Calculating Shift Premium Pay

Shift premium pay is a form of incentive pay, also referred to as “shift differential". Shift premium pay is normally associated with shift work that occurs during odd hours or under unusual conditions. Shift premium pay was traditionally used to provide incentives for employees to work outside their normal shifts or new hires to work on shifts that don't readily attract employees, but shift premium pay can be used for other purposes such as:

Snap Schedule 365 provides a very flexible scheme to handle practically all types of incentive pay through the use of shift premium policies. You can define as many policies as you like. With each policy, you can specify how the premium pay will be calculated, whether or not overtime exempt employees are eligible, which days of the week and which hours are applicable, and whether or not Snap Schedule 365 should include shift premium pay in overtime computations. You can then associate a shift premium policy to a particular shift, and all employees who are assigned to that shift will be subject to the premium pay policy.

You can specify up to three rules for shift premium calculation per policy. A shift premium pay can be a fixed amount per shift (regardless of the number of hours worked), a fixed amount per hour for each hour worked, or a percentage of the employee's regular hourly rate for each hour worked.

For example, some employee John is scheduled to work 32 hours for one week, Monday through Thursday, on the day shift at an hourly rate of $20 per hour. On Friday, John fills in for Joanne who works the night shift for 8 hours. Employees who work the night shift are offered a premium of $30 per shift plus 10 percent of the employee's basic hourly rate. John's shift premium pay for the week would be $46, computed by:

$46 = ($30 per shift + (($20 per hour * 10%) * 8 hours)).

This premium pay is in addition to John's regular pay of $800, which is calculated by:

$846 = $20 per hour * (32 hours on day shift + 8 hours on night shift)