Overtime Cost as % of Payroll
Overtime pay as a percentage of total payroll, flagging unsustainable workload or understaffing
What is Overtime Cost as % of Payroll?
Overtime cost as a percentage of payroll is the share of total payroll paid as overtime. It shows how much extra labour is being bought through additional hours.
Some overtime is normal, but consistently high levels can signal understaffing, poor scheduling, higher cost and risk of burnout.
How this KPI is measured
- Function
- Human Resources
- Sub-function
- Compensation & Benefits
- Industry
- All Industries
- Type
- Lagging
- Impact
- Financial control
- Unit
- %
- Measurement frequency
- Monthly / Quarterly
- Formula
- (Total overtime pay / Total payroll cost) × 100
How to calculate it
Divide total overtime pay by total payroll cost, and multiply by 100.
For example, if overtime pay was 120,000 and total payroll was 2,000,000, the share is 6%.
Look at overtime by team and season, and compare with the cost of hiring additional staff.
Where it is used
Controlling labour cost
Spot excessive overtime.
Deciding on hiring
Compare overtime with new staff cost.
Protecting wellbeing
Find overworked teams.
How to improve it
Tips and common mistakes
- Persistent overtime is a workload signal, not just a cost.
- Follow working time regulations.
- Consider fatigue and safety.
More Human Resources kpi library
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