Overtime pay explained: who qualifies and how it is calculated

Overtime is one of those areas of pay where almost everyone has a confident opinion and a good share of those opinions are wrong. People believe salaried staff can never get overtime, that anyone with “manager” in their title is exempt, that the UK has a legal time-and-a-half rate, or that working through lunch and answering email at night simply does not count. Each of those is wrong often enough to cost real money.

This guide sets out how overtime works in the US, UK, Canada and Australia in general terms, with the hedging the subject needs: thresholds change, and your contract, award or state law can override the general picture. It then shows you how to check a payslip against your actual hours, and what to do if the numbers do not match.

The United States: time-and-a-half after 40 hours, unless you are exempt

The federal rule comes from the Fair Labor Standards Act. Covered, non-exempt employees must be paid at least one and a half times their regular rate for every hour over 40 in a workweek. Three things in that sentence trip people up.

It is per workweek, not per day or per pay period. Federal law does not care if you worked 14 hours on Tuesday; it cares whether you passed 40 in the seven-day week your employer has defined. If you are paid every two weeks, 50 hours one week and 30 the next still earns 10 hours of overtime, because averaging across weeks is not permitted. Some states add daily overtime on top. California is the best-known example, with overtime after eight hours in a day and a higher rate after twelve, and a handful of other states have their own daily rules.

The regular rate is not always your hourly rate. It includes most non-discretionary payments for the week: shift differentials, production bonuses, commissions, and attendance bonuses that were promised in advance. If you earn a base rate plus a guaranteed weekly bonus, your overtime should be calculated on the combined figure, not the base alone. Employers get this wrong constantly, often through payroll software defaults rather than intent.

Exempt is a legal status, not a job title. To be exempt from overtime under the main “white collar” exemptions, an employee generally has to meet all of three tests: be paid on a salary basis (a fixed amount that does not go down when the work does), earn at least a minimum salary level set by the Department of Labor, and perform duties that fit one of the exempt categories (broadly executive, administrative, professional, outside sales, and certain computer roles). The salary threshold has been changed, challenged in court and changed back within the last few years, so check the current figure on the Department of Labor’s Wage and Hour Division site rather than trusting a number you read somewhere last year. What has not changed is the principle: a salary alone does not make you exempt, and neither does a title. A “shift manager” who spends most of the day doing the same work as the crew and has no real authority over hiring or scheduling will often fail the duties test regardless of what the offer letter said.

We go through what exempt status means in practice at /pay/salary-vs-hourly-what-changes-when-you-move-to-salaried-work/.

One more federal point: “off the clock” work counts. If your employer knows or should know you are working (setting up before a shift, answering work messages at home, staying late to finish a task), those hours are hours worked, whether or not anyone told you to do them.

The United Kingdom: no statutory overtime rate, but limits on hours and a wage floor

Britain is the outlier. There is no legal requirement to pay a premium rate for overtime. What you get for extra hours is whatever your contract or a collective agreement says, and many contracts say nothing beyond a line that “reasonable additional hours may be required.”

That does not make overtime a free-for-all. Three rules apply.

The National Minimum Wage and National Living Wage must be met across all hours worked. If you are salaried and regularly work far more than your contracted hours, your effective hourly rate can fall below the legal minimum. That is unlawful even if each individual extra hour was “unpaid” by contract. Divide your pay for the pay reference period by every hour you actually worked and compare it to the current rate on GOV.UK.

The Working Time Regulations cap average hours. You cannot be required to work more than an average of 48 hours a week, usually measured over 17 weeks, unless you have signed an opt-out. The opt-out must be voluntary and you can withdraw it with notice. These rules do not give you money for overtime, but they give you the right to refuse it beyond the limit.

Contractual overtime terms are enforceable. If your contract says overtime is paid at a set rate, or is compulsory, or is voluntary, those terms bind both sides. Separately, case law over the past decade has moved toward including regular overtime in holiday pay for at least part of the statutory entitlement. If you routinely work overtime and your holiday pay is based on basic hours alone, it is worth asking about.

Canada: provincial rules, most commonly time-and-a-half after 40 or 44 hours

Employment standards in Canada are mostly provincial, with federally regulated sectors (banking, telecoms, interprovincial transport and a few others) under the Canada Labour Code. The general shape is consistent: overtime at one and a half times the regular wage after a weekly threshold, with some provinces also setting a daily threshold.

The thresholds differ. Some provinces trigger overtime after 40 hours a week; others use 44. Several add daily overtime after eight hours. Some allow averaging agreements that let employers spread hours over several weeks with the employee’s written consent, and some permit banked time off in lieu at the overtime rate. Exemptions exist for managers and some professionals, tested on actual duties rather than title, much as in the US.

