Step 6.3. Create Overtime/Deduction Rate/Daily Rate Formula

Note: Please be informed this article also refers to the step on how to create Deduction Rate and Daily Rate Formula. You will just need to replace the Overtime keyword in the steps to Deduction Rate/Daily Rate if you are creating Deduction Rate/Daily Formula.

To set up the Overtime Policy, you need to create the Overtime Formula first. In short, creating Overtime Formula is for you to decide how the wages of Overtime will be calculated, it can be a fixed rate or combination of some mathematical formula. 

This section will guide you through on setting up an Overtime Formula. Here are the steps.

Step 1 ,2 & 3: Go to Payroll - > Overtime Setting - > Overtime Formula Setting.

Step 4: Click on 'Create' button to create a new formula, 

Step 5: Enter the name of the Overtime Formula that you are creating here in the column 'Formula Name'. Since you may need to create more than one formula, it will be good to think ahead and assign meaningful names to each of the formula. 

Step 6: If you want to set a Fix Amount for the Overtime, then tick the box and enter the value in the column. 

Note: once you tick the box and enter a value, it doesn't matter what you enter in the formula setting below, the system will only take this fixed amount for this Overtime

. 

If you do not want to use a Fixed Amount, then you can use the generic mathematics formula here to calculate the OT Rate. The drop down is list of Calendar for you to choose from. You also choose whether you are going to use Basic Salary, Overtime Wages, or both, to calculate the Overtime Rate. Just try the formula out and you should be able to find the right formula for your Overtime Policy. 

 

Picture below tells that the mathematics formula will take the value of Basic Salary from the system, but you can set a different value to be used "Basic" here.

For example. Company A might have an Overtime Policy where the Overtime Hourly Rate is 2 times of normal working hour, but the Basic Salary used to calculate the Overtime is a flat rate of RM1500 for everyone, instead of taking everybody's actual Basic Salary.

Hence, once you enter the value in the column of 'Basic Ceiling', this value will be used as the 'Basic' in the Overtime Formula, regardless of the actual value of Basic Salary.

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