# Payroll Shift Codes Overtime Calculation

## TechKnowledge Content

Issue

How does Dynamics calculate overtime when employees are paid using several shift codes attached to their regular pay code in the same pay run?

Resolution

Dynamics will calculate overtime on an average rate of the total amount the employee was paid. Automatic overtime is set at 80 hours and a factor of 1.5.This can be set under Setup | Payroll | Payroll.

Employee was paid 30 hours with regular hourly pay code, \$10/hour.

Employee was paid 60 hours with regular hourly pay code, and a shift code of \$10 attached to that transaction for a rate of \$20/hour.

Employee was paid 10 hours with regular hourly pay code, and a shift code of \$20 attached to that transaction for a rate of \$30/hour.

The system will calculatea total of 100 hours so 20 should be allocated to overtime.It takes a percentage of hours from each transaction. In this case, it’s going to take 20% (20 out of 100) of the hours entered from each transaction for overtime hours.

Of 30 hours, 6 are overtime.Of 60 hours and 10 hours, 12 and 2 are overtime hours respectively.

It also calculates at what rate to calculate those 20 hours.The system has already calculated 80 hours at a total pay of \$1440.

(24 hrs. at \$10, 48 hrs. at \$20, and 8 hrs. at \$30)

Using an average rate (\$1440/80=\$18), it takes \$18 times the 1.5 factor for an overtime rate \$27.

To summarize this example:

24 hours at \$10/hr

48 hours at \$20/hr

8 hours at \$30/hr

20 hours at \$27/hr (overtime)