STAY INFORMED! Click here to visit the Covid-19 South African Online Portal

HR 101 – Overtime – What you’re in for

802 Views 0 Comment

Please note that this pertains to South African Labour Relations and Best Practice requirements.

Please further note that terms and conditions in the Basic Conditions of Employment Act as well as the Labour Relations Act are amended from time to time and therefore information should be checked to ensure that it is correct and still applicable. This has been checked as at 3rd May 2019.

There is a huge amount of confusion about what is considered overtime and what actually is overtime and this often causes problems within an organisation – it’s that whole perception and assumption thing that very seldom actually reflects reality.

For example a normal working week is considered (by law) to be 45 hours. So if an employee works a 5 day week, 8 hour day (remember their lunch times do not constitute ‘working’ time), they have successfully worked a 40 hour week, so working an extra ½ an hour does not mean that they qualify for overtime, because they are still 4 ½ hours short on what they should be working. Many employees do not understand this and then feel that the employer is ‘cheating’ them out of overtime pay and by the same token, many employers are not aware of this and just pay! Either way, it is not a good situation and hopefully this article will put things into perspective.

Overtime and work on Public Holidays.
This is where the wording in your Letter/Contract of employment is extremely important. Unless there is a proper agreement or contract in place, according to the Basic Conditions of Employment Act, the employer is not permitted to ‘force’ the employee to work overtime (remember that this means the time that an employee works during a day or a week in excess of ordinary hours of work) on weekends or public holiday.

If you don’t have anything in place in terms of your Letter/Contract of employment and you, as the employer, require overtime work to be done over a weekend or on a public holiday, your staff would only be obliged to work if you got their agreement, in writing, to do so.

So people, it is in your own best interests to get your Letters of Appointment up to date and in compliance with the Basic Conditions of Employment Act.

How to calculate the rates.
Let me be very clear here – there are some employees that are not ‘covered’ by the BCOA (Basic Conditions of Employment Act) – these are (but not limited to):
– Members of the National Defence Force
– (workers in) Senior Management
– Sales staff – who travel
– Workers who work less than 24 hours in a month
– Workers who earn more than an amount gazetted from time to time – clearly this pertains to specialized circumstances and would not affect most employees – if you’re not sure, please contact an HR Specialist.

Then of course there is the, no overtime work will be paid unless the overtime has been authorized by an employee’s Manager or is required in terms of a work roster.

Workers must receive 1.5 times their normal hourly rate of pay or time off in exchange for overtime or they can even receive a combination of the two.

Staff are not obliged to work overtime:
– Unless the overtime has been made by agreement (in your Letter/Contract of employment or by consent in writing)
– If the overtime is more than 10 hours per week (if this is a special circumstance a ‘collective agreement’ can increase this to 15 hours a week, but only for a maximum of two months in any given year.)
– Workers may not work more than 12 hours a day.

Pay for Overtime Work
Like most calculations in life, life is generally made a lot easier if you have a formula to calculate with – overtime remuneration is no exception to the rule.

5 day week overtime calculation:
Those who work a 5 day week work 21.67 days per month, this is accepted as the norm.

The working week is accepted as 45 ordinary hours (not including overtime).

The working day is accepted as a 9 hour day. The employee is paid for 8 hours and the 1 hour meal break is NOT paid for. Before every staff members starts weeping and wailing and shouting the odds, this is the law as it is gazetted in the BCOA, so don’t be having a go at your bosses!

So therefore the formula for calculating the hourly rate is:
Salary divided by 21.67 (remember these are the days worked in a month) divided 9 (those are the working hours per day) and 21.67 multiplied by 9 = total working hours per month (195.03 hours). Therefore if Tommy earns say R5 000 per month then his hourly rate is R25.64 per hour and if he has worked 48 hours in one week, then he is entitled to 3 hours over time at 1.5 times his hourly rate, which would mean that he is entitled to an additional R115.38.

The calculation for employees who work a 6 day week is as follows:
Those who work a 6 day week work 26 days per month, this is accepted as the norm.

The working week is accepted as 45 ordinary hours (not including overtime).

The working day is accepted as a 7.5 hour day. The employee is paid for 6.5 hours and the 1 hour meal break is NOT paid for. Before every staff members starts weeping and wailing and shouting the odds, this is the law as it is gazetted in the BCOA, so don’t be having a go at your bosses!

So therefore the formula for calculating the hourly rate is:
Salary divided by 26 (remember these are the days worked in a month) divided 7.5 (those are the working hours per day) and 26 multiplied by 7.5 = total working hours per month (195 hours). Therefore if Tommy earns say R5 000 per month then his hourly rate is R25.64 per hour and if he has worked 48 hours in one week, then he is entitled to 3 hours over time at 1.5 times his hourly rate, which would mean that he is entitled to an additional R76.92.

Oh . . . and don’t forget that the Tax man want’s his cut of this to. So if for example your extra R100 overtime that you think you are getting is usually  a lot less and if  puts you into the next tax bracket, this will mean that you owe the Tax man probably more than the R100 that you think you are getting.

So there you have the mysteries of overtime and how to calculate it at your fingertips.

 

Comments