What is Code 3607 on a South African Payslip?
Your overtime pay explained — why it is taxed at your marginal rate, how PAYE is calculated on it, and a step-by-step worked example.
3607Code 3607 is your overtime income — additional pay for hours worked beyond your ordinary contracted hours, at 1.5× (weekdays) or 2× (Sundays and public holidays) your normal rate. It is fully taxable under PAYE at your marginal tax rate and appears separately from your salary on your IRP5.
What Code 3607 Means
Code 3607 is an income code in the 3600 series — the same group as your regular salary (3601), bonuses (3605), and commission (3606). It records all overtime income for the month: pay earned for working beyond your contracted ordinary hours, calculated at the rates prescribed by the Basic Conditions of Employment Act (BCEA).
The overtime rates under BCEA are:
- Weekday overtime: 1.5 times your normal hourly rate
- Sundays: 2 times your normal hourly rate (or 1.5 times if you ordinarily work Sundays)
- Public holidays: 2 times your normal rate if you are required to work
Your employer reports overtime separately from your salary so that SARS can see the full breakdown of your remuneration on your IRP5. Both codes form part of your gross remuneration total.
Why Overtime Is Taxed So Heavily
The most common complaint from employees who work overtime is that it feels like the tax takes most of it. This is not a special "overtime tax" — it is simply a consequence of how the SARS progressive tax system works.
Your employer uses the aggregation method to calculate PAYE on overtime: they add your overtime to your projected annual salary and calculate the PAYE on the combined figure. Because the overtime sits on top of your full salary, it is taxed at your marginal rate — the highest bracket you reach. For most South African employees this means 26% to 31% of every rand of overtime goes to SARS.
The effect is more pronounced in months where you work substantial overtime — the combined income may temporarily push you into a higher bracket, increasing the effective rate on the overtime portion even further.
Worked Example — Overtime at R20,000 Monthly Salary
An employee earns R20,000 per month. In March they work 15 hours of weekday overtime. Their hourly rate is R20,000 ÷ (45 hours × 4.33 weeks) = R102.54/hour. Overtime rate = R102.54 × 1.5 = R153.81/hour × 15 hours = R2,307 overtime (code 3607).
| Item | Without Overtime | With R2,307 Overtime |
|---|---|---|
| Monthly salary (code 3601) | R20,000 | R20,000 |
| Overtime (code 3607) | — | R2,307 |
| Annual taxable income (× 12) | R240,000 | R267,684 |
| Tax on first R245,100 @ 18% | R43,200 | R44,118 |
| Tax on remainder @ 26% | — | R5,798 |
| Gross annual tax | R43,200 | R49,916 |
| Less: Primary rebate | −R17,235 | −R17,235 |
| Annual PAYE | R25,965 | R32,681 |
| Monthly PAYE | R2,164 | R2,724 |
| Additional PAYE on R2,307 overtime | — | R560 |
| Effective tax rate on overtime | — | 24.3% |
| Net overtime received after PAYE | — | R1,747 |
The R2,307 gross overtime results in R1,747 net — R560 goes to SARS. Use our Overtime Calculator to calculate your exact gross and net overtime for any salary and hours worked.
Frequently Asked Questions
What does code 3607 mean on my payslip?
Code 3607 is your overtime income — additional pay for hours worked beyond your contracted ordinary hours, at 1.5× your normal rate for weekday overtime or 2× for Sundays and public holidays under BCEA. It appears separately from your salary and is fully taxable at your marginal PAYE rate.
Why is so much tax deducted from my overtime?
Overtime is taxed at your marginal rate — the bracket that applies to the top of your income. Your employer adds overtime to your projected annual salary and calculates PAYE on the combined total. Because overtime sits on top of your full salary, every rand of overtime is taxed at your highest applicable rate, typically 26% to 31% for most employees.
Is there any tax-free portion on overtime?
No. There is no tax-free threshold for overtime pay in South Africa. Code 3607 overtime is fully taxable from the first rand at your marginal rate. Making retirement fund contributions (pension, provident or RA) can reduce your overall taxable income and therefore the effective rate at which your overtime is taxed.
What is the difference between code 3607 and code 3601?
Code 3601 is your fixed monthly salary for ordinary contracted hours. Code 3607 is the additional pay for hours worked beyond ordinary hours at the BCEA overtime rates of 1.5× or 2×. Both are taxable income and both appear on your IRP5, but separately so SARS can see the breakdown of your remuneration.
Does overtime appear on my IRP5?
Yes. Your total overtime income for the tax year appears as code 3607 on your IRP5, separately from your code 3601 salary. The combined figure of both codes plus any other income codes makes up your gross remuneration total. SARS uses this to verify that your code 4102 PAYE deduction matches your total income.
Who is entitled to overtime pay in South Africa?
Under the BCEA, employees earning below the annual earnings threshold are entitled to overtime at the prescribed rates. Employees above the threshold may still receive overtime by mutual agreement but are not protected by BCEA overtime provisions. Use our Overtime Calculator to check your overtime entitlement and calculate your gross and net payout.