Formula
| Term | Meaning |
|---|---|
| Approved overtime hours | Hours worked beyond full-day hours or shift end, counted under the overtime policy and approved for pay or comp-off. |
| Regular hours worked | Hours worked within normal shift hours in the same period, excluding breaks. A simpler base is employees x working days x normal daily hours. |
Worked example
An auto components unit in Rajkot has 80 machine operators on 8-hour shifts. June 2026 had 30 days and 4 Sundays as weekly offs, so each operator was scheduled for 26 working days. Approved overtime for the month, after the policy's 30-minute minimum and rounding down to 15 minutes, came to 1,248 hours.
- Regular hours = 80 operators x 26 days x 8 hours = 16,640
- Overtime rate = 1,248 / 16,640 x 100 = 7.5%
- Average overtime per operator = 1,248 / 80 = 15.6 hours in the month
Overtime rate or overtime pay rate
The phrase overtime rate is used in two ways. In payroll it means the multiplier on wages for each overtime hour: under the OSH Code, overtime is paid at twice the ordinary rate of wages, with the worker's consent, as set out in the working hours and overtime rules. As an HR metric it means overtime hours as a share of regular hours, which is the meaning used here. Label reports clearly so finance and operations read the same thing.
What a rising overtime rate is telling you
Some overtime is healthy: seasonal peaks, breakdowns and urgent orders happen. A rate that stays high month after month usually means the roster is short of people or badly matched to demand. Compare each month with the same month last year and each line or department with the others. Look at concentration too. Overtime spread across the team is a staffing question, while overtime loaded onto a few people is a fatigue, safety and fairness question.
- Overtime rate by department, shift and line.
- Overtime hours per employee, to spot overloaded people.
- Share of overtime paid in cash compared with overtime taken as comp-off.
Pitfalls in overtime data
Treating every punched hour after shift end as overtime overstates the rate, since some of that time is spent waiting for transport or finishing a conversation. Counting only paid overtime understates it when part of the extra work is banked as comp-off. Use approved overtime, paid or banked, and keep the policy's minimum and rounding rules the same from month to month so the trend stays comparable.
How to improve it
- Match the roster to demand by hour and day, so regular shifts cover the predictable peaks.
- Cap monthly overtime per person and watch anyone close to the cap for signs of fatigue.
- Cross-train operators so absences can be covered from within the shift instead of through overtime.
- Require approval before overtime is worked wherever operations allow, not after.
- Compare the cost of overtime with the cost of hiring extra staff every quarter.
Tracking it in ZeniaHR
ZeniaHR's Overtime module detects overtime from punches every night under the overtime policy: counted beyond full-day hours or after shift end, as the company chooses, with a 30-minute minimum, rounding down to 15 minutes and a monthly cap. The manager and then HR approve, and employees see their overtime in self-service. Effective hours come from Attendance Punches. There is no ready overtime rate report, so export and calculate.
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How do you calculate overtime rate as a percentage?
Divide the approved overtime hours in the period by the regular hours worked in the same period, then multiply by 100. Regular hours can be estimated as employees x working days x normal daily hours. For example, 1,248 overtime hours against 16,640 regular hours gives an overtime rate of 7.5 percent.
What is the overtime pay rate in India?
Under the OSH Code, work beyond the prescribed hours is overtime and is paid at twice the ordinary rate of wages, with the worker's consent. A company may pay more, but not less. Ordinary daily work is capped at eight hours, while intervals, spread-over and weekly limits are fixed by government notification, so check the rules for your state.
Should comp-off hours be included in the overtime rate?
Yes, if you want to measure workload. Hours worked beyond the shift are extra work whether they are paid or banked as comp-off. Show paid overtime and comp-off separately underneath, because they hit cost differently: paid overtime lands in this month's payroll, while comp-off becomes paid leave taken later.