Free calculator

Overtime cost calculator

Regular overtime is one of the most expensive ways to cover work. Work out its annual cost, how many full-time roles it adds up to, and what the same hours would cost at the base rate.

Overtime cost = hours × hourly rate × multiplier × (1 + on-costs)

Your numbers

Annual overtime cost £51,840

Overtime hours per year
1,920
Equal to full-time roles
1.1
Premium paid above base rate
£17,280
Same hours as employed staff
£37,440

The hiring comparison pays new staff for 52 weeks (holiday included) at the base rate, but excludes recruitment and training costs.

What overtime really costs

Occasional overtime is a sensible way to absorb peaks. Regular overtime is different: every hour is paid at a premium, and the hours often add up to a full-time role that is never budgeted as one. The calculator shows both numbers side by side.

Worked example

  1. 40 overtime hours a week across the team, 48 weeks a year: 1,920 hours.
  2. Cost: 1,920 × £15 × 1.5 × 1.20 on-costs = £51,840.
  3. One full-time person works 37.5 × 48 = 1,800 hours, so the overtime equals 1.07 full-time roles.
  4. Employing 1.07 people at the base rate, paid for 52 weeks: 1.07 × 37.5 × 52 × £15 × 1.20 = £37,440.
  5. The gap of about £14,400 a year is what the overtime premium costs over hiring, before recruitment and training.

Before you cut overtime, find its cause

DriverHow to spot itTypical fix
Open rolesOvertime rises in the team with vacanciesFill the role; overtime is the cost of the delay
Absence coverOvertime follows absence spikesAddress absence patterns, plan cover earlier
Shift designSame shifts run over every weekAdjust shift length or start times
Demand peaksOvertime clusters by season or dayFlexible or seasonal staffing

To check whether absence is behind your overtime, use the cost of absence calculator. To see overtime explained by cause for every team automatically, see labour cost insights.

Frequently asked questions

How do you calculate the cost of overtime?

Multiply the overtime hours by the base hourly rate and the overtime multiplier (for example 1.5 for time and a half), then add employer on-costs. For example, 1,920 overtime hours a year at £15 an hour, time and a half, with 20% on-costs, cost 1,920 × 15 × 1.5 × 1.2 = £51,840.

Is overtime cheaper than hiring?

Not usually, once overtime is regular. Overtime is paid at a premium on every hour, while a new hire is paid the base rate, although they also need recruitment, training and paid holiday. If overtime adds up to close to one full-time role every week of the year, compare both costs before deciding.

How many overtime hours equal one full-time employee?

Divide your annual overtime hours by the annual hours of one full-time contract. With a 37.5-hour week over 48 working weeks, one full-time employee works about 1,800 hours a year, so 1,800 overtime hours is roughly one full-time role.

What causes high overtime?

The usual drivers are open roles covered by the existing team, absence cover, shift patterns that do not match demand, and seasonal peaks. Knowing which one is behind your overtime matters, because each needs a different fix. TeamzMate links overtime to its causes using attendance, schedules and HR data.

Should overtime include employer on-costs?

Yes. Employer social security or National Insurance contributions and, in many cases, pension contributions apply to overtime pay as well, so leaving them out understates the real cost. Use the on-cost percentage from your own payroll.

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See these numbers calculated for you, every week.

TeamzMate reads your attendance, schedules and payroll hours and explains absence, overtime and labour cost automatically, in plain words.

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