Income & Work

How Overtime Pay Is Calculated

Overtime is paid at a higher rate than ordinary hours — but the multipliers and rules confuse many workers. Here is how it works.

Plantrino Guides · Updated 2026 · About a 6-minute read

When you work beyond your normal hours, you are often entitled to be paid at a higher rate. The principle is simple, but the terms — time-and-a-half, double-time, penalty rates — and the rules around them leave many people unsure whether their pay is correct. This guide explains the mechanics.

What Overtime Is

Overtime generally refers to hours worked beyond your ordinary or agreed hours. Because those extra hours ask more of you — evenings, weekends, longer days — they are commonly paid at a rate higher than your standard hourly pay. The exact definition of when overtime begins depends on your employment terms.

The Common Multipliers

Overtime is usually expressed as a multiple of your ordinary hourly rate. Two terms come up constantly:

Time-and-a-half means 1.5 times your normal rate.
Double-time means 2 times your normal rate.

Overtime pay = Ordinary hourly rate × Multiplier × Overtime hours

If your ordinary rate is 30 and you work 4 hours at time-and-a-half: 30 × 1.5 × 4 = 180. Those same 4 hours at your ordinary rate would have paid 120, so the overtime premium added 60.

A Fuller Example

Suppose in one week you work 38 ordinary hours plus 3 hours at time-and-a-half and 2 hours at double-time, on a 30 ordinary rate:

Ordinary: 38 × 30 = 1,140
Time-and-a-half: 3 × 30 × 1.5 = 135
Double-time: 2 × 30 × 2 = 120
Total gross: 1,395

Breaking pay into these blocks is exactly how payroll systems handle it — and how you can check your own.

Work out your overtime pay across different rates.

Try the Plantrino Overtime Calculator

Penalty Rates

Closely related to overtime are penalty rates — higher rates paid for working at particular times, such as weekends, public holidays, or late-night shifts. The "penalty" is on the employer, not the worker; it is extra pay that compensates for less sociable hours. Penalty rates and overtime rates can sometimes apply to the same hours, depending on the rules covering your job.

Where the Rules Come From

When and how overtime and penalty rates apply is not the same for every worker. It depends on the framework covering your employment — in Australia, for example, this may be an award, an enterprise agreement, or an individual contract. These set out the ordinary hours, the multipliers, and the conditions. Some salaried roles, by contrast, may have overtime built into the salary rather than paid separately. Because of this variation, your own employment terms are the place to confirm what you are entitled to.

Worth checking your payslip Overtime errors are common — hours recorded at the wrong multiplier, or missed entirely. If you regularly work overtime, it is worth checking that your payslip shows the extra hours, at the right rate. Keeping your own simple record of hours worked makes any discrepancy easy to raise and resolve.

Frequently Asked Questions

Is everyone entitled to overtime pay?

Not automatically. It depends on the award, agreement, or contract covering your role. Some salaried positions include overtime within the salary instead of paying it separately.

What is the difference between overtime and penalty rates?

Overtime is for hours beyond your ordinary hours; penalty rates are for working at particular times, such as weekends or public holidays. Both raise your rate above ordinary pay.

How do I know my rate is correct?

Check your employment terms for the multipliers and conditions, then compare them against your payslip. A personal record of hours worked helps.

Overtime pay is your ordinary rate lifted by a multiplier — 1.5 for time-and-a-half, 2 for double-time — applied to the extra hours you work. Penalty rates work similarly for unsociable times. Know the multipliers, know where your rules come from, and check your payslip reflects them.