Payment of Overtime

Payment of Overtime

There are two ways in which overtime can be paid
1. By calculating the amount externally and adding it as an Adhoc payment during the payroll run - refer article
2. Using the option of calculating overtime based on overtime hours captured in employee's timesheet and using overtime multiplier, this article explains this option in more detail

Overtime payment in Payroll is currently based on the hours of overtime booked using the charge-code "Overtime" in the Timesheet. Refer article on Timesheet Creation for more details.

Overtime amount is calculated based on OT multiplier rates which can be configured in payroll setup, refer article on Overtime Scheme for more details.

Sample Timesheet - to update overtime employee can submit working hours in their weekly (or daily) timesheet against Overtime charge-code.


After timesheet is approved overtime is automatically paid with payroll. Overtime details are visible when running payroll. Submitted timesheet (which are not approved) are not considered for Overtime payment.


Note - overtime will be paid on the basis of all the timesheets which have overtime booked and which have been approved after the previous payroll run, system does not check for the month of the timesheet.
Payroll manager is able see the overtime information, status would be "Pending" initially. Click on "Validate" button to see details of overtime hours on a popup. On the popup also click on "Validate" to approve these hours for payout. Breakup of hours is also shown based on different category of hours.

Overtime  amount = Hours x OT Multiplier x Basis

For the purpose of calculating overtime the following methodology is adopted

1. Number of hours in a day are calculated based on the shift to which the employee is mapped. Each shift has a Start Time and End Time which is captured in hh:mm format. Total number of hours is (End time - Start time + 1 ) / 60
2. Number of days are taken as the actual number of days in the month - Jan will have 31 and Feb will have 28 or 29
3. Monthly salary is converted to hourly salary by dividing the monthly salary by number of days and number of hours per day
4. Whether a particular day is working day or holiday or weekly off is captured from the calendar mapped to the employee. Even if an employee is on leave on a particular day the system will treat it as a working day if it is working day as per the calendar.
5. Basis of salary on which OT is paid is identified from the Deduction and Encashment table

Example

Month - Jan 2016
Paydays basis - Actual number of days = 31
Shift hours = 08:30

Salary basis = Basic + HRA + Special Pay = 40,000 + 15,000 + 7,500 = 62,500

OT Hours For Working Day = 22
OT Hours for Weekly Off  = 6
OT for Holidays = 5

OT Multiplier
Working Day = 2
Weekly Off  = 3
Holidays = 4 

Overtime = (22x2 + 6x3 + 5x2)x 62500 / (31x8.5)  = 17078



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