When an employee works more than their specified number of working hours, it is called overtime. It is the addition to one’s normal working hours in which sometimes is required to get a job finished.
In Singapore, employees who work under a contract of service are covered by the Employment Act. It is the main labour law in the country which provides the terms and conditions of work, such as employers’ responsibilities and obligations, as well as employees’ basic rights. The Act covers both local and foreign employees, of different terms (full-time, part-time, temporary, contract) and basis (hourly, daily, monthly, piece-rated). As it regulates work systems and procedures, the Act also provides guidelines on hours of work, overtime and rest day. This is specifically mentioned in the Part IV of the Employment Act. However, please be informed that the Part IV of the Employment Act only applies to:
– A workman (someone whose work involves manual labour, such as construction workers and train inspector) earning a basic monthly salary of $4500 or less
– An employee who is not a workman, but is covered by the Employment Act, earning a basic monthly salary of not more than $2600
If your employees fall under those categories, their hours of work are regulated, including breaks, rest day, and overtime pay. And this is why it is important for employees to check their hour records and payslips, ensuring that their hours worked have been breakdown correctly. Now let us take a look at how to calculate the overtime pay.
Employers must pay their employees at least 1.5 times the hourly basic rate of pay. This means the number may be higher based on the employer or company policies.
Hourly Basic Rate of Pay x 1.5 x Number of Overtime Hours
For example, if one’s hourly rate is $14 and they work 2 hours of overtime, the calculation would be:
$14 x 1.5 x 2 = $42
It is also important to understand how the hourly rate of pay is calculated. It is basically divided into three categories: monthly, daily, and piece-rated.
– For monthly-rated employee: (12 x Monthly Basic Rate of Pay) / (52 x 44)
– For daily-rated employee: Daily Pay at the Basic Rate / Working Hours per Day
– For piece-rated employee: Total Weekly Pay at the Basic Rate of Pay / Total Number of Hours Worked in the Week
Employees are not allowed to work more than 12 hours a day, and in a month the overtime should not exceed 72 hours. Under certain circumstances where employees need to work more than 12 hours a day (14 hours maximum), employers should apply for an overtime exemption. The circumstances are limited only to the followings:
– An accident or threat of accident
– Essential work to the life of community, national defence or security
– Urgent work to be done to machinery or plant
– A work interruption that was not foreseen
Only under those circumstances, exceeding overtime is possible. Calculating overtime pay should not be complicated. As long as the daily working hours are recorded correctly, there should be no issue arise. Employees should also be able and allowed to check and discuss this to their employers openly. At the very least, their payslip should provide a detailed breakdown of how much they are paid. This is why, when it comes to salary, it is essential for businesses to have a reliable payroll system. Kayaroll, for example, is a payroll software which could help you to carry out a pay run with better efficiency and confidence. Not only does it assist you with the payroll calculations and deductions, it could also help you calculate bonuses, expenses, and all the other extra cost, including overtime pay. Depending on your business needs, you may look for certain payroll features, but a software like Kayaroll could easily be your one-stop solution. While some may say software like this could be expensive, we say we offer this for free. Yes, free – only with one condition: be one of the first one hundred sign-ups, and this payroll package is yours. Register now and see how our easily accesible software reduces your burden of compliance and is useful to your business.