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Overtime Cost Calculator

Work out what overtime costs the employer across a team, and whether another hire would be cheaper.

About Overtime Cost Calculator

Sustained overtime is a hiring signal: once the hours exceed a full-time equivalent, paying a 50% premium indefinitely costs more than employing someone. The premium element isolates the avoidable part of the cost. Overtime is cheaper than a hire only while it is genuinely temporary; at one FTE and above, the premium alone would fund a substantial part of a salary.

Formula

Overtime Cost

Overtime cost = employees × hours each × base rate × multiplier × weeks

premium element
The extra above ordinary pay, which is the true cost of using overtime
FTE equivalent
Overtime hours expressed as full-time roles

Worked example

With the default values below, Overtime Cost Calculator returns Overtime Cost for the Period of $134,784.00. Change any input above and every figure here is recalculated in your browser.

Inputs used

Employees working overtimeminimum 0
12
Overtime hours each per weekminimum 0 h
6 h
Base hourly rateminimum 0
24
Overtime multiplieraccepts 1–4 x
1.5 x
Weeks in the periodaccepts 1–52 weeks
52 weeks

Results

Overtime Cost for the Period
$134,784.00
Weekly Overtime Cost
$2,592.00
Premium Element Above Base Pay
$44,928.00
Full-Time Equivalents the Overtime Represents
1.80
Verdict
Overtime equals 1.8 full-time roles — hiring is likely cheaper

Step by step

  1. 1Values used
  2. 2Overtime Cost
  3. 3Overtime Cost for the Period= 134,784.00
  4. 4Weekly Overtime Cost= 2,592.00
  5. 5Premium Element Above Base Pay= 44,928.00
  6. 6Full-Time Equivalents the Overtime Represents= 1.80
  7. 7Verdict= Overtime equals 1.8 full-time roles — hiring is likely cheaper

Assumptions and limits

  • The result is derived only from the 5 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax or fees or charges into account.
  • Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
  • This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

How is Overtime Cost calculated?

Overtime cost = employees × hours each × base rate × multiplier × weeks Sustained overtime is a hiring signal: once the hours exceed a full-time equivalent, paying a 50% premium indefinitely costs more than employing someone. The premium element isolates the avoidable part of the cost.

Why does Overtime Cost matter?

Overtime is cheaper than a hire only while it is genuinely temporary; at one FTE and above, the premium alone would fund a substantial part of a salary.

What values do I need to enter?

This calculator takes 5 inputs: Employees working overtime, Overtime hours each per week, Base hourly rate, Overtime multiplier, Weeks in the period. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.

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