What is overtime?
An employer can specify within an employment contract that an employee works a fixed number of hours, whether per day, week, month or year.
Overtime is any additional hours spent working beyond these normal working hours.
Overtime tends to be measured in hours because it is often hourly paid staff who are entitled to overtime pay. However, there is no reason that pay cannot be calculated by the minute.
Overtime pay rates
Does an employer have to pay overtime rates in the UK?
No. There is no legal obligation for an employer to offer overtime pay. Whether overtime is paid, and at what rate, depends on the business policy.
But if it is paid, then overtime tends to be paid at a higher rate than for standard hours.
Rates should be recorded in writing
Like normal pay rates, remuneration for overtime should be available to an employee in a written document.
That document might be the employee's employment contract. However, because a contract is difficult to amend later if a policy changes, overtime rates given in a contract tend to be based on a calculation that uses normal rates of pay as a basis, such as 'time and a half'.
More commonly, an overtime rate is recorded in an employee handbook (a collection of employment policies), to which all employees have access. This allows it to be changed, and for that change to apply to all employees. Within a policy, the calculation of overtime pay can be much more complex.
There may be a minimum amount of time that needs to be worked before overtime becomes payable. For example, an employee may be required to work for at least an additional hour before being paid for that hour.
What is 'time and a half'?
'Time and a half' means 1.5 times the normal hourly rate of pay. It is offered by employers to incentivise employees to work overtime, particularly on holidays or busy periods. or during unsocial hours. The additional rate of pay above the normal rate is known as the overtime premium.
Calculating overtime
Working out how much overtime an employee has put in can be difficult, which can make calculating how much additionally to pay them difficult as well.
Some companies have clocking in systems that record when employees enter and leave work premises. There can be digital equivalents of these meters - based on when a worker is signed in to the business' network.
But with remote working, it can be difficult for an employer to know when an employee is putting in extra work and when they are simply signed in. Or there may be no monitoring, and the employee may not be able to record extra hours worked so that they can be given credit for them.
In jobs where time is booked against a specific client (such as in consultancy) time recording applications might be used. A risk here is that the employee overstates their additional hours worked.
Can an employer force an employee to work overtime?
The simple answer is 'no'. The longer answer is 'possibly, depending on what you mean by force'.
There is no law in the UK that states that if required by their employer, an employee must work for longer than their normal working hours.
However, an employment contract may contain a term that job requires that the employee works beyond normal working hours from time to time.
A requirement to work occasionally beyond normal hours can be expected in many jobs: a specific project may need to be completed to a deadline; additional work may be required to meet customer demands; or there may be an exceptionally busy period.
Working overtime may be part of the business culture. For example, there may be a general expectation (but no obligation) that an employee should arrive slightly earlier and leave slightly later than he or she is contractually bound.
So if an employee agrees in their contract of employment to work overtime, and an employer requests it, the employee would be expected to do so. Not doing so could be considered a breach of contract, and a possible reason for dismissal.
Different types of overtime
In the UK, overtime work is either voluntary or compulsory. If it is compulsory, then it is either guaranteed or non-guaranteed.
Generally, if the employee is paid by the hour, then overtime hours are paid.
Voluntary
With voluntary overtime, the employee does not have any obligation to accept any additional work beyond basic working hours, and there is no obligation on the employer to offer it.
Because the employee has no obligation if the work is offered, he or she should not be treated unfairly or less favourably if he or she chooses not to accept it.
Guaranteed
With guaranteed overtime (sometimes called compulsory overtime), the employee’s contract of employment states that the employer must offer overtime and that the employee must work it.
Non-guaranteed
With non-guaranteed overtime, the employer has no legal obligation to offer additional work, but if they do then the employee must accept it.
Other legal considerations
Working Time Regulations
The Working Time Regulations ('WTR') apply to all work performed, including overtime.
This is UK law that incorporates EU law known as the Working Time Directive.
It states that an employee cannot work more than 48 hours a week unless they sign an opt out agreement or have an opt out clause in their contract of employment.
How much overtime you can work is partly based on your contracted hours. If your normal hours already work close to 48 hours per week, then you may not be able to work extra hours, without having opted out of the WTR.
Average working hours are calculated over a ‘reference’ period, which is normally 17 weeks.
Using a reference period means that an employee can work more than 48 hours one week, putting in long hours of overtime, as long as the average over the reference period is less than 48 hours a week.
There are exceptions to the 48 hour rule and its calculation depending on the type of work being carried out and the age of the employee. For example, people under 18 can't work more than 40 hours, and the reference period for junior doctors and offshore oil and gas workers is much longer.
Pay and The National Minimum Wage
There is no minimum statutory level of overtime pay. However, average pay for the total hours worked must not fall below the National Minimum Wage.
This can happen if the overtime pay rate is below the NMW (for example, overtime is not paid and the rate is therefore zero).
Discrimination
Part-time workers in the UK can face overtime payment discrimination. Examples include denial of overtime opportunities, pro-rata pay for overtime, and inconsistent treatment compared to full-time employees.
Employers may also set eligibility requirements that disadvantage part-time workers (such as only paying overtime after a certain number of overtime hours have been worked within a given period of time).
These practices could be considered discriminatory and therefore illegal under UK employment law, as part-time employees are entitled to the same rates as full-time workers.
Other employee rights
Many employee benefits, including holiday and holiday pay entitlement depend on total hours worked, which includes all overtime. However, all overtime may not be taken into account.
Small amounts of extra time worked, such as an extra 15 minutes at the end of most days, and time on an occasional or infrequent basis would not be recorded, and therefore not be taken into account when calculating holiday pay entitlement.
Of course, most employees have enough goodwill towards their employer to consider occasional or small amounts of overtime to be simply part of the job.
As an alternative to paying overtime, an employer might offer time off in lieu ('TOIL') to employees who have worked more than their contracted hours. The possibility of this arrangement should be stated in the employment contract, including details about when leave can take be taken, the process for arranging it and what happens if employments ends before the time has been taken off.
Advantages of working overtime
Allowing employees to work overtime can be advantageous for both the employee and the business. It can:
- allow an employee to be paid more or to bank hours for leave later on
- give a flexible workforce that can respond to business needs
- reduce the need to hire (and train) extra workers during periods of employee absence or increased demand
Disadvantages of working overtime
There can also be disadvantages of relying on overtime as an alternative to not hiring more staff:
- Employee productivity and quality of work can suffer if employeesdon't have sufficient rest.
- Morale in the workforce can drop, leading to more people leaving the business and higher levels of absenteeism.
- There can be health and safety issues caused by tired employees.