Overtime Cost Calculator
Calculates overtime costs by employee and department, computes the OT-to-total-hours ratio, and shows the budget impact of overtime versus hiring additional staff. Designed for teams where overtime is a significant and potentially controllable expense.
HR - Overtime Cost Calculator.xlsx
Excel (.xlsx) — No macros — Works in Excel, Google Sheets, LibreOffice
What This Spreadsheet Solves
- Overtime costs are buried in payroll and not tracked separately
- No visibility into which departments or employees drive the most OT
- Cannot determine if hiring is cheaper than continued overtime
- OT ratio is unknown, making it impossible to set reduction targets
- Budget overruns from unplanned overtime are not flagged early
Who This Is For
- HR managers monitoring labor costs
- Operations managers with hourly workforces
- Finance controllers tracking payroll variances
- Department heads managing shift-based teams
Inputs
- textEmployee Name / ID
- textDepartment
- $Regular Hourly Rate
- #Regular Hours Worked
- #Overtime Hours Worked
- #OT Multiplier
Outputs
- Overtime cost per employee
- Total overtime cost by department
- OT ratio (OT hours / total hours)
- Cost premium from OT vs. straight time
- Break-even point: OT cost vs. new hire cost
How Calculations Work
Overtime cost per employee is OT Hours * Regular Rate * OT Multiplier. The OT ratio is OT Hours / (Regular Hours + OT Hours). The cost premium is the difference between actual OT cost and what those hours would cost at straight time. The break-even analysis compares annualized OT cost against the fully loaded cost of an additional hire.
Example Use Case
Scenario: A warehouse team of 8 workers: regular rate $22/hour, 160 regular hours/month each, averaging 25 OT hours/month each at 1.5x multiplier.
Result: Monthly OT cost per employee: $825. Department OT total: $6,600/month ($79,200/year). OT ratio: 13.5%. Cost premium: $2,200/month over straight time. A new hire at $55,000 fully loaded breaks even at 14 OT hours/month per current employee.
What You Get — 5 Sheets
Technical Details
Frequently Asked Questions
What OT multiplier should I use?
1.5x is standard in the US for hours over 40/week. Some jurisdictions require 2x for holidays or double-time thresholds. Enter the applicable multiplier per employee.
How is the break-even hire calculation done?
The model divides the fully loaded cost of a new hire by the OT premium rate. If total annual OT cost exceeds the new hire cost, hiring is cheaper.
Can I track OT trends over time?
Yes. Add a month column to the INPUT sheet. The OUTPUT sheet will show month-over-month OT trends by department.
Should I include salaried employees?
Only if they receive OT pay. Exempt salaried employees do not generate OT cost, so including them would distort the OT ratio.
What is a concerning OT ratio?
Sustained OT ratios above 10-15% often indicate understaffing. The CONFIG sheet lets you set a threshold for automated flagging.
Download Overtime Cost Calculator
Ready to use immediately. Enter your data in the INPUT sheet, see results in OUTPUT.