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Chapter 10

Illustration 1

George is paid $5.50 per hour for a basic 36-hour week. Any overtime is paid
at basic rate plus 50 per cent.

During a particular week, George worked for 42 hours.

The first step is to calculate the amount of George’s gross earnings for that
week:
$
Basic hours 36 hours @ $5.50 per hour = 198.00
Overtime hours 6 hours @ $8.25 per hour = 49.50
––––––
247.50

Unfortunately for George, he will have to pay income tax, and also in some
countries a social security (SS) tax, which will be deducted from his gross
earnings. Let us assume that he will be liable to pay income tax at 25 per cent
on all his weekly earnings in excess of $75 and, in addition, he will be liable to
pay SS tax of 9 per cent of his total earnings.

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