How to calculate overtime and undertime: tolerance, break and shift rules

Overtime is the most common subject of payroll disputes. An employee says, "I stayed until eight that day," while the timesheet shows 20 minutes; for another employee, 7-minute delays that nobody noticed add up to two hours of undertime by month-end. The formula itself isn't complicated; the confusion comes from not knowing which rules produced the data that goes into it.

In this article I briefly recap the legal framework in Türkiye and then focus on the real question: by which rules does a clock-in/out record turn into overtime or undertime, and where should those rules be defined?

The legal framework: 45 hours, 50 percent, 270 hours

Under Turkish Labour Act No. 4857, normal weekly working time is at most 45 hours. Work beyond this is overtime work and is paid at the hourly rate plus a 50 percent premium. If the employment contract sets weekly hours below 45 (for example, 40 hours), work between 40 and 45 hours counts as excess-hours work and is paid with a 25 percent premium. The annual cap on overtime is 270 hours, and the employee's consent is required. Time off in lieu of pay is also possible: one and a half hours for each hour of overtime, and one hour and fifteen minutes for each hour of excess-hours work.

The rates and limits are fixed; what changes is the amount on which the hourly wage is based, and your payroll software calculates that. The job of a time and attendance system (PDKS) is to produce the correct hours.

What is undertime?

Undertime is the time by which an employee works less than expected for their shift: arriving late, leaving early or taking a long break. Turkish law has no concept called "undertime"; it is a timesheet term, and it usually leads not to a wage deduction but to make-up work, a warning or a deduction from leave. How it is handled is a matter of company policy; but for the policy to be enforceable, it first has to be measured correctly.

Three rules that turn a record into hours

1. Shift: what is the expected duration?

Overtime or undertime only exists relative to an expectation. On an 08:00–17:00 shift (with a 1-hour lunch break), the expected working time is 8 hours. On a night shift, a clock-out that spills into the next day is counted toward the same day. The hours of an employee with no assigned shift cannot be calculated, which is why the first check should be "does everyone have a shift?"

2. Tolerance: which deviation is not counted?

If a 10-minute tolerance is set for late arrival and 5 minutes for early departure, an 08:09 clock-in is normal and an 08:11 clock-in is 11 minutes late (whether the entire deviation or only the excess counts once the tolerance is exceeded is also a policy decision and should be chosen explicitly in the system). For overtime, the minimum duration is critical: unless you specify that "overtime under 30 minutes doesn't count," every 6-minute late clock-out accumulates, and at month-end you end up paying for hours nobody actually worked.

3. Breaks: which time is deducted?

Rest breaks are not counted as working time. The Turkish Labour Act sets minimum rest breaks according to daily working time: 15 minutes for work of up to 4 hours, 30 minutes for work between 4 and 7.5 hours, and 1 hour for work over 7.5 hours. The break defined in the shift is deducted automatically; if break start/end records are kept, the actual duration is used and any overrun shows up in the "excess break" report.

Example: same day, two different results

Same record, two different results. Software can't know which one is right; the company decides, and the system applies that decision the same way to every record. The real problem with manual calculation isn't wrong math; it's math that comes out a little differently every month.

The problem of unapproved overtime

If the record shows a 19:30 clock-out, did the employee work overtime? Maybe; or maybe they were waiting for a colleague. That's why a good setup handles overtime in two stages: overtime calculated from the records and overtime approved by the manager. The daily overtime report lands in front of the manager; approved hours go to payroll, while unapproved hours stay on record with the reason. You can also use the same report to monitor employees approaching the annual 270-hour limit.

What to do about undertime?

For measured undertime, companies usually choose one of three paths: make-up work, deduction from leave entitlement or a warning. Whichever you choose, two principles must hold: the rule must be written and known in advance, and its application must not vary from person to person. The undertime report with tolerance applied and the per-person clock-in/out list are the only sound basis for that conversation; a conversation that starts with "I have a feeling that…" ends badly.

How does the calculation work in NetKurum?

Shift and flexible shift definitions, minute-level tolerance and break rules are set up in the dashboard; card, turnstile and mobile records are evaluated by the same rules. Daily reports on late arrivals, early departures, overtime and undertime, the report of employees taking breaks longer than 30 minutes, and the monthly timesheet are all generated from this calculation; in the detailed monthly report, overtime and undertime totals are ready at the end of each row and can be exported to Excel. Every manual correction is kept in a separate report with who, when and why. Details: Shift Management.

The overtime debate isn't a debate about math; it's a debate about rules. Once you write the rule down and put it in the system, the debate is over.

Put your rules into the system

We can define your tolerance, break and shift rules together and review your first month's timesheet side by side. Start your free trial or contact us.