This is the amount over and above the normal hourly rate that employees are paid for
overtime hours worked. It is common to be paid an enhanced rate for any overtime
hours worked, for example, an individual may be paid £20 per hour and any overtime
hours worked can be paid at time and a half rate, this means that the person will get
£30 per hour for the additional hours worked over and above the contract hours. In
this case, the overtime premium is £10 on each additional hour worked over the
contract hours.
Illustration:
PPL Ltd pays a time rate of £15/ hr to its direct labour for a standard 35-hour week.
Any of the labour force working in excess of 35 hours is paid an overtime rate of time
and a quarter. Calculate the gross wage per week for the workers.
