Overtime: Learn to calculate it

An extra hour is something tedious to calculate. You must take each remuneration and apply a formula for each collaborator. Slow, right? At Ninja Excel we want to help you and teach you more about the hours that are worked outside the agreed working day and that must be paid.

What is an extra hour?

Overtime is, despite the redundancy, the hours worked that exceed the working day agreed upon with the employer.. This agreement is usually 8 hours, so any time outside of this schedule must be paid for. 

These have different values depending on the day and the day on which they are carried out. However, this will always depend on the agreement reached between the parties, since, for example In the case of people who work under article 22 of the Labor Code, overtime is not considered., since there is no day as such.

It is also important that you take into consideration that Overtime should only be exercised for “transitory needs or temporary situations of the company” as indicated by the Labor Directorate. Furthermore, you should know that The law only allows a maximum of 2 overtime hours per day.

Calculation of overtime: How is it done?

To calculate overtime hours, it must be considered that these are calculated taking into account that a week has 45 working hours*. Then, at the end of each week, the number of overtime hours must be added to the monthly remuneration of each employee. 

In the event that a month ends on a Wednesday, overtime for that week must be paid at the end of that month.

Now, let's get to the calculation. To do so, you must consider what the collaborator's base salary is. With this, you can begin.

To get the value of each extra hour, you must first calculate the value of the ordinary hour. For this, you must Divide the employee's salary by 30 and multiply this result by 28, and divide the result you get by 180.. 

Once you have the value of the ordinary hour, you should know that overtime has a minimum legal surcharge of 50%. Then, the value of extra hour must be calculated by multiplying the value of the ordinary hour by 1.5. 

So, we already know the value of ordinary and overtime. Now all that remains is to multiply this number by the total overtime hours worked and that's it.

To help you remember this, we leave you the corresponding formula below:

No more confusing calculations! With this information you can even automate the calculation of each collaborator's overtime in tools like Excel, saving you even more time. If you want to know more about this software, you can read more here.

*Due to the approval of the 40-hour work bill, within five years this floor must be considered to calculate overtime.