Overview of overtime 

Introduction

There are times in the life of a business when staff are going to be required to work extra hours – if you have a rush of demand for your goods or services or during a staff shortage situation, for example.

In some industries it is common for employment contracts to stipulate that staff are expected to work a reasonable amount of extra time for no additional pay (this is commonly 15 minutes a day for manual workers; around an hour for supervisors or managers). If there are no special provisions in an employee's contract, you must get their agreement to work overtime and generally pay them for the work they do. 

Contractual provisions for overtime

If you expect employees to work regular overtime, this should be stated clearly in their employment contracts. Other provisions which should be stipulated include:

• when overtime becomes payable and at what rate;
• whether overtime is compulsory or voluntary;
• what notice needs to be given to require a worker to do overtime;
• how overtime needs to be authorised

Overtime payment rates

There are no minimum statutory levels of overtime pay and rates vary from business to business. Some rates may be fixed by an industry-wide agreement and some sectors expect employees to work overtime at their usual rate. Generally, it is up to you to agree overtime rates with your staff. Typical rates are:

• weekdays and Saturday mornings - time-and-a-half
• Saturday afternoons, Sundays and public holidays - double-time (Sunday shop workers may be an exception)
• Christmas Day and New Year's Eve night - double-time or more

Some organisations vary rates depending on how much overtime is done e.g. time-and-a-half for the first two hours and double time after that.

Some companies pay for travelling time if it’s for company business, as well as actual hours worked. Standby payments are often made too where employees are on standby to respond to any call outs. You may decide to pay at different rates for time on standby or pay a separate fixed allowance. 

Health and safety considerations

There are various issues connected with health and safety which you need to bear in mind when authorising overtime. These include:

• Ensuring workers aren’t doing so much overtime that their inevitable tiredness poses a risk to themselves or those around them. Conduct risk assessments to ensure any potential perils are highlighted and minimised.
• Not giving excessive overtime to shift workers, especially those who work at night as extreme fatigue can cause health problems or exacerbate existing one. Restrict night-work shifts to eight hours, including overtime, and offer health assessments to night workers.
• Trying to avoid situations where employees have to work alone – particularly in potentially dangerous places like factories. If lone working can’t be avoided, ensure employees do not have any medical condition making it unsuitable for them to work alone, e.g. epilepsy.
• Providing extra security for staff working at night such as better car park lighting or a taxi home.

Alternatives to overtime 

Time off in lieu

Allowing employees to take time off in lieu (TOIL) is an increasingly common alternative to overtime pay, particularly among better paid or more senior staff. To make it work efficiently you should:

• Get workers to agree to TOIL.
• Arrange for it be taken only at a time that is convenient for you.
• Avoid excessive accumulation of owed time by limiting the number of hours that can be accumulated in any one month, and stipulating that the time off must be taken within a certain time, with any entitlement not taken to be lost.
• Set out the minimum amount of time that can be recorded.

Part-time employees

You can demand that part-time workers work the normal full-time hours at basic rates before being entitled to an overtime premium (though as soon as they have worked more than the normal full-time hours, you must pay them the same hourly rate of overtime as a comparable full-time worker).  

Flexible working

There are a variety of flexible working practices which can provide cost-effective alternatives to overtime, such as shift-work, flexitime, seasonal and term-time working, and job sharing. Temporary or agency workers can be used to fill in where necessary or you may decide to contract some work out.