Work out what overtime costs the employer across a team, and whether another hire would be cheaper.
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.
Overtime Cost
Overtime cost = employees × hours each × base rate × multiplier × weeks
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.
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.
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.