Definition: Time and a-half is a term regularly used to state the cost of overtime work. Simply put, it means that the pay rate is 1.5 times the regular rate.
What Does Time and a Half Mean?
Time and a-half is a concept used more commonly in hourly payments. With hourly employees, and in some cases with salaried ones, the time and a-half rate is employed when they do overtime work or they work in the holidays. This term indicates that the rate increases by 1.5 times the regular one, since this is additional, off-the-schedule, type of work.
The additional half is known as the overtime or the holiday’s premium, because it is an extra that has to be paid in these particular scenarios. This concept of time and a-half might not be applicable in every country because work legislations will determine what would be the actual premium that has to be paid for overtime or holiday’s work.
Here’s an illustration of this concept.
Example
Mr. Fergusson works in a factory that produces toothpaste. He was hired as an hourly employee and he earns $15 an hour. He has a full-time contract that allows him to work 8 hours a day for 5 days a week. This means he has to work a maximum of 40 hours a week. Today, his boss offered him to work 2 more hours a day because there’s a lot of demand and the company needs to increase its production levels. Mr. Fergusson’s boss told him that he would get a time and a-half rate for each of these 2 additional hours worked. What would be the hourly rate Mr. Fergusson will get for these overtime hours?
According to our previously discussed concept, a time and a-half rate means that the employee will get 1.5 times its current hourly rate for each overtime hour. What this means is, that Mr. Fergusson will get $22.5 for each additional hour worked, this means a total of $45 a day for this 2 additional hours.
