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Saudi Overtime Calculation: the Correct Formula
Overtime is one of the most miscalculated payments in Saudi Arabia — not because the rule is complicated, but because the real formula has been replaced in many workplaces by two wrong simplifications. This page sets the record straight: the correct Article 107 formula, why the popular versions are wrong, and three worked examples you can check against your own payslip.
The correct formula (Article 107)
Article 107 of the Saudi Labor Law (Royal Decree M/51) says an overtime hour is paid at:
Overtime hour pay = hourly ACTUAL wage + 50% of hourly BASIC wage
Two definitions matter here:
- Basic wage — your base salary, without allowances.
- Actual wage — basic wage plus the fixed allowances you regularly receive (housing, transport, and similar).
So the formula uses both numbers: your actual wage at 100%, plus half of your basic wage on top.
2025 amendment: the employer may now, with the worker’s consent, grant paid compensatory leave days instead of overtime pay — the implementing regulations set the details. Without your agreement, overtime must still be paid in money per the formula above.
The two wrong versions people publish
Many payroll departments and blog posts use one of these simplifications instead of the real formula:
| Published simplification | What it pays | Problem |
|---|---|---|
| 125% of actual wage | 1.25 × hourly actual wage | Underpays whenever you receive allowances — it drops the extra 50% of basic entirely and just adds a flat quarter. |
| 150% of basic wage | 1.50 × hourly basic wage | Underpays whenever you receive allowances — it ignores your allowances completely. |
Both are approximations that only match the real formula in one special case: when you receive no allowances at all, your actual wage equals your basic wage, and the correct formula genuinely simplifies to 150% of the hourly wage. Everywhere else, they pay less than Article 107 requires.
The 240-hour hourly conversion
The statute gives the formula in hourly terms, so your monthly wage must be converted to an hourly rate. The standard convention is:
Hourly wage = monthly wage ÷ 240
240 comes from 8 hours × 30 days. Note that this is a widely used convention, not a statutory rule — the law itself does not fix this divisor. Confirm with your employer or HRSD how your company applies it.
3 worked examples
Example 1 — worker with allowances (the common case)
Basic salary SAR 4,000/month + housing and transport allowances totaling SAR 1,000/month → actual wage SAR 5,000/month. 10 overtime hours worked.
| Step | Calculation | Result |
|---|---|---|
| Hourly basic wage | 4,000 ÷ 240 | SAR 16.67 |
| Hourly actual wage | 5,000 ÷ 240 | SAR 20.83 |
| Overtime hour pay | 20.83 + (0.5 × 16.67) | SAR 29.17 |
| 10 overtime hours | 10 × 29.17 | SAR 291.67 |
Compare the wrong versions: 125% of actual = 1.25 × 20.83 = SAR 26.04/hr (SAR 260.40 total); 150% of basic = 1.50 × 16.67 = SAR 25.00/hr (SAR 250.00 total). The correct formula pays SAR 31–42 more for those 10 hours.
Example 2 — no allowances (the 150% exception)
Basic salary SAR 6,000/month, no allowances → actual wage also SAR 6,000/month. 8 overtime hours worked.
| Step | Calculation | Result |
|---|---|---|
| Hourly wage (basic = actual) | 6,000 ÷ 240 | SAR 25.00 |
| Overtime hour pay | 25.00 + (0.5 × 25.00) | SAR 37.50 |
| 8 overtime hours | 8 × 37.50 | SAR 300.00 |
Here the correct answer is exactly 150% of the hourly wage — the one case where the popular figure is right.
Example 3 — higher-paid worker with large allowances
Basic salary SAR 9,000/month + allowances SAR 3,000/month → actual wage SAR 12,000/month. 20 overtime hours worked.
| Step | Calculation | Result |
|---|---|---|
| Hourly basic wage | 9,000 ÷ 240 | SAR 37.50 |
| Hourly actual wage | 12,000 ÷ 240 | SAR 50.00 |
| Overtime hour pay | 50.00 + (0.5 × 37.50) | SAR 68.75 |
| 20 overtime hours | 20 × 68.75 | SAR 1,375.00 |
Compare: 125% of actual = SAR 1,250.00; 150% of basic = SAR 1,125.00. The gap grows with your allowances — SAR 125–250 underpaid for these 20 hours under the wrong versions.
Checking your payslip
- Find your basic salary and your total fixed allowances on your contract or payslip.
- Convert both to hourly rates: monthly ÷ 240.
- Apply the formula: hourly actual + 50% of hourly basic.
- Multiply by your recorded overtime hours and compare with what was paid.
- If there is a gap, ask your employer — in writing — which formula they used.
Frequently asked questions
What is the correct overtime formula in Saudi Arabia?
Article 107 of the Saudi Labor Law sets the overtime rate as the hourly actual wage plus 50% of the hourly basic wage. So if your hourly actual wage is SAR 20 and your hourly basic wage is SAR 16, one overtime hour pays SAR 28.
Is overtime in Saudi Arabia 125% or 150% of salary?
Neither is the statutory formula. Some employers simplify overtime to 125% of the actual wage or 150% of the basic wage. The real Article 107 formula — hourly actual wage plus 50% of hourly basic wage — gives a different (usually higher) figure whenever you receive allowances.
How do I convert my monthly salary to an hourly rate for overtime?
The common convention is monthly wage divided by 240 standard working hours (8 hours × 30 days). This is a widely used convention, not a rule written in the statute, so confirm with your employer or HRSD how your company applies it.
What is the difference between basic wage and actual wage?
Your basic wage is your base salary without allowances. Your actual wage is the basic wage plus fixed allowances you regularly receive, such as housing and transport. The distinction matters because the Article 107 formula uses both: actual wage at 100%, basic wage for the extra 50%.
What if I get no allowances — how does the overtime formula work?
If you receive no allowances, your actual wage equals your basic wage, and the Article 107 formula simplifies to 150% of your hourly wage. That is the one case where the popular 150% figure is actually correct.
Can my employer give me time off instead of overtime pay?
Since the 2025 amendment, yes — but only with your consent. The employer may grant paid compensatory leave days in lieu of overtime wages if you agree; the regulations set the details. Without your agreement, overtime must be paid in money per the Article 107 formula.
How can I check whether my employer paid my overtime correctly?
Work out your hourly actual wage and hourly basic wage using monthly ÷ 240, apply the Article 107 formula, and multiply by your overtime hours. Compare the result with your payslip line by line. If there is a gap, ask your employer for the calculation method in writing.