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How overtime should be calculated and taxed

Working time including overtime is regulated by the Basic Conditions of Employment Act and every employer in South Africa must regulate the working time of each employee;

What is “overtime worked”?  As per the Basic Conditions of Employment Act all hours worked in excess of the employee’s normal daily or weekly hours of work will be regarded as overtime hours.


Overtime is not compulsory and employees can refuse to work overtime on short notice, unless the employee contractually agreed to be available to work overtime on short notice. In circumstances where overtime work on short notice is required by the employer, fairness towards the employee must be taken into consideration. Despite the aforementioned an employee cannot refuse to work overtime if work was required to be carried out within normal working hours and an unexpected incident delayed the work for example a breakdown of equipment

The maximum normal working time for an employee below the threshold is 45 hours per week, the current threshold is R183008 per year. This would mean a maximum of nine hours in any day if the employee works for five days or fewer in a week and eight hours in any day if the employee works on more than five days in a week. The amount of normal time worked is a matter of contractual agreement between employer and employee.

The maximum permissible overtime as per section 10 of the Basic Conditions of Employment Act is 10 hours in any 1 week. As per the definitions of the Act a week means the period of seven days within which the working week of that employee ordinarily falls.  Employees earning below the threshold must be paid 1.5 times the normal wage rate for overtime worked except for Sundays. Overtime on a Sunday must be remunerated a double the normal wage rate.

Employers must also take into consideration that an agreement by the employee to work overtime that was reached during the first three months of employment, lapses after one year. The onus will therefore be on the employer to reconfirm the commitment of the employee to work overtime after a period of 12 months.

Employees who earn in excess of the present threshold amount are not subject to the provisions of overtime as set out in The Basic Conditions of Employment Act. This means that such employees cannot demand to be paid for overtime worked, nor can they demand to be granted paid time off. However contrary to popular belief, the employer also cannot force such employees to work overtime and cannot demand that they   overtime without compensation, unless the employee agreed to this.

Employees earning over the threshold amount must approach the employer, negotiate and reach agreement on how many normal hours and overtime work will be required from the employee. Once this has been established the parties must agree on remuneration for the overtime worked.

Your weekly/monthly tax credits are set against your full weekly/monthly pay. If you earn overtime or bonus pay etc., these amounts are included as part of your pay for that week or month. You do not get any additional tax credits against these additional earnings.