work in that time to get their standard hourly rate.
Multiply their standard hourly rate by 1.5.
Multiply the overtime hours worked by the employee by 1.5 to discover their overtime wages.
Add the employee's regular wages to their overtime wage amount.

Examples of calculating time and a half

Below you can find some scenarios with examples for calculating time and a half for hourly and salaried employees:

Example overtime calculation for hourly employees

Consider an hourly employee who is a non-exempt employee and earns $25 per hour. In a normal 38-hour workweek, this employee earns $950. If this employee works any hours over 38 hours, they are eligible for a time and a half rate. For instance, if the employee works 48 hours in one week, 10 of the 48 hours is overtime.

Example: $25 (standard rate per hour) x 1.5 (overtime loading) = $37.50 (overtime rate of pay)

To work out how much to pay this employee for their overtime, you can then multiply their time and a half rate by the number of overtime hours.

$37.50 (overtime rate of pay) x 10 (overtime hours) = $375 (overtime pay)

As the employee did 10 hours of overtime, they are eligible to receive $375 in addition to their regular wage amount.

$375 (overtime pay) + $950 (regular weekly pay) = $1325 (total weekly pay)

Example overtime calculation for a salaried employee

Consider a salaried employee who earns an annual salary of $49,400. This equates to a monthly rate of $3,800, a weekly rate of $950 and an hourly rate of $25 (based on a 38-hour working week). If the employee works any more than 38 hours per week, they can earn overtime. For example, if the employee works 53 hours in one week, they can be eligible for 15 hours of overtime.

Example: $25 (rate per hour) x 1.5 (overtime loading) = $37.50 (overtime rate of pay)

To work out how much to pay this employee for their overtime, you can multiply their time and a half rate by the number of overtime hours.

$37.50 (overtime rate of pay) x 15 (overtime hours) = $562.50 (overtime pay)

As the employee did 15 hours of overtime, they can earn $562.50 in addition to their regular monthly amount.

$562.50 (overtime pay) + $3,800 (regular monthly pay) = $4,362,50 (total monthly pay)

Example double-time calculation

If you want to calculate a double-time rate for an employee who is a nonexempt hourly employee and makes $25 per hour ($950 per 38-hour week), you can simply double their hourly rate.

Example: $25 (rate per hour) x 2 (overtime loading) = $50 (overtime rate of pay)

To work out how much to pay this employee for their overtime, you can multiply their double-time rate by the number of hours of overtime.

$50 (overtime rate of pay) x 10 (overtime hours) = $500 (overtime pay)

If the employee worked 10 hours overtime, they can earn $500 in addition to their regular weekly amount of $950.

$500 (overtime pay) + $950 (regular weekly pay) = $1450 (total weekly pay)

What determines the overtime rate paid?

Overtime rates are not standard. There is a range of factors that may determine the overtime rate paid. These factors include registered agreements, awards and individual contracts between an employer and employee. Here is more information on three of the factors that can influence an overtime rate:

1. Overtime according to a registered agreement

A registered agreement is a document an employer creates for their employees that stipulates employment conditions. Agreements applicable to employee salaries are individual transitional employment agreements (ITEA). These agreements cover the overtime rate that the employer agrees to pay. Only agreements registered with and approved by the Fair Work Commission are official.

2. Overtime according to industry awards

Modern awards are legal documents that define the conditions of employment according to the industry and type of job. Awards cover minimum pay rates, overtime rates and other employment conditions. Awards do not apply if there is a registered agreement in effect.

3. Individual contracts between employer and employee

An employer may draw up an individual contract with their employees. Not all agreements between an employer and an employee offer a higher wage rate for hours worked overtime. Most agreements state that an employer pays at least 150% (time and a half) of the normal basic wage amount for work done on a Saturday and 200% (double time) for employees who work on a Sunday.

When does overtime apply?

A company that requires or allows an employee to work more than their normal weekly hours is generally responsible for paying that employee overtime compensation. Overtime usually applies when:

an employee works over the standard 38 hours per week
an employee works more than their normal number of hours in a week (for those who work less than the standard 38 hours per week)
an employee works outside of their regular spread of hours (for example, if their working hours are 8 am - 2 pm and they work from 6 am).

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

Non-exempt employees are usually eligible for overtime pay, while exempt employees are not. Below you can find the difference between non-exempt and exempt employees in more detail:

Non-exempt employees

usually have a right to claim overtime for the extra hours they work
often earn an hourly wage (sometimes a salary)
commonly have jobs that are junior to mid-level
work in areas such as administration, computer operation and executive function.

Exempt employees

usually do not have a right to claim overtime for the extra hours they work
often earn a salary (sometimes an hourly wage)
commonly have management roles, such as executives or administrators
work in areas such as theatre and film, agriculture, transportation, sales and the food industry.

Reasons for staff overtime

It can be common practice for businesses to request their staff to work overtime under certain circumstances. Asking employees to work extra hours is something that regularly happens across all industries and in all most employment sectors. Here are some common reasons employers may request overtime hours from their employees:

repair and maintenance work that needs to take place after hours, for example, IT processes such as back-ups and server upgrades
short-term shortages of personnel
unforeseen demand leading to overdue services or production
seasonal busy periods for the purpose of delivering a good customer experience
financial year-end and tax season for those working in the financial sector
employee training.