Page 91 - Accountancy_F5

This calculation takes into account that most months have more than 4 weeks (4 weeks
x 5 workdays/week = 20 workdays). Therefore, 176 hours instead of 160 hours is
considered to provide a more accurate representation of a full-time work schedule over
the course of a month, representing a total of 22 days. Overtime hours are those that an
employee works in excess of these agreed-upon standard hours.
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Typically, the rate for overtime work exceeds the rate paid for standard working hours.
Overtime payment is the additional compensation provided to employees who have
worked beyond these normal hours during a specific period. This is typically applicable
to employees who are compensated on a time basis. In Tanzania, the standard factors
applied to calculate the minimum overtime payments are 1.5 (150%) for weekdays and
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2.0 (200%) for weekends and holidays. The overtime amount is computed using these
factors, applied to the employee’s base pay rate and the number of overtime hours
worked. This ensures that employees are adequately compensated for their additional
time and effort, and it encourages compliance with labour laws and regulations. It also
contributes to employee satisfaction and retention by recognizing and rewarding extra
work. Overtime compensation can be determined using the following formula:

Basic pay
Overtime payment = # Factor # Overtime hours worked
Hours per period (176 hours )
Note: Normal hours rate # Factors # Overtime hours worked
• Standard factors are: - 1.5 for weekdays
- 2.0 for weekends and holidays
• Working hours per month: - Total working days per month are assumed to be
22 days. Thus, hours per month = 8 hours per
day# 22 days = 176 hours

Example 3.2
Mkwawa Institute of Social Work (MISW) is a government agency recently established
in Zanzibar with the objective of rehabilitating street children. It has five employees
whose salaries are paid according to the normal calendar of the month. The following
data presents two employees relating to the month of June 2024:

Name of Basic Total overtime Duration of overtime
employee salary hours worked work
1. Riziki Kibo 1,720,000 4 4:00 p.m. – 8:00 p.m.

Sunday
2. Zawadi Almasi 820,000 8
(8:30 a.m. – 5:30 p.m.)

Student’s Book Form Five
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