Overtime methods, practical examples

Updated by Leigh Hutchens

Overtime Methods is, simply put, the different rules that dictate how and when overtime should be paid out to your employees.

You can define what kind of overtime methods a particular agreement will generate. So, if you have employees with different ways of earning overtime you might need different templates. You can, of course, also combine methods, such as daily and/or weekly/monthly OT, if configured the correct way. 

There are a few default overtime methods already configured. You can use the default ones as they are, modify them, or and you can also create new ones.

Overtime management allows you to create rules for additional time, overtime, and/or minus time:

Read more about working with overtime methods here.

Practical examples

Example 1 - Swedish retail

Full-time quota: 38.25 hours per week.

Overtime exceeding schedule per day.

Part-time exceeding schedule per day up to nominal hours full-time per week. Any hours after this are overtime.

Monday-Friday: Overtime 50% first two hours, then overtime 70%. Under these conditions, the employee always receives 70% after 8 p.m.

Saturday after 12 p.m., all day Sunday 100% overtime.

Bank holidays overtime 100%.

Additional time and overtime shift on an ordinary free day: Overtime 70% all day and additional time needs to be handled manually using a shift type that doesn't count as scheduled hours with shift type rules for the overtime.

In this case, you don't need different contracts for part-time or full-time employees in reference to calculations of additional and overtime.

Example 2 - Overtime compensation

You have one employee, Adam, who works 100% and has a right to overtime compensation if he works more than 8 hours in a single day. Meanwhile, you have another employee, Sarah, who only works 50% and thus, should receive the same overtime compensation if she works more than 4 hours in a day. So though similar rules apply to each, in this case you would have to create two unique overtime methods (with separate sets of rules): one for employees who are expected to work at 100% capacity, and one for those who are meant to work at 50% capacity. They could both receive the same compensation - the difference being that the overtime comes into effect for Adam after 8 hours, while for Sarah it triggers after 4 hours.

These rules can be defined on a very granular level to meet the different needs of a company or of an individual. Though rules tend to be set on an agreement level, for example, for all employees who work full time versus all employees who work part time, they can also be set to fit the needs of different individuals. For Ben, for example, who should receive overtime compensation if he works more than 16 hours over two days - though how that's distributed over the two days doesn't matter.

Example 3 - Overtime methods versus overtime periods

Alongside overtime methods, we also have overtime periods. These are used in combination to the rules you establish in the overtime methods, to map out cases when overtime payouts are only applicable to certain time periods in a week.

For example: at a retail store, the standard business hours are between 10:00 - 20:00 on weekdays and 11:00 - 18:00. An employee may be expected to work any number of hours during these times, but if they are scheduled to work at all outside of this window, overtime will come into effect. Annie for example, is scheduled to work 8 hours on Thursday from 10:00 - 18:00. But it turns out to be a busy day at the store, and she gets stuck working until close (at 20:00) and also has to help restock afterwards (until 22:00). Those first two hours (from 18:00 - 20:00) she'll just receive her regular salary even though it exceeded her original shift, as they are still during standard working hours. But for those two hours after close (20:00 - 22:00) she'll receive overtime compensation, as they fell into the established overtime period.

As with overtime methods, these can be configured on a very granular level to allow for all kinds of cases, or to allow for layered levels of overtime if, for example, a second tier of overtime compensation should be paid out if an employee has to work more than "x" hours during a specific window.

How Did We Do?