June 8, 2026 · Tickin

How to Calculate Overtime Pay (Without the Spreadsheet Headache)

Overtime math looks simple until you actually do it for a real team, with real breaks, mid-month joiners, and a payroll deadline. Then it becomes the line item most likely to be wrong. Here's how to calculate overtime pay cleanly — and how to stop doing it by hand.

The basic overtime formula

At its core, overtime pay is:

Overtime pay = overtime hours × hourly rate × overtime multiplier

Three inputs, and each one is a place teams get it wrong:

Overtime hours — hours worked beyond your threshold (daily, weekly, or both).
Hourly rate — for salaried staff, derive it from monthly salary, not guesswork.
Multiplier — the rate for overtime (commonly 1.5×, sometimes 1.25× or 2× depending on your policy or local rules).

Step 1: Define your overtime threshold

Decide when overtime starts. Most small teams use a daily threshold — say, anything past 9 net hours in a day. Some use a weekly one. Pick the rule that matches how your team actually works, write it down once, and apply it consistently. Ambiguity here is what causes disputes later.

Step 2: Use net hours, not gross

This is the mistake that quietly inflates overtime: counting break time as work. Overtime should be measured on net worked hours — gross hours minus breaks. A nine-hour day with a long lunch isn't an overtime day. Get your break tracking right first, or every overtime number downstream is suspect.

Step 3: Derive the hourly rate for salaried staff

For an employee on a monthly salary, a clean approach is:

Hourly rate = monthly salary ÷ (working days in month × standard daily hours)

Use your actual working-days setting and standard daily hours so the rate reflects your real schedule, not a generic 160-hour assumption.

Step 4: Apply the multiplier

Multiply overtime hours by the hourly rate and your overtime multiplier. Example: 6 overtime hours in a month, an hourly rate of $10, at 1.5× =

6 × $10 × 1.5 = $90 in overtime pay

Add that to base salary, minus any deductions, and you have the month's gross.

Common overtime mistakes to avoid

Counting breaks as worked time — inflates hours and pay.
Silently assuming overtime — overtime should be confirmed by the employee (keep working, or clock out?), not auto-logged because someone forgot to clock out.
Rounding inconsistently — round the same way every time, or not at all.
Re-keying into a spreadsheet — every manual copy is a chance to fat-finger a number.

Stop calculating it by hand

The reason overtime is painful is that the inputs live in different places — attendance here, salary there, multiplier in someone's head. When hours, breaks, salary, and the multiplier are in one system, overtime calculates itself.

In Tickin, the system watches net worked hours against your daily threshold and, the moment someone crosses it, sends a Slack prompt: keep working (counts as overtime) or clock out now (caps at the threshold). Confirmed overtime flows straight into the monthly salary slip — pro-rated pay, overtime, and deductions calculated automatically, no spreadsheet. (Overtime detection is a Growth-plan feature.)

Get overtime right every month

Tickin detects overtime from real worked hours and turns it into accurate, automatic salary slips. Start a 14-day free trial, no credit card required — or book a demo for a walkthrough.