What Overtime Is Actually Worth

Only the "half" is the overtime

Time-and-a-half means the base rate plus half of it again. On a $20 rate an overtime hour pays $30 — of which $20 is what any hour pays and $10 is the overtime itself.

That sounds pedantic and turns out to matter. When people judge whether extra hours are worth it, they think of the whole $30 as the reward for staying late. The part the overtime rule earned is $10.

The multiplier gets diluted

Eight overtime hours on a forty-hour week — 20% more time, at 1.5× the rate:

Gross	$1,040
Same hours with no premium	$960
The premium	$80
Effective rate	$21.67
Uplift on base	8.3%

A week that feels like it should pay half as much again pays 8.3% more per hour.

The multiplier applies to the extra hours only, then gets averaged across everything you worked. The more base hours you have, the more diluted it becomes.

You can see that directly: the same 1.5× on a short day — 8 base hours plus 4 overtime — gives a 16.7% uplift, because a third of the hours are at the higher rate instead of a sixth.

Track the premium, not the gross

Gross pay rises with any extra hour, so it says almost nothing about whether the arrangement is worth it.

The premium — what the overtime rule earned above ordinary pay for that same time — is the figure to weigh against what the hours actually cost you: rest, family, the second job you couldn't do, and the fact that tired hours in the following days are worth less.

That's why the tool reports it separately instead of hiding it inside a bigger gross.

The mirror image: salaried and exempt

If you're salaried with no overtime entitlement, the same arithmetic runs the other way — and it's worth seeing once.

Your effective rate is salary ÷ hours worked. Extra hours don't add pay; they divide the same pay across more of your time. On a $50,000 salary:

Hours a week	Hours a year	Effective rate	vs a 40-hour week
40	2,080	$24.04	—
45	2,340	$21.37	−11.1%
50	2,600	$19.23	−20.0%
55	2,860	$17.48	−27.3%

Working 25% more hours is a 20% pay cut per hour. Nothing on your payslip changes, which is precisely why it goes unnoticed.

That comparison is also the honest way to weigh a salaried offer against an hourly one. A salary that looks higher on paper can be worth less per hour than the role it replaced, and the only way to know is to divide by the hours you'll actually work rather than the ones in the contract.

⚠️ This does not tell you what you're owed

Overtime is law, and it varies:

• The threshold — 40 hours a week in some places, 8 hours a day in others
• The multiplier
• Whether it's counted daily or weekly
• Which workers are exempt — some roles get none of it
• How public holidays are treated

And your own contract or collective agreement can change any of them again.

Everything in this tool is a number you supply. It does arithmetic on your figures — useful for checking a payslip, useless as a statement of entitlement.

If your payslip doesn't match

Treat it as a reason to ask a question, not as evidence of anything.

The common explanations are dull: a threshold counted daily rather than weekly, a different definition of which hours qualify, a shift premium handled separately, or an ordinary mistake.

All of them start the same way — a polite question, with the payslip in front of you and the hours you believe you worked.

If that doesn't resolve it and the amount matters, your union, a qualified adviser or the relevant labour authority is the next step. Not a calculator.

Everything here is gross

Tax, national insurance or social security, pension contributions and student loan repayments all come off afterwards.

Worth knowing that in some systems a larger gross in a single period can be taxed at a higher marginal rate, or push you past a threshold that changes something else. The take-home from an unusually big overtime week is sometimes a smaller share than usual — check a payslip rather than assuming the same percentage applies.

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General information, not financial or employment advice.