Overtime Policy - HR and payroll

The rule that decides what an hour of overtime is worth, and who it applies to.

When to use it

When setting the system up, and whenever the overtime rate changes or a group of staff needs a different one.

Before you start

There must be a salary component coded OT. Without it, the overtime is worked out and then dropped with nothing to show for it. Overtime hours must also be on the finalised attendance for the period, or there is nothing to price.

Where to find it

Open the HR area from the main menu, then HR Setup, then Overtime Policy.

The fields on this screen

Field (on screen)	What to enter	Required
Policy Name	Your name for this overtime rule. For reference only - the rule is matched by its scope, not its name.	No
Designation (scope)	Limit this policy to one designation. Leave it blank for everyone; the most specific match wins.	No
Department (scope)	Limit this policy to one department. Leave it blank for everyone; the most specific match wins.	No
Branch (scope)	Limit this policy to one branch. Leave it blank for everyone; the most specific match wins.	No
Rate Basis	How an overtime hour is priced: from hourly Basic, a fixed amount per hour, or a percent of Basic.	No
Rate Multiplier	Multiplies the hourly Basic rate, or is the percent when the basis is % of Basic. Ignored for a fixed rate.	No
Flat Rate (when basis=fixed)	Amount paid for each overtime hour. It is used only when the rate basis is a fixed amount per hour.	No
Effective From	Date this policy starts to apply. A payroll run uses the policy in force on the period's last day.	No
Effective To	Last date this policy applies. Leave it blank to keep it open-ended.	No
Notes	Optional note on why this rule exists or who agreed it.	No

How it works

A payroll run takes the rule in force on the last day of the period. Where several rules match one person, the most specific wins: post beats department, department beats branch, and a rule with none of them set covers everybody. If two rules are equally specific, the one added most recently wins.

The hours come from the period's attendance and are priced in one of three ways:

From hourly basic: basic divided by the payable days, then by eight hours, times the multiplier.
A fixed amount per hour: the flat rate for each hour. The multiplier is ignored.
A percent of basic per hour: the multiplier read as a percent of basic, per hour.

The result is added to the slip as its own earning line, and it counts towards gross.

This screen stops being used once a pay policy is on

As soon as any Compensation Policy is active and in date for your organization, overtime is priced by a rule on that screen instead, and everything set here is ignored. Nothing on this screen tells you so. If overtime changes on everyone's slip at once, check this first.

Tips and common mistakes

A higher rate on a public holiday cannot be set here, and it does not work on the pay policy screen either. Where you owe one, pay the difference as a Compensation Adjustment.
If the hours look right but the overtime line is zero or missing, check that a component coded OT exists. Also check that the basic pay line on that person's slip is not itself zero: overtime priced from hourly basic comes out at nothing when basic does.
A rule with no dates set covers nothing. Give every rule a start date.

Salary Component: where the component coded OT is set up
Attendance Finalize: where overtime hours are entered
Compensation Policy: what replaces this screen once it is in use
Designation: one of the things a rule can be aimed at