Overtime Cost Calculator
An overtime cost calculator shows what overtime is costing your business. Enter the number of employees, overtime hours per week, hourly rate and overtime multiplier to see weekly, monthly and annual overtime cost.
e.g. 1.5× for time-and-a-half, 2× for double time.
At a glance
How the overtime cost calculator works
- 1 Enter how many employees regularly work overtime.
- 2 Add the average overtime hours each works per week.
- 3 Set the hourly rate and the overtime multiplier (e.g. 1.5× for time-and-a-half).
- 4 The calculator scales it to weekly, monthly and annual cost.
Overtime rate = Hourly rate × Multiplier. Weekly cost = Employees × OT hours × OT rate. Annual cost = Weekly cost × Weeks.
Worked example
A warehouse runs 45 staff on overtime through the busy season — about 7 hours each a week, over 48 working weeks. The average hourly rate is 21, and overtime is paid at time and a half.
- ·Employees on overtime: 45
- ·Overtime hours a week each: 7
- ·Average hourly rate: 21
- ·Overtime multiplier: 1.5×
- ·Weeks a year: 48
- 1. Overtime hourly rate = 21 × 1.5 = 31.50
- 2. Weekly cost = 45 × 7 × 31.50 = 9,922.50
- 3. Annual cost = 9,922.50 × 48 = 476,280
- 4. Monthly average = 476,280 ÷ 12 = 39,690
- 5. Per employee a year = 476,280 ÷ 45 = 10,584
Overtime costs 476,280 a year — 39,690 a month, or 10,584 per person.
The per-employee figure is the one to act on: 10,584 a year each is a large fraction of what an additional hire would cost, and 45 people working 7 hours of overtime a week is roughly 7.9 full-time equivalents. Once sustained overtime approaches the cost of the headcount it substitutes for, it has stopped being flexibility and become an expensive permanent arrangement — with fatigue and attrition costs this calculation does not capture.
Frequently asked questions
How do you calculate overtime cost?
Multiply the hourly rate by the overtime multiplier (commonly 1.5×) to get the overtime rate. Then multiply by overtime hours and the number of employees for weekly cost, and by weeks worked for the annual figure.
What is the overtime multiplier?
It is the premium paid for overtime hours. Time-and-a-half (1.5×) is the most common; some jurisdictions or shifts require double time (2×). Set it to match your policy or local labour law.
Is overtime cheaper than hiring?
For short-term spikes, overtime is often cheaper than recruiting and onboarding. But sustained high overtime is expensive and risks burnout and errors — at some point an extra hire is cheaper. Compare the annual overtime cost here against a new salary.
How can scheduling software reduce overtime?
Attendance and scheduling tools surface overtime before it happens, balance shifts across the team and flag policy breaches — so unplanned, avoidable overtime drops.
What overtime multiplier should I use?
Whatever your law and contracts require, which varies widely. Time and a half (1.5×) is the common statutory rate for hours beyond the standard week — it is the FLSA rate in the United States for over 40 hours. Double time often applies to rest days and public holidays, and some jurisdictions set two per cent of monthly pay per overtime hour. If you pay different rates for weekday and weekend overtime, run the calculation separately for each.
How do I know whether overtime or a new hire is cheaper?
Convert the overtime into full-time equivalents: total overtime hours a year divided by annual full-time hours. Forty-five people at 7 hours over 48 weeks is 15,120 hours, or roughly 7.9 FTEs. Then compare the 476,280 against what eight additional staff would cost fully loaded. Overtime usually wins for short, genuine peaks and loses badly once it becomes routine.
Why use 48 weeks rather than 52?
Because 52 assumes overtime every single week of the year, which almost never holds once leave, shutdowns and quiet periods are accounted for. Use the number of weeks overtime is actually worked. If it is seasonal, run the busy period at its real intensity rather than averaging it across the year — averaging hides the peak that is driving your cost.
What costs does overtime carry beyond the premium?
Higher error and accident rates as hours extend, elevated absence, and attrition among the people carrying the load — all real and none of them in this figure. There is also an opportunity cost: staff working sustained overtime are not available for training or improvement work. Treat the calculated number as the floor of what persistent overtime costs you.