Overtime and extra work: this is how it works in 2025 and this is what the tax needs to know.

Employees who work extra hours in addition to the hours they work under their employment contract are overtime or additional work. But what is the difference between these two terms? And how do you deal with these hours as an employer? In this blog, we'll explain it to you.

The difference between overtime and additional hours

There is a difference between overtime and additional hours. This is the difference.‍

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Overtime is not an official term in the law, but refers to the hours that an employee works in excess of the regular full-time work week (usually 36 or 40 hours), which are often subject to an additional surcharge. These overtime hours are usually reimbursed at a higher rate. It is essential to make this distinction, as tax and overtime allowances are based on this. We will delve deeper into this later.

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‍More hours are the extra hours that a part-time employee works on top of their normal schedule, but within a full-time working week. For example, if an employee with a 24-hour working week works 28 hours, the additional 4 hours are hours.

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Can anyone have more and overtime?

It is possible for an employee to have additional and overtime hours.

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• Contract: An employee has a contract for 36 hours a week.
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• Fixed working week: The employee works Monday through Friday, from 9 a.m. to 5 p.m.
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This week, the employee works his normal hours from 9 a.m. to 5 p.m. (36 hours in total). ‍The employee is asked to complete a project on Saturday and works from 10 a.m. to 2 p.m. (4 extra hours).

Explanation

More hours: In this situation, the employee worked 4 more hours. The employee worked the entire week under his contract, but the extra hours on Saturday are additional hours, because they are in addition to the normal working week. These hours can be paid at the regular hourly rate.
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Overtime: Assume that the next week, the employee also works overtime on Thursdays and Fridays, from 6 p.m. to 8 p.m., which means an additional 4 hours. These are overtime, because they exceed the agreed 36-hour working week. These hours can be reimbursed at a higher rate, for example 125% of the regular hourly wage, depending on the collective agreement or employment contract.

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• More hours: 4 hours on Saturday, paid at the regular hourly rate.
• Overtime: 4 hours on Thursdays and Fridays, paid at an increased rate.
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In this example, the employee therefore works both additional hours and overtime, depending on the week and the requirements of his job.

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Remuneration of additional hours and overtime

Not all forms of overtime are automatically paid extra. This depends on several factors:
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1. Included in the basic wage: In some cases, the possibility of overtime is already included in the employee's basic wage.
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2. Job-related expectations: For certain positions, it may be normal to expect unpaid overtime.
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3. Forms of compensation: Overtime does not always have to be financially compensated. Employers and employees can also decide to reimburse overtime with extra time off.

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Conditions for additional hours and overtime

When registering and reimbursing additional hours and overtime, it is important to understand what percentages and conditions apply.

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More hours vs. overtime (table)

What is the difference between extra hours and overtime? You can find the answer in this table.

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Explanation of the table

A number of points from the table above are highlighted below.
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• % Hourly wage: Extra hours are often paid at the regular hourly rate, while overtime is usually paid at an additional cost. The surcharge may vary depending on the agreements within the company or the collective labor agreement.
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• Payroll tax: The tax on additional hours is calculated at the normal rate. There may be a special rate for overtime, which means that these hours are taxed differently.
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• Vacation allowance: A vacation allowance of 8% applies to both additional hours and overtime. This is a statutory fee that is calculated on the gross salary.
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• Retirement: Extra hours often fall under the pension scheme, while overtime is usually not included, unless this is specifically regulated in the collective labor agreement.
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• Leave rights: In case of additional hours, the employee accrues leave rights, but this is not the case for overtime. This may affect the final employment conditions.

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The tax authorities and overtime and overtime

When employees work more hours than stated in their employment contract, there are important tax aspects to consider. Good insight into these rules is important for good payroll administration and to prevent surprises.

Overtime tax

An important aspect of overtime is the tax that is levied on it. In the Netherlands, the following rules apply:
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• ‍Regular salary: Overtime is usually included in the regular salary.
• ‍Higher rates: Overtime can sometimes be paid at a higher rate.

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Impact on wages and costs

It's important to understand that these tax implications affect:
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• Employee's net salary: The payment of overtime may affect the net salary.
• Total wage costs for the employer: The correct rate for overtime has an effect on total wage costs.

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Stay up to date

To avoid surprises during payroll administration, it is essential to be well aware of the tax rules that apply to overtime:
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• Keep track of which hours: Make sure you keep track of exactly which hours are considered overtime.
• Correct processing: This ensures that you can process and reimburse these hours correctly.

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Agreement and contract: what do you need to know?

It is important to know that registering additional hours and overtime is also linked to the employment contract or contracts that you have concluded with your employees. Make sure:
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• Similarities are clear: The agreements about working hours, including the options for overtime, must be clearly laid down in the employment contract.
• Overtime information is included: This includes how overtime is reimbursed, what tax applies to it, and how they are registered.
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A clear employment contract prevents confusion and ensures that both employer and employee know where they stand.

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How do you record additional hours and overtime hours?

An efficient way to keep track of additional hours and overtime is to use a system for your registration. Handwritten lists and Excel sheets are not only time-consuming, but also prone to errors.

With the right software:
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• Do you automate registration?: This reduces the risk of errors and makes administration much easier.
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• Get insight into the hours worked: You can easily see how many additional hours and overtime have been worked and what tax applies to them.
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• Save your time: No more manual tracking, but a well-organized digital system that saves you a lot of time.

Conclusion

More hours and overtime can have a significant impact on your business operations. By understanding the differences between the two, digitizing and automating your time registration, and making clear agreements in employment contracts, you prevent surprises and ensure a transparent and fair working environment.

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Start your free trial

Curious about how TimeChimp can help you set up additional hours and overtime? With our tool, you have immediate insight into your projects, time registration and performance.

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