Check your own province’s employment standards page rather than relying on a national summary. The point to hold onto is that overtime is a statutory right for most non-managerial employees, that averaging requires your agreement, and that a claim can be made without a lawyer.

Australia: awards and enterprise agreements set the rates

In Australia, minimum overtime entitlements for most employees come from the modern award or enterprise agreement that covers their job, on top of the National Employment Standards. Awards typically pay a higher rate (often expressed as a percentage of the ordinary rate) for a first block of overtime hours and a higher rate again beyond that, with different treatment for weekends and public holidays. The specifics depend on the award, and there are dozens of them, so the first step is always to find out which award or agreement covers you. The Fair Work Ombudsman has a tool for this and publishes pay guides for each award.

Award-free employees (typically some senior or specialised roles) may have no overtime entitlement beyond their contract, though the National Employment Standards still limit ordinary hours to 38 a week plus “reasonable” additional hours. Some awards allow annualised salaries that fold expected overtime into a fixed amount, but if the salary turns out to be less than you would have earned under the award, the difference is owed.

How to check your payslip against your hours

Whatever country you are in, the checking process is the same, and it takes about twenty minutes per pay period once you have a system.

1. Keep your own record of hours. A note on your phone at the end of each shift is enough: start time, finish time, unpaid breaks. Include work done outside the workplace if it was expected or accepted. In a dispute your contemporaneous record carries real weight, especially if the employer’s records are missing or vague.

2. Identify the workweek and pay period. Your employer should be able to tell you when the workweek starts. Pay periods that do not line up with workweeks are a common source of undercounting.

3. Total the hours per week, not per pay period. Count hours over the weekly threshold that applies to you (40 federal in the US, your provincial figure in Canada, your award’s ordinary hours in Australia, your contractual hours in the UK). Add any daily overtime where your jurisdiction has it.

4. Work out the correct rate. In the US, include non-discretionary bonuses and differentials in the regular rate before multiplying. In Australia, use the award’s overtime percentages for the relevant blocks. In Canada, use the provincial multiplier. In the UK, use the contractual rate, then separately check that total pay divided by total hours clears the minimum wage.

5. Compare to the payslip. Look for an overtime line, the hours it shows, and the rate. If the payslip shows no overtime line at all and you have exceeded the threshold, or the hours are lower than your record, or the rate is your base rate rather than the premium, you have found a discrepancy.

6. Check what has been deducted. Some employers automatically deduct a meal break whether or not you took it. If you worked through it, that is unpaid working time.

What to do if you are owed money

Start inside the company. Most underpayment is error rather than policy, and a clear, unemotional message to payroll or your manager resolves a good share of cases. Something like:

“I have been checking my hours against my payslips for the past few pay periods. For the week beginning [date] I recorded [X] hours, which is [Y] hours over the threshold, but my payslip shows [Z] hours of overtime. Could you check the calculation and let me know what I have missed, or arrange an adjustment?”

Attach your record. Keep the tone as if you assume it is a mistake; that leaves the employer room to fix it without anyone losing face.

If the internal route fails, each country has a free enforcement route that does not require a lawyer.

In the US, the Department of Labor’s Wage and Hour Division takes complaints and can recover back wages; many state labor departments do the same. Federal claims generally reach back two years, or three if the violation was willful, so delay costs you money. Retaliation for making a complaint is itself unlawful.

In the UK, ACAS early conciliation is the compulsory first step before an employment tribunal claim for unlawful deduction from wages, and tribunal time limits are short (three months less one day from the last deduction). Minimum wage underpayment can also be reported to HMRC, which enforces it directly.

In Canada, the provincial employment standards branch (or the federal Labour Program for federally regulated workers) investigates complaints and can order payment. Time limits vary by province, and some cap how far back a claim can reach.

In Australia, the Fair Work Ombudsman handles underpayment complaints and can pursue employers directly.

One practical caution: if your colleagues are in the same position, a group complaint is stronger and harder to dismiss as one person’s grievance. Discussing pay with co-workers is protected in the US and lawful in the UK, Canada and Australia.

The habit that matters more than the rules

Every rule above depends on one thing you control: knowing how many hours you actually worked. Employers who underpay overtime rely on the fact that most people do not keep track. Start a record this week, even a rough one. Check it against your next payslip. If the numbers match, you have lost twenty minutes. If they do not, you have found the one piece of evidence that turns “I think I am owed something” into a claim that gets paid.