In a work contract of 8 hours per day, 6 days a week, a worker fulfills about 220 hours per month. By dividing your salary by 220, you will discover your hourly wage. This value, added to an increase of 50%, legal percentage of overtime, is the value of each of the extra hours fulfilled.
Yes, work overtime correctly, you need to know:
- Overtime types (normal, compensated, holiday, night, etc.)
- Extra percentage paid for each type
- Number of hours worked in the month
- Quantity of overtime worked in the month
Before entering into the calculation itself, let's see what it is and why to calculate overtime in your business:
- What is: Extra time is all working time that employees carry out outside the usual range. Overtime usually occurs because of the need for specific conclusions from a job.
- Why calculate: Business management includes a number of factors that are not always entirely clear, especially for beginning entrepreneurs. Among these factors appears the calculation of overtime, which may seem very simple, but that offers risks to the health of the company. Many labor lawsuits occur from the error of overtime calculations within the payroll, or, simply by negligence of that management.
And you who are starting your venture, already know how to count and calculate overtime of your employees? Stay tuned for this little tutorial and get your doubts about this key element in running the business.
Calculate Extra Hours: What do I need to know?
1. Calculate the number of hours worked in the month
Before starting an employment contract, you must establish the number of hours worked in the month. The CLT (consolidation of labor laws) foresees the maximum of 220 monthly hours distributed on weekdays. If a holiday occurs during the month, the day is counted normally, so if you work on that day, the company must pay overtime to the employee.
2. Overtime Concepts
Any time that the employee stays in the service of the company and that exceeds the limit of monthly work is considered overtime. However, not every overtime has the same weight or even value. Thus, the extra hours worked on normal days of the employee have an increase of a certain percentage. Already the hours in extraordinary days, that in spite of the accumulation of service or force majeure, will have an increase of a greater percentage in the value of the extra hour.
3. What is the percentage in the overtime calculation?
To facilitate the calculation of overtime, we will use the values defined by the CLT. These values correspond to 50% increase over the hour value on normal days that only exceed the employee's departure time. Already, for days that require the extraordinary displacement in the service of the company, the percentage is of 100%.
4. Types of Overtime
It's important that you know what the possible overtime is:
- Interjornada (before 11 hours of rest)
- Intrajornada (during rest time / lunch)
- Normal night
- Compensated night
- Night time holiday
- DSR (Paid Weekly Break)
- DSR Night
How to calculate overtime
Let us suppose the following situation. Employee A works on the CLT scheme for 220 monthly hours distributed from Monday to Saturday. The salary of A is $ 1200. In this way the calculation is as follows:
Step 1: Calculate the value of the time worked
This calculation is simple, just take the value of the monthly salary and divide by the amount of hours, which remains. In this example, 1200 / 220, the found value is 5,46.
2: Calculate the Overtime Value on Normal Days
The overtime value is the value of the time worked, in the 5,46 case, plus 50%. The value found is 8,19.
3 Step: Calculating the Overtime Value for Holidays, Saturdays, and Sundays
The same as the previous calculation. But in this case the increment is 100%. The value found is 10,92.
Once this is done, simply add the overtime worked on normal days and multiply by 8,19 and the hours worked on extraordinary days by 10,92 and add to the salary of the employee.
4 Step: Items that can be used to calculate your overtime
Usually one should calculate overtime from an employee's gross salary. It turns out that this gross salary may be increased depending on the type of activity it performs and this can affect the value of the overtime. Therefore, before arriving at the final value of the hour, find out if these items affect the salary of the employee:
Tips for calculating overtime
- All overtime is reflected in holiday pay and thirteenth paycheck.
- The INSS and other discounts as well as FGTS payment are made on the gross salary, ie, salary plus overtime.
- In collective bargaining agreement between companies and category unions there may be other values for extra overtime. It is important to pay close attention to this factor.
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