Basic Pay & Overtime (SQA National 5 Applications of Mathematics): Revision Note

Basic pay & overtime

How do I calculate basic pay using hourly rates?

• Some employers pay their employees per hour

  • The basic pay depends on how many hours the person works

• You can calculate a person's basic pay using the formula

  • basic pay = number of hours worked × the basic hourly rate

• You can use this formula to find the basic pay for any time period

  • Questions typically ask you to find the basic pay for a week or a month

What is overtime pay?

• Some employers pay their employees overtime pay

• This is pay for working extra hours in addition to their contracted hours

• The rate of overtime pay is usually higher than the basic rate of pay

• Common rates of overtime pay include:

  • Time and a half

    • Multiply the basic rate by 1.5

  • Double time

    • Multiply the basic rate by 2

How do I calculate overtime pay using hourly rates?

• STEP 1
  Calculate the number of hours worked as overtime

  • e.g. if a person is contracted for 35 hours

  • and they work 40 hours

  • then their overtime hours are 40 - 35 = 5

• STEP 2
  Calculate the hourly overtime rate

  • e.g. if a person's basic hourly rate is £12.40

  • and they get paid overtime at time and a half

  • then their hourly overtime rate is £12.40 × 1.5 = £18.60

• STEP 3
  Multiply the number of overtime hours by the hourly overtime rate

  • e.g. 5 × £18.60 = £93