How to Calculate and Pay Overtime: A Step-by-Step Guide
Do you have to pay staff for overtime? Well, here’s a snippet of information that can add value to your company’s bottom line, although your employees may not particularly like us much for revealing this to you: not all employees are entitled to overtime pay. In terms of the Basic Conditions of Employment Act, the following employees do not have a legal entitlement to overtime pay:
- Senior managerial employees;
- Employees who earn more than the amount specified by the Minister;
- Sales staff who travel to customers’ premises and regulate their own working hours.
Having said that, if the Contract of Employment expressly specifies that your employee is entitled to overtime pay, then you need to pay in accordance with the agreement, regardless of legal entitlement. Now may be a good time to review your Employment Contracts and employment policies and procedures to determine whether overtime pay has been included as an entitlement in every instance where overtime is worked.
The law also allows an employer to agree with an employee that instead of overtime pay, the employee may take time off in lieu of payment. However, this needs to be on agreement between the employer and the employee, so while you’re reviewing your Employment Agreements and policies for the overtime pay clause, this may be a useful provision to add in. You could also flesh out overtime provisions in your General Policies and Procedures.
When an employee who is entitled to overtime pay works overtime, you are required to pay one and a half times his/her wage for the overtime worked. If the overtime was worked on a Sunday, then double pay must be paid for each hour worked – unless, in terms of your contract with him/her, Sunday is a normal working day, in which case overtime worked on a Sunday is also calculated at one and a half times his/her wage.
Please note that this information is supplied for general information and does not constitute legal advice. It is advisable for you to contact a legal practitioner for guidance in respect of your unique requirements.