Under the Saudi Labor Law, overtime is paid at the hourly wage plus 50% of the basic hourly wage. The amended law also allows the two sides to agree on paid time off instead in some cases; check the current text of the Labor Law. Overtime is the time worked beyond normal working hours, which are 8 hours a day or 48 hours a week, reduced for Muslim workers during Ramadan to 6 hours a day or 36 hours a week. An overtime calculator simply applies this rule: it turns the monthly wage into an hourly wage, adds the premium on the basic part, and multiplies the result by the overtime hours. This guide walks through the same steps in words, so you can check any calculator, payslip or claim yourself.
What counts as overtime
Overtime is work the employer asks for, or accepts, beyond the normal working time the Labor Law sets:
- Daily limit. Normal working time is 8 hours a day when the establishment counts hours by the day.
- Weekly limit. It is 48 hours a week when the establishment counts hours by the week. Hours above the weekly limit are overtime even if no single day was long.
- Ramadan. For Muslim workers, normal working time during Ramadan falls to 6 hours a day or 36 hours a week. Hours above these lower limits during the month are overtime.
- Holidays and Eid. The Labor Law treats hours worked on holidays and Eid days as overtime. If staff work on their weekly rest day, check the current text and your work regulations for how those hours are paid.
The working-time rules of the Labor Law treat some categories of work and some senior roles differently. Before you treat a role as outside the overtime rules, check the current text on the website of the Ministry of Human Resources and Social Development; a job title alone does not settle it. Breaks for prayer, rest and meals are generally not counted as working time, so on their own they do not create overtime.
How to calculate overtime, step by step
A calculator does these steps for you, but each one hides a choice that changes the result. Work through them in order:
- Count the overtime hours. Compare the hours actually worked with the normal limit for that day or week: 8 hours a day or 48 a week, or 6 a day or 36 a week for Muslim workers in Ramadan. Only the hours above the limit are overtime. Use the approved timesheet, not memory.
- Identify the two wage figures. You need the basic wage and the wage the worker normally receives. The basic wage is the fixed amount in the contract before allowances. The fuller wage adds the allowances that form part of the wage under the contract.
- Turn the monthly wage into an hourly wage. Divide the monthly wage by the number of days your work regulations count in a month to get a daily wage, then divide the daily wage by the normal daily hours. Do this once for the wage the worker normally receives and once for the basic wage. Use the same method for every employee and write it into your policy.
- Work out the overtime hourly rate. The rate is the hourly wage plus 50% of the basic hourly wage. In other words, take half of the basic hourly wage and add it to the hourly wage.
- Multiply by the overtime hours. Multiply the overtime hourly rate by the number of overtime hours in the period. The result is the overtime pay for that period.
- Pay it with the wage. Add the amount to the payroll for the period and show it as a separate line on the payslip.
Which wage the calculation uses
Most disputes about overtime pay are about the wage base, not the hours. Two points matter:
- The premium is based on the basic wage. The extra 50% is calculated on the basic hourly wage only, not on allowances.
- The first part is the hourly wage. Employers differ on which allowances they include in the hourly wage for the first part of the formula. Read the overtime wording in the current Labor Law text and in your contracts, apply one method to everyone, and record it in the work regulations. If you are unsure, take advice before the method goes into payroll.
The conversion from monthly to hourly matters too. Two employers that count a different number of days in a month will reach different hourly wages from the same salary. Whichever method you use, it must not leave the worker with less than the Labor Law gives.
Using an overtime calculator
An online overtime calculator is useful for a quick check, but it is only as good as what you enter and the method behind it:
- Enter the basic wage and the full monthly wage separately. A tool that asks for a single salary figure cannot apply the rule correctly.
- Check which normal hours it assumes. Ramadan hours for Muslim workers and weekly counting both change the number of overtime hours.
- Check how it converts the monthly wage into an hourly wage, and compare that with your policy.
- Treat the result as a check, not as the payslip. The payslip should come from your payroll system and approved timesheets.
Records the employer should keep
If a worker claims unpaid overtime, the employer’s records are the main evidence. Keep the following for each worker:
- Working hours. The schedule of working hours and rest periods announced to staff, and the daily attendance record.
- Overtime approvals. Who asked for the overtime and when, and the worker’s agreement, preferably in writing.
- Hours worked. Start and end times for each overtime period, approved by the manager.
- The calculation. The wage figures, the hourly rates and the method used to reach them.
- Proof of payment. The payslip line and the payroll file submitted for wage protection through Mudad.
The Labor Law and its regulations set rules on keeping records of working hours and overtime. Check the current text for what applies to your establishment, and keep the records for as long as a claim could be raised.
Common mistakes
- Applying the premium to the wrong base. Calculating the extra 50% on the full wage costs the company more than the law requires; calculating the whole rate on the basic wage alone may underpay the worker, depending on what the hourly wage should include.
- Ignoring the weekly limit. Checking only daily hours misses overtime that builds up across the week.
- Forgetting Ramadan. Keeping normal hours for Muslim workers in Ramadan without counting the extra time as overtime.
- A fixed overtime allowance that does not match the hours. A flat monthly amount is risky if it falls below what the actual hours would earn. Reconcile it with the timesheets.
- No written approval. Overtime that was never approved, but was clearly worked and accepted, is still hard to deny. Control it in advance.
- Different methods for different staff. Counting one number of days in a month for some workers and another for others invites complaints.
- Weak records. Without timesheets and approvals, the employer has little to answer a claim with.
Frequently asked questions
How is overtime calculated in Saudi Arabia?
Is overtime calculated on the basic salary or the total salary?
How many hours are normal before overtime starts?
Can an employer refuse to pay overtime that was not approved in advance?
Next steps
Write your overtime method into the work regulations, check that your payroll system applies it, and train managers to approve overtime before it is worked. Innovant’s payroll and HR advisors can review your method and records against the Labor Law.
Book a free consultation with an Innovant advisor.
