Overtime pay: 4 steps before payroll

Calculating and approving overtime before payroll takes four steps: a written request before the extra hour, a record of actual hours day by day, the pay worked out as the law sets it, and approval before payroll closes. The calculation itself comes from Article 107 of the Saudi Labor Law: an overtime hour is paid at the hourly wage plus 50% of the basic wage, and every hour worked on holidays and Eid days counts as overtime.

This follows the payroll review lesson: there you asked for the reason behind every change from last month; here you prepare the evidence for the most common change before it reaches payroll.

When does an hour become overtime?

Article 98 sets the normal limit: eight hours a day if the business uses the daily standard, or forty-eight hours a week if it uses the weekly standard. During Ramadan, for Muslim workers, it is six hours a day or thirty-six a week. Anything above the standard your business uses is overtime. So first confirm which standard you use, daily or weekly, because the answer changes how many overtime hours the same week produces.

The four steps

1. A written request before the hour, not after

An overtime hour nobody asked for reaches payroll with no basis. Keep the rule simple: the branch manager requests it in writing, naming the employee, the date, the expected hours and the reason. One message is enough, as long as it comes before the work.

2. Record actual hours day by day

The request says how many hours are expected; the attendance record says how many were actually worked. Record actual hours the same day, not at month end when nobody remembers. Mark holiday and Eid hours separately, because all of them are overtime.

3. Calculate the pay as the law sets it

Overtime hour = hourly wage + 50% of the basic hourly wage. With the employee's consent, the same Article 107 allows paid compensatory leave days instead of the pay. If you choose leave, record the consent, and never give both pay and leave for the same hours.

4. Approve before payroll closes

Total each employee's hours for the month, match every line to its request and record, then approve the total before payroll is prepared. An hour with no request is not rejected automatically; it goes back to the branch manager to confirm or reject in writing.

A WhatsApp example

A shop has a salesperson whose basic hourly wage is SAR 20, with no allowances, who worked extra hours during a sale season. Before payroll is prepared, the owner writes:

Owner: How many overtime hours for the salesperson this month?

System: 10 hours recorded. 8 have a written request from the branch manager; 2 hours last Thursday have none. The overtime rate is SAR 30 an hour: 20 for the hourly wage and 10 for half the basic hourly wage. Approved so far: 8 hours, SAR 240.

Owner: Ask the branch manager about the Thursday hours

System: Sent. I will add them to payroll if the manager confirms in writing; if they are rejected, I will record the reason.

Once the manager confirms, the total becomes 10 hours and SAR 300, and it appears on payroll as a line with evidence behind it. More on following staff and branches from the same chat in running your business over WhatsApp.

Overtime checklist

Step	Question	Evidence
Request	Did someone ask for this hour before the work?	A message or form from the manager with date and reason
Record	How many hours were actually worked above the standard?	Attendance record from the same day
Calculation	Was 50% of the basic hourly wage added?	The Article 107 formula on every line
Alternative	Did the employee choose compensatory leave instead?	Their written consent
Approval	Was the total approved before payroll was prepared?	Approval by the person with authority

Common mistake: hours are said, not written

At month end an employee says they stayed late on several days, and the manager confirms from memory. Either an amount is paid that nobody can trace, or an employee who really worked loses what they are owed. A written request and a daily record protect both sides, and approval goes through whoever holds the authority, as in the approval chain lesson.