How to Calculate Overtime Pay (2026 Guide)

How do you calculate overtime pay?

The calculation has four steps, and it works the same way in the UK and the US — only the multiplier and the threshold change:

1. Find your hourly rate. If you are paid hourly, it is on your payslip. If you are paid a salary, divide the annual salary by 52 and then by your contracted weekly hours — the worked example below shows this for a £36,000 salary.
2. Count the overtime hours. Only the hours beyond your normal contracted hours (UK) or beyond 40 hours in the workweek (US) count. Hours inside your normal week are paid at the basic rate.
3. Find the overtime multiplier. In the UK it is the rate your contract states; in the US it is 1.5× by law for non-exempt employees. The common multipliers are in the table below.
4. Multiply: overtime hours × hourly rate × multiplier. That is the overtime pay for the period. Add it to your basic pay for the week to get the week's total.

If your contract pays a flat overtime rate instead of a multiplier — say £20 an hour for any overtime — skip step 3 and multiply the hours by that rate directly. And if you are comparing a salary offer with an hourly one, the hourly-to-salary calculator converts between the two so the hourly rate you use here is right.

Worked example: time and a half at £15 an hour

Take a warehouse worker on £15 an hour, contracted 40 hours a week, who works 8 extra hours on a weekday at time and a half:

1. Overtime rate: £15 × 1.5 = £22.50 an hour.
2. Overtime pay: 8 hours × £22.50 = £180.00.
3. Basic pay for the week: 40 hours × £15 = £600.00.
4. Total for the week: £600.00 + £180.00 = £780.00 before tax.

The premium part — the extra 50% — is only £60 of that £180 (8 hours × £7.50). That split matters for tax in the US, where a 2025 law lets employees deduct the premium portion, and for checking a payslip: if the overtime line shows £120 instead of £180, the employer has paid the basic rate, not time and a half.

Worked example: double time on a Sunday

Same worker, £15 an hour, working a 6-hour Sunday shift at double time:

1. Overtime rate: £15 × 2 = £30.00 an hour.
2. Overtime pay: 6 hours × £30.00 = £180.00 for the one shift.
3. Over a month: four Sunday shifts at the same rate pay 4 × £180 = £720.00 of overtime pay on top of basic pay.

Double time is a contract term, not a legal right in the UK — check the contract before assuming a Sunday pays double. Where the contract is silent, the employer only has to pay the basic rate, as long as the worker's average pay across all hours stays at or above the National Minimum Wage.

How do you calculate overtime pay for a salaried employee?

A salaried employee has no hourly rate on the payslip, so work one out first. The formula is: hourly rate = annual salary ÷ 52 weeks ÷ contracted hours per week. Use 52, not 48 — there are 52 weeks in a year, and dividing by 48 overstates the hourly rate. Worked example: a £36,000 salary on a 40-hour contract, with 5 overtime hours at time and a half.

1. Hourly rate: £36,000 ÷ 52 = £692.31 a week; £692.31 ÷ 40 = £17.31 an hour.
2. Overtime rate: £17.31 × 1.5 = £25.96 an hour.
3. Overtime pay: 5 hours × £25.96 = £129.81 for the week.
4. Check it: basic weekly pay is £692.31, so the week pays £692.31 + £129.81 = £822.12 before tax.

Two warnings. First, some salaried contracts say the salary already covers a reasonable amount of extra hours — if yours does, there is no separate overtime pay to calculate until you pass the hours the contract names. Second, in the US a salaried employee is only owed overtime if they are non-exempt; the FLSA exemption needs both a salary of at least $684 a week ($35,568 a year, reinstated in 2026) and duties that genuinely qualify as executive, administrative or professional. Run any salary through the free salary calculator to check the annual figure first.

How does overtime pay work in the US?

In the US the answer is set by law, not by contract. Under the Fair Labor Standards Act (FLSA), enforced by the US Department of Labor's Wage and Hour Division, a non-exempt employee must be paid at least 1.5 times their regular rate of pay for every hour worked over 40 in a single workweek. The federal rule does not require daily overtime or double time — some states add their own rules on top. Worked example: a non-exempt employee on $22 an hour who works 48 hours in one workweek.

1. Basic pay: 40 hours × $22 = $880.00.
2. Overtime rate: $22 × 1.5 = $33.00 an hour.
3. Overtime pay: 8 hours × $33.00 = $264.00.
4. Total for the week: $880.00 + $264.00 = $1,144.00 before tax.

The trap is the regular rate. Overtime is 1.5 times the regular rate, not 1.5 times the hourly rate — and the regular rate folds in most non-discretionary bonuses. Say the same employee also earns a $100 weekly performance bonus: total straight-time earnings are 48 × $22 + $100 = $1,156, so the regular rate is $1,156 ÷ 48 = $24.08 an hour. The overtime premium is 0.5 × $24.08 × 8 = $96.33, and the week pays $1,056 + $100 + $96.33 = $1,252.33 — $108.33 more than the simple version. Discretionary gifts, like a holiday bonus, stay out of the calculation.

California goes further than the FLSA: under Labor Code §510, non-exempt workers earn 1.5× for hours past 8 in a single day (even if the weekly total is under 40 hours), 2× for hours past 12 in a day, and 1.5× for the first 8 hours on the seventh consecutive workday, then 2× after that. Alaska and Nevada have daily rules of their own, so multi-state employers need the state answer, not just the federal one.

