Set up overtime

 

This article explains how to set up overtime for various working schedules. If you want to pay out overtime, remove a time entry, or convert overtime to time off, take a look at our article on Managing Overtime.

 

Setting up Overtime Policies

You can individually activate the counting of overtime for your individual working hour schedules through Settings > Work Hours and Absences > Attendance. All hours worked and recorded exceeding the number of hours defined in the working hour schedule count as overtime.

Once you have activated overtime counting, Personio offers you four different calculation options for overtime to be calculated:

  • on a weekly basis,
  • on a daily basis without deficit hours activated,
  • on a daily basis with deficit hours activated, and
  • on a daily basis with automatic deficit hours activated.

For each working hour schedule, it is also possible to enter a contractually agreed number of compensated overtime hours. Overtime worked exceeding this may be compensated based on the monthly salary or converted into vacation days.

 

1. Calculation of Overtime Based on Weekly Working Hours

overtime-weekly-hours_en-us.png

If you choose to calculate overtime on a weekly basis, your employees' deficit and overtime hours will be settled every week. However, the balance of overtime hours cannot be negative; the minimum shown is always 0 hours.


2. Calculation of Overtime Based on Daily Working Hours (Without Deficit Hours)

overtime-daily-basis_en-us.png

If you choose to calculate overtime on a daily basis, the daily overtime is credited to the overtime account. 

If you do not activate the Track deficit hours option, the deficit hours will not be automatically recorded. 

You will need to manually enter the respective deficit hours (negative balances) through Employee profile > Attendance > Overtime & Deficit Hours > More details > Edit balance. Once the deficit hours have been entered into the employee's Attendance tab, their overtime hours will be recalculated.

 

3. Calculation of Overtime Based on Daily Working Hours (With Deficit Hours)

overtime-daily-min_en-us.png

If you choose to calculate overtime on a daily basis, but to also activate the Track deficit hours option, the deficit hours will be automatically recorded for days with time tracked.

You will not need to manually enter the deficit hours into the employee profile. Instead, a deficit time entry will be automatically created for those days in which the employee registered a shorter period of time than the one appearing in their work schedule. 

This way, every time the employee registers fewer hours than they should on a workday, their overtime hours will be automatically recalculated.

 

4. Calculation of Overtime Based on Daily Working Hours (With Automatic Deficit Hours)

overtime-daily-minus_en-us.png

If you choose to calculate overtime on a daily basis, and to also activate both options for deficit hours, the deficit hours will be automatically recorded for days with time tracked but also for days with no time tracked at all.

You will not need to manually enter the deficit hours into the employee profile. Instead, a deficit time entry will be automatically created for those days in which the employee was supposed to work according to their work schedule but did not track time on.

This way, every time the employee does not track time on a workday, their overtime hours will be automatically recalculated.

Note
If you activate this option for an existing work schedule, deficit hours will be created for every workday in the past with no time tracked by the employees. Likewise, if you activate this option for a new work schedule, deficit hours will start getting generated straight away. That is why we recommend that:

▶︎you only activate automatic deficit hours once your employees are actively tracking hours.
▶︎ you select Create duplicate working schedule when saving the work schedule, to save the updates on a copy of the work schedule that will be automatically assigned to the same employees.

Note
To avoid deficit hours from appearing in an absence, go to Settings > Work Hours and Absences > Absences > [Any absence type] and activate the Consider time tracked during absences of this type as overtime? option.

Effects on the Overtime Account

The following example illustrates the three different configurations for a part-time employee with a contract for 20 weekly working hours to clarify the various options for recording overtime:

Day of the week Target hours Actual hours Weekly calculation Daily calculation Daily calculation incl. deficit hours
Monday 4 hrs 4 hrs +/- 0 hrs +/- 0 hrs +/- 0 hrs
Tuesday 4 hrs 1 hr -3 hrs +/- 0 hrs -3 hrs
Wednesday 4 hrs 5 hrs +1 hr +1 hr +1 hr
Thursday 4 hrs 4 hrs +/- 0 hrs +/- 0 hrs +/- 0 hrs
Friday 4 hrs         4 hrs        +/- 0 hrs     +/- 0 hrs      +/- 0 hrs       
  20 hrs 18 hrs 0 hrs overtime 1 hr overtime - 2 hrs deficit

In the above example, the employee worked two hours less during the week than required. However, these deficit hours are only recorded if the third calculation method is applied. When tracking working hours but not deficit hours on a daily basis, the employee is even credited with one hour of overtime. If an employee works more than the contractually agreed working hours during the week under review, there is no difference between the weekly calculation and the daily calculation with deficit hours:

Day of the w eek

Target hours

Actual hours Weekly calculation Daily calculation Daily calculation incl. deficit hours
Monday 4 hrs 4 hrs +/- 0 hrs +/- 0 hrs +/- 0 hrs
Tuesday 4 hrs 1 hr -3 hrs +/- 0 hrs -3 hrs
Wednesday 4 hrs 7 hrs +3 hrs +3 hrs +3 hrs
Thursday 4 hrs 6 hrs +2 hrs +2 hrs +2 hrs
Friday 4 hrs 4 hrs         +/- 0 hrs +/- 0 hrs +/- 0 hrs
  20 hrs 22 hrs 2 hrs overtime 5 hrs overtime 2 hours overtime

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