Understanding Overtime Rule Calculations: Daily vs Weekly or Both Combined
🕓 Daily Overtime
Daily overtime is triggered when an employee works more than a set number of hours in a single day (for example, more than 8 hours).
These extra hours are treated as overtime for that day, regardless of the total number of hours worked in the week.
Example:
- An employee works 10 hours on Monday.
- The first 8 hours are considered regular hours.
- The 2 additional hours are counted as daily overtime.
At the end of the day, this employee has earned 8 regular hours + 2 daily overtime hours.
📅 Weekly Overtime
Weekly overtime is triggered when the total hours worked in a week exceed a certain threshold (for example, 40 hours).
This rule considers the total accumulated hours over all days worked in the week.
Example:
- An employee works 9 hours each day, Monday to Friday.
- Total worked = 45 hours for the week.
- The first 40 hours are considered regular hours.
- The 5 extra hours are counted as weekly overtime.
At the end of the week, the employee has earned 40 regular hours + 5 weekly overtime hours.
🔁 When Both Rules Apply (Combined Overtime Scenarios)
If both daily and weekly overtime rules are combined, some hours may potentially qualify under both conditions.
To ensure employees are not paid overtime twice for the same hours, the system applies a priority order when calculating overtime.
How the system handles overlap:
- Daily overtime is calculated first.
The system identifies all overtime hours worked each day that exceed the daily limit. - Weekly overtime is then evaluated.
The system checks if the total hours in the week exceed the weekly limit. - Hours already counted as daily overtime are excluded from the weekly overtime calculation.
This means that once an hour has been classified as daily overtime, it won’t be counted again as weekly overtime.
Example:
Combined Overtime (12 hours per day)
In this example, the employee works 12 hours per day from Sunday to Friday, with both rules active:
-
Daily Overtime: Over 8 hours per day
-
Weekly Overtime: Over 44 hours per week
| Day | Start | End | Total Hours | Regular Hours | Daily OT | Weekly OT | Total Counted |
|---|---|---|---|---|---|---|---|
| Sunday | 8:00 AM | 8:00 PM | 12.00 | 8.00 | 4.00 | – | 12.00 |
| Monday | 8:00 AM | 8:00 PM | 12.00 | 8.00 | 4.00 | – | 12.00 |
| Tuesday | 8:00 AM | 8:00 PM | 12.00 | 8.00 | 4.00 | – | 12.00 |
| Wednesday | 8:00 AM | 8:00 PM | 12.00 | 8.00 | 4.00 | – | 12.00 |
| Thursday | 8:00 AM | 8:00 PM | 12.00 | 8.00 | 4.00 | – | 12.00 |
| Friday | 8:00 AM | 8:00 PM | 12.00 | 0.00* | 4.00 | 8.00 | 12.00 |
| Saturday | – | – | 0.00 | – | – | – | 0.00 |
| Week Total | 72.00 | 40.00 | 24.00 | 8.00 | 72.00 |
*On Friday, the employee reached the 44-hour weekly threshold after completing 4 regular hours.
From that point forward, any additional hours were counted as weekly overtime, not as regular time.
How it breaks down
-
The system first applied daily overtime to all hours beyond 8 each day (4 hours × 6 days = 24 hours).
-
At the end of Thursday, the employee had worked 48 hours total, already exceeding the 44-hour weekly limit by 4 hours.
-
On Friday, after the first 4 hours, the employee hit the weekly limit again.
-
The final 8 hours of Friday were split between daily overtime (4 hours) and additional weekly overtime (4 hours), bringing the total to 8 weekly OT hours.
-
✅ Result:
- 40 regular hours
- 24 daily overtime hours
- 8 weekly overtime hours
- 72 total hours worked