7 Tips to Avoid Overtime Pitfalls

New guidance on the pitfalls to watch out for if your workers do overtime – whether on a voluntary or compulsory basis – has been published on the Acas website. The guidance provides advice on how to avoid working time and minimum wage breaches, as well as on whether there’s a legal right to paid overtime.

The Acas guidance starts by looking at the different types of overtime, namely:

  • Voluntary: you’re not obliged to offer any overtime and the worker isn’t obliged to do it if you do offer it.
  • Guaranteed: you’re contractually obliged to offer the overtime and the worker is obliged to accept.
  • Non-guaranteed: you don’t have to offer the overtime but, when you, do, the worker must accept it.

The guidance then looks at some of the difficult issues that employers commonly have to deal with.

How to Manage the Legal and Practical Issues

  1. If you want workers to do guaranteed or non-guaranteed overtime, set out in their terms and conditions of employment that it is compulsory. Otherwise, you won’t be able to take disciplinary action if they refuse to do the work.
  2. Unless a worker has opted out of the Working Time Regulations, ensure they do not work more than 48 hours a week on average, including overtime.
  3. In allocating overtime, make sure you still allow workers one day off each week or two days off each fortnight. You must also allow them 11 hours uninterrupted rest each 24 hours and at least one 20-minute rest break if their shift lasts more than 6 hours.
  4. Clearly state in the contract what, if anything, you will pay for working extra hours. There is no legal right to additional or higher pay for overtime but you may need to offer extra pay as an incentive.
  5. Instead of pay, you may choose to offer time off in lieu when workers work beyond their contracted hours. In this case, set out in a written agreement when workers may take time off in lieu, how they can book it and what happens if they stop working for you before they take the time off.
  6. Watch out for breaches of the national minimum wage legislation if you don’t pay for overtime or if you offer time off in lieu later. In this case, make sure the extra hours don’t bring the worker’s average hourly rate below the legal minimum for that pay reference period.
  7. When they’re on holiday, you should pay workers the same amount as they normally receive when they’re working. If they regularly work overtime, even if this is voluntary, you must include an amount in their holiday pay to reflect this. Only exclude overtime that is genuinely occasional