Are You Following the Rules on Overtime for Your Employees?

At a recent meeting of the Resolution Foundation think tank the topic of overtime was debated. It was suggested that many workers are reliant on the earnings that comes from their overtime, with overtime typically representing 12% of the earnings of workers. One in 10 employees in the UK regularly works overtime.

Unlike other countries, overtime is not regulated in the UK. At the recent meeting of the Resolutions Foundation questions were asked in order to clarify the rules of overtime:

  • There should be a set premium rate for overtime
  • There should be a maximum number of hours that can be worked before the work is seen as overtime, and then subject to a premium rate
  • There should be a limit on the hours of overtime that can be worked

These debates continue, but it is useful to take the opportunity to review the legislation that currently impacts the working of overtime.

Top Tips to Manage Employee Overtime

  1. There is no legal obligation to pay a premium rate for any hours of overtime worked. However, there could be a contractual obligation. If you have set out in your contracts of employment that premium rates will be paid then you must pay them.
  2. If you have an individual working a zero hours contract then there is no requirement to start treating hours as overtime after a specific number of hours have been worked. Again, if you have specified in your contract that any hours after a specific amount of time will be overtime you need to honour this. Otherwise, you do not need to separate out normal and overtime working.
  3. There is no maximum number of hours that can be worked before the work is classed as overtime, unless this is specified in the contract of employment. However, an employee should not work more than 48 hours a week (averaged over a 17-week period) unless the employee has signed an ‘opt out’ agreement to signal that they are willing to work additional hours.
  4. Guaranteed overtime is when an employer promises an employee a set amount of overtime each week. Non-guaranteed overtime is not promised. However, if you always give employees the same amount of overtime every week it could be argued that it will become a contractual obligation through custom and practice. If you do not want this to happen it would be best to vary the amount of overtime that employees are working each week.