We saw earlier that wages are calculated by multiplying the hourly rate by the number of hours worked.
In many cases, if you work beyond the normal working hours, or at unfavourable times such as weekends, overnight, or on public holidays, then you are deemed to be working overtime, and are eligible for overtime earnings.
When you are working overtime, you may be paid at a higher hourly rate, called the overtime rate. In other words, overtime is an increased hourly rate of pay to compensate for time worked beyond normal hours.
Overtime rates vary and may be paid at either time and quarter (1 times the normal rate) or time and a half (1 times the normal rate) or at double time (twice the normal hourly rate), or some other rate.
Sometimes, you will need to calculate the total wages for a week where working overtime and working during normal hours is involved. In such situations, you will need to calculate each component (viz. normal earnings and overtime earnings) separately and then add all them together.
Example 1 : Peter earns $12.50 an hour. Calculate his hourly rate of pay for working overtime when he works time and a half, and when he works double time.
When he is working overtime at time and a half we multiply the normal hourly rate by 1.5
= $12.50 x 1.5 = $18.75
To calculate the hourly rate at double time, we multiply the normal hourly rate by 2
= $12.50 x 2 = $25.00
Example 2 : Susan is a waitress at a local restaurant where she is paid time and a half for work on Saturday. Calculate Susan’s wages for the week during which she works 20 hours during the week and 6 hours on a Saturday, given her normal rate of pay is $ 12.60 per hour.
Hourly rate for Saturday = normal rate x 1.5
= $12.60 x 1.5 = $18.90
Overtime earnings for Saturday = 6 x 18.90 = $113.40
Earnings for weekdays = 20 x 12.60 = $252.00
Total wages for the week = weekday earnings + overtime earnings
= $252 + $113.40
Example 3 : Lisa works at a florist, and is paid double time for work on Sunday. Calculate Lisa’s earnings for a Sunday when she works 6 hours, given her normal rate of pay is $12.72 per hour.
Sunday’s payment rate = normal rate x 2
= $12.72 x 2 = $25.44
Lisa’s wages for Sunday (her overtime earnings) = 6 x 25.44 = $152.64
Example 4 : Richard is a train guard who is paid time and quarter for work on Saturdays. Calculate Richard’s wages for a Saturday in which he works 9 hours, given his normal rate of pay is $13.20 per hour.
Payment rate for Saturday = 13.20 x 1.25 = $16.50
Richard’s wages for Saturday (his overtime earnings) = 9 x 16.50 = $148.50