What is the UK law on overtime pay?

UK law does not require employers to pay a premium rate for overtime. There is no statutory right to time and a half or double time — the Employment Rights Act 1996 and the Working Time Regulations 1998 set rules about maximum hours and rest breaks, but neither mandates an overtime rate. What your contract, staff handbook or collective agreement says is what applies, and Acas confirms there is no automatic legal right to overtime pay. Four rules do apply, and they are the ones that catch people out:

• The minimum-wage floor. Even where a contract says overtime is unpaid, total pay divided by total hours worked must not fall below the National Minimum Wage — £12.71 an hour for workers aged 21 and over from 1 April 2026, under the National Minimum Wage Act 1998.
• The 48-hour week. Working time, including overtime, must not exceed an average of 48 hours a week over 17 weeks unless the worker has opted out in writing (Working Time Regulations 1998, regulation 4).
• Holiday pay. Overtime paid regularly in the 52 weeks before a holiday counts towards pay for the first four weeks of annual leave (Working Time Regulations, regulation 16(3ZA), in force since 1 January 2024).
• You only have to work it if your contract says so. GOV.UK is explicit on this — without an overtime clause, overtime is voluntary, and an employer cannot force it. If the contract promises a rate and the employer pays less, the shortfall can be an unlawful deduction from wages.

The same 48-hour average and minimum-wage floor apply in Northern Ireland under its own legislation. For the tax side of UK overtime, see our PAYE guide, which works through the bands and tax codes the deduction depends on.

How is overtime pay taxed?

Overtime pay is taxed like ordinary pay — it is added to your earnings and taxed at your marginal rate, not at a special overtime rate. In the UK it goes through PAYE in the pay period you receive it. Example: a £35,000 salary plus £2,000 of overtime in the year is £37,000 in total, still inside the basic-rate band, so the overtime is taxed at 20% — £400 of income tax — plus 8% National Insurance on the slice between £12,570 and £50,270. If overtime pushes total pay over £50,270, only the slice above that line is taxed at 40%, never the whole amount. Our gross-from-net guide shows how those bands work in reverse.

In the US, a 2025 federal law (the One Big Beautiful Bill Act, Public Law 119-21) added a temporary income-tax deduction for the premium portion of FLSA-required overtime — the extra 50% above the regular rate, not the whole overtime payment — for tax years 2025 to 2028, capped and phased out by income. From tax year 2026, employers report each employee's qualified overtime premium on Form W-2 in box 12 with code TT, per IRS Fact Sheet FS-2026-13. The deduction covers federal income tax only: Social Security and Medicare payroll taxes still apply, and state overtime rules that exceed the FLSA do not count as qualified overtime for this deduction.

Overtime pay or time off in lieu (TOIL)?

Some contracts offer TOIL — time off in lieu — instead of money: each overtime hour earns an hour off later, or 1.5 hours off where the contract mirrors the time-and-a-half rate. TOIL must be agreed, not imposed: if the contract specifies overtime will be paid, the employer cannot switch to TOIL without agreement. Paid overtime suits people who want the money now; TOIL suits people who would rather bank the time, for example to take a longer break later. Either way, agree in writing how TOIL accrues, when it can be taken, and whether unused TOIL is paid out or lost when you leave — the most common TOIL disputes are about hours that were never recorded.

Overtime pay at common hourly rates

The table below shows what 5 overtime hours pay at four common hourly rates, at time and a half and at double time. The first row uses the National Minimum Wage for workers aged 21 and over from 1 April 2026.

For any rate not in the table, an overtime calculator runs the same formula — hours × rate × multiplier — or use the free salary calculator to check the annual figure first.

Five common mistakes when you calculate overtime pay

• Paying the basic rate instead of the multiplier. The classic payslip error: 8 hours at £15 is £120, not £180 — the 1.5× multiplier is the whole point of overtime pay. Check the overtime line against hours × rate × multiplier every month.
• Forgetting bonuses in the US regular rate. Under the FLSA the regular rate includes non-discretionary bonuses, so overtime on a bonus week pays more than 1.5 times the hourly rate. In the example above the difference was $108.33 in a single week.
• Dividing a monthly salary by 4 to get a weekly rate. There are 52 weeks in a year, not 48. A £3,000 monthly salary is £692.31 a week (£36,000 ÷ 52), not £750 — dividing by 4 overstates the hourly rate by about 8%.
• Assuming time and a half is a legal right in the UK. It is a contract term, not a legal right. If the contract says basic rate only, basic rate is what is owed — the legal floors are the National Minimum Wage and the 48-hour week, not the premium.
• Leaving overtime out of holiday pay and tax. Regular overtime counts towards holiday pay for the first four weeks of leave, and overtime is taxed at your marginal rate — a big overtime month can push part of your pay into the 40% band, so budget for the tax on the extra hours.

Who qualifies for overtime pay?

In the UK, anyone whose contract promises overtime pay qualifies — there is no separate legal test, and agency and part-time workers have the same contractual rights as full-time staff. In the US, the FLSA test is exemption: non-exempt employees are owed 1.5× over 40 hours a week, while exempt employees (executive, administrative, professional and outside-sales roles meeting both the $684-a-week salary threshold and the duties tests) have no federal right to overtime, however many hours they work. Salaried does not automatically mean exempt — a salaried employee earning under $684 a week cannot legally be classified as exempt, whatever their job title says.