What is overtime?

Overtime is work performed beyond an employee's standard working hours, paid at a premium rate set by law. What counts as beyond, and how large the premium is, differ by country. The United States uses a weekly test: hours past 40 in a fixed workweek are paid at 1.5 times the regular rate under the Fair Labor Standards Act. India and much of Asia use a daily and weekly test with a flat double-time premium. The United Kingdom and Germany cap hours but set no statutory premium at all. The multiplier is rarely the hard part; the pay base it applies to and the eligibility test are where overtime goes wrong.

What counts as overtime hours?

• Weekly threshold: the most common trigger. The United States counts hours past 40 in a fixed, recurring workweek; India and much of Asia count hours past 48.
• Daily threshold: many countries, and several US states, also measure by the day. India triggers at 8 hours; California pays 1.5x beyond 8 hours and 2x beyond 12.
• Spread-over limits: a cap on the total span of a shift including breaks, commonly 12 hours, stops a schedule being stretched around the daily trigger.
• Rest days and holidays: the FLSA requires no premium for weekend or holiday work unless those hours are themselves overtime. Many other markets do, often at a higher rate.
• Hours actually worked: only time on the job counts toward the US 40-hour threshold, so a 48-hour paid week containing 8 hours of holiday produces no overtime.

How do overtime rates differ by country?

There is no global overtime standard. The trigger, the multiplier, and whether a statutory premium exists at all vary by jurisdiction, so a policy written for one country will underpay in the next. The broad split is between markets that legislate a premium and markets that only cap the hours.

How is overtime pay calculated?

The multiplier is the simple part. The base it applies to is the regular or ordinary rate, which is usually wider than the stated hourly wage or basic salary. Having managed payroll and benefits for more than 2,000 employees, the correction we make most often is to that base, not the rate. The standard formula is:

Overtime pay = regular hourly rate x overtime multiplier x overtime hours

On a regular rate of 24 US dollars an hour, 5 overtime hours in a 45-hour week add 180 US dollars at the federal 1.5x rate, taking gross pay to 1,140 US dollars. India changes both inputs: a monthly salary is divided by 26 rather than 30, so an employee on 26,000 rupees (about 312 US dollars) a month in basic plus dearness allowance has an hourly rate of 125 rupees. At 2x, 10 overtime hours add 2,500 rupees (about 30 US dollars).

Two rules commonly widen that base. Under the FLSA the regular rate must include nondiscretionary bonuses, shift differentials, and commissions, not the hourly wage alone. In India the Code on Wages requires basic plus dearness allowance to reach at least 50 percent of total remuneration, and in January 2026 the Supreme Court held in Union of India v. Heavy Vehicles Factory Employees' Union that compensatory allowances such as house rent form part of the ordinary rate of wages. That judgment interprets the Factories Act, replaced by the OSH Code in November 2025, so treat it as persuasive rather than binding.

Who is eligible for overtime pay?

• Non-exempt employees: everyone the law does not specifically exempt. US exemption requires all three of a salary basis, at least 684 US dollars a week, and genuinely executive, administrative, professional, outside sales, or computer duties. Six states, including California and New York, set a higher floor.
• Highly compensated employees: a shortened US test applies above 107,432 US dollars a year, but it still requires at least one exempt duty. Pay alone does not remove the entitlement.
• Salaried staff: a salary is not an exemption. An employee who fails the duties test or falls below the threshold is non-exempt and owed overtime.
• Part-time employees: eligible on identical terms, because the threshold counts hours actually worked rather than contracted status.
• Independent contractors: outside overtime law in most markets, which is why misclassification is the costliest overtime mistake an employer can make.

Common employer pitfalls

• Using the base wage instead of the regular rate: leaving nondiscretionary bonuses, shift differentials, and commissions out understates every overtime hour, and the shortfall compounds across a year.
• Quoting a threshold that no longer exists: the 844 US dollars a week figure from the 2024 rule was vacated in November 2024, and the Department of Labor formally restored 684 US dollars a week on 14 May 2026.
• Averaging hours across weeks: the US workweek is fixed and stands alone, so a 45-hour week cannot be offset against a 35-hour one.
• Treating a job title as an exemption: titles decide nothing. Actual duties and authority do, and a manager badge on non-exempt work will not survive a wage claim.
• Paying overtime a cycle late: overtime falls due on the regular payday for the period in which it was earned, so an approval workflow that closes after payroll creates a breach.

Overtime is one of the few payroll items where the multiplier is simple and everything around it is not. The rate rarely causes disputes; the regular rate it applies to, the exemption test, and the trigger in each country do, and all three reset the moment a team crosses a border.

This information is for general guidance and is not legal advice. Overtime rules change and vary by jurisdiction, so confirm the current position for each country you employ in.