How to calculate employee overtime pay in the UK
Overtime pay in the UK depends on the contract. Here's how to work out what you owe your team.
Written by Naomi Lai— Small business & finance writer. Read Naomi's full bio
Published Thursday 24 September 2026
Table of contents
Key takeaways
- UK employers don't have to pay a premium for overtime, but average pay across all hours can't drop below the National Minimum Wage.
- Overtime rates like time and a half are set by the employment contract, not by law, and time and a half means 150% of the normal hourly rate.
- You can work out overtime pay by finding the normal hourly rate, applying the contractual multiplier, then multiplying by the overtime hours.
- Regular overtime has to count towards holiday pay, so it's worth tracking every extra hour your team works.
What is overtime pay?
Overtime is any time an employee works beyond their normal contracted hours. Overtime pay is what you pay them for those extra hours, and how you pay it depends entirely on the employment contract.
Some contracts pay a higher rate for overtime, some pay the normal rate, and some don't pay for it at all. Because there's no single legal standard for overtime pay in the UK, your contract is the starting point for every calculation you'll make.
Do employers have to pay overtime in the UK?
There's no legal requirement to pay a premium rate for overtime in the UK. You don't have to pay time and a half or double time unless the contract says so.
The one firm rule is that an employee's average pay across their total hours can't fall below the National Minimum Wage. So if someone works extra hours for no extra pay, you need to check that their overall average still clears the legal floor.
The overtime rules UK employers follow come from the contract rather than statute. You can read the government's position on overtime and employee rights and get practical guidance from Acas on pay for working extra hours before you set your own terms.
Types of overtime
Contracts tend to describe overtime in one of four ways, and the terms affects whether an employee can turn the hours down. The official NIDirect guidance on overtime covers guaranteed, non-guaranteed, and voluntary overtime, and here are the main types you'll come across:
- Compulsory overtime: The contract requires the employee to work extra hours when you ask, and they have to agree.
- Voluntary overtime: You offer the extra hours, and the employee can accept or decline them.
- Guaranteed overtime: You commit in the contract to offering a set amount of overtime, and you have to provide it.
- Non-guaranteed overtime: You're not obliged to offer overtime, but the employee must work it if you do.
Setting out which type applies protects both sides and keeps expectations clear. It also helps you plan cover for busy periods without disputes over who has to work.
Common overtime pay rates
Overtime rates are contractual conventions rather than legal minimums, so you can set what works for your business. Three approaches come up most often:
- Time and a half: The employee earns 150% of their normal hourly rate.
- Double time: The employee earns 200% of their normal rate, often reserved for bank holidays or unsocial hours.
- Flat rate: The employee earns their normal hourly rate with no uplift for the extra hours.
Whichever rate you choose, write it into the contract so there's no confusion later. Time and a half rewards extra effort while staying manageable for a small team.
How to calculate overtime pay
Once you know the rate from the contract, working out overtime pay is straightforward arithmetic. Follow these steps to get the figure for any pay period.
- Find the employee's normal hourly rate or, if they're salaried, divide their annual salary by the number of hours they work in a year.
- Confirm the overtime multiplier from their contract, for example, 1.5 for time and a half or 2 for double time.
- Multiply the normal hourly rate by the multiplier to get the overtime hourly rate.
- Count the number of overtime hours worked in the pay period.
- Multiply the overtime hourly rate by the overtime hours to get the total overtime pay.
Here's a worked example. Say an employee earns £13 an hour, and their contract sets overtime at time and a half. Their overtime rate is £13 x 1.5, which is £19.50 an hour. If they work six overtime hours in a week, their overtime pay is £19.50 x 6, or £117.
To see the full weekly picture, add their normal pay back in. If they worked 37 normal hours at £13, that's £481, plus the £117 of overtime, giving a weekly total of £598. Running the calculation this way keeps your records clean and your payslips accurate.
Overtime and the National Minimum Wage
Even when overtime is unpaid or paid at a flat rate, an employee's average hourly pay across all the hours they work has to stay at or above the legal minimum wage.
The rates that apply in the current 2026/27 tax year are:
- 21 and over: £12.71 an hour, the National Living Wage
- 18 to 20: £10.85 an hour
- Under 18: £8.00 an hour
- Apprentice: £8.00 an hour
To run the compliance check, add up an employee's total pay for the period and divide it by their total hours, including overtime. If the result sits below their age-band rate, you'll need to top it up. You can confirm the current figures on the National Minimum Wage rates page.
The 48-hour working week and overtime
Overtime also has to fit within the working time limits. Most workers can't be made to work more than 48 hours a week on average, normally worked out over a rolling 17-week period.
An adult worker can choose to opt out of the 48-hour limit, but the choice has to be theirs, and it needs to be in writing. Under-18s can't opt out, and they're limited to eight hours a day and 40 hours a week.
Because the limit is an average, a busy week of overtime is fine as long as quieter weeks bring the 17-week figure back down. Keeping accurate hours records is the simplest way to show you're within the maximum weekly working hours.
Overtime and holiday pay
Regular overtime has to be included in holiday pay, so you can't leave it out when you work out what someone earns on leave. If overtime is a normal part of an employee's pay, their holiday pay should reflect it.
"Regular" means overtime worked often enough to form part of the employee's usual earnings, rather than a one-off extra shift. A common approach is to average the overtime over a recent reference period and fold that into the holiday rate.
Getting this right matters because underpaying holiday can lead to claims. Tracking overtime consistently through the year makes the holiday calculation far easier when it comes around.
Simplify overtime pay with Xero payroll
Working out overtime by hand across a growing team eats into time you'd rather spend running the business. Payroll software handles the multipliers, minimum wage checks, and holiday pay in the background, so extra hours flow straight through to accurate payslips.
You can record overtime hours, apply the right rate, and keep the records you need for working time limits in one place. See how Xero payroll software can take the manual admin out of every pay run.
FAQs on overtime pay
Here are quick answers to the questions employers ask most often about overtime pay.
Do you get paid overtime in the UK?
Only if the employment contract says so, because there's no automatic legal right to overtime pay. The single limit is that average pay across all hours must meet the National Minimum Wage.
Is overtime paid after 40 hours in the UK?
No, the UK has no 40-hour threshold that triggers overtime pay. Overtime and its rate are defined by the contract, not by a fixed weekly hours figure.
How is overtime calculated in the UK?
You multiply the employee's normal hourly rate by the overtime multiplier set in their contract, then multiply that by the number of overtime hours worked.
Can an employee refuse to work overtime?
It depends on the contract. An employee can decline voluntary overtime but usually has to work compulsory or non-guaranteed overtime. You still can't require hours that would breach the 48-hour weekly limit.
Get one month free
Purchase any Xero plan, and we will give you the first month free.