Setting up custom overtime and pay rules per employee, rather than relying solely on company-wide policies, offers greater flexibility and accuracy in payroll management. Managing pay rules, including overtime, holiday pay, night shifts, and weekend rates - can be complex, and a one-size-fits-all approach may not always be suitable. By tailoring these rules per employee, you can account for individual roles, contracts, and regional regulations. Let's take a closer look!
This article will cover:
How to Create Overtime & Pay Rules
To create a new pay rule, follow these steps:
Navigate to the Users tab found in the left sidebar, and access the Company Policies tab on the top right.
Enter the Overtime and Pay Rules tab, and switch to the Manage pay rules tab.
Here, you will see a default rule called Regular, for regular working hours. Click on Add Rule to create a new rule.
Give the rule a name, and if needed add a code such as WKND, x1.5, etc.
Next, set the rule type, either overtime or an additional hourly rate. For overtime, set the multiplier that the employee's base wage should be multiplied by. For Additional Rates, you can set it as either a fixed amount (Add a specific dollar amount per hour worked) or a multiplier (Apply a percentage-based increase on top of regular or overtime wages).
As an example, if your business needs to separate holiday pay from overtime, and users get paid 1.5X for holiday hours, you should set the Multiplier to 0.5 as the system calculates additional pay separately and adds it to the regular hourly rate. This would appear in a separate column in their timesheet, allowing for flexible hours classification, meeting specific payroll requirements and ensuring compliance with diverse labor policies.
Now, add the condition for when the overtime or pay rules apply. For example weekly, after 40 hours, and save the changes.
You also have the ability to choose an And/Or condition when setting up a rule.
For example, you can configure weekly rules specifically for weekends—allowing employers to apply higher pay rates if employees exceed their weekly hours during the weekend, or to offer increased overtime rates during holidays.
Please note: This applies to daily rules only!
When done, click on Save rule.
Overtime Conditions & Examples
Now that you know how to set up overtime and pay rules, let's go over all the different conditions that can be set and an example of each one.
The different conditions that can be set are:
Daily - applies when an employee works more than a specific number of hours per day. For example 1.5x after 8 hours per day on Monday- Friday. Note that you can create more than one daily rule therefore in addition to having 1.5x after 8 hours, you could also have 2x after 10 hours on all days. Another example of a daily condition is paying employees 1.5x if they work on Sunday.
Weekly - applies when an employee works more than a certain number of hours per week. For example +$20 per hour after 40+ hours per week.
Pay period - This applies when employees work a certain number of hours per payroll period. For example, 60 hours per pay period.
Partial day - applies when employees work specific hours of the day, such as Monday through Friday between 21:00 and 1:00.
Consecutive days - applies when employees work more than a certain number of days in a row, for example, after 8 hours on the 5th consecutive day.
Holiday - this applies to certain days of the year that are set in advance. For example, x2 for working on New Year's Eve (December 31st). When creating this policy you can choose to have it repeated every year.
Note that the pay period overtime is calculated based on the payroll period previously set in your time clock setting. To learn about setting your payroll period click here.
You will also have the option to limit the pay rule to certain Time Clocks, so that the pay rule will only be applied within these Time Clocks.
How to Set Overtime & Pay Rules per Employee
After you set up your overtime and pay rules in the company policies tab, you can now assign them to each user individually through their user profile! Simply follow these steps:
Enter the Users tab from the left sidebar, and access the relevant user's profile.
In the Employment tab, locate the Overtime & Pay Rules section.
Click on the three dots next to the policy that the user is already assigned to, and select update.
Here, you can select whether to assign the user to a company wide policy or to a specific rule. To learn more about setting up company-wide policies, make sure to check out this article!
To assign the user to a pay rule you created, select the option Assign specific rules, and click on Add rule.
Select the relevant rule, and click Continue.
Next, choose the effective dates for the new policy. The rule will take effect on the date you select at this step. Select a custom date or the employee's start date. Note, that this will replace the existing pay rules effective on this date.
When done, click Confirm!
To assign the pay rule to multiple users, you can create a policy through the policies tab, and assign it to the relevant employees in bulk. To learn more about creating policies, make sure to check out this article!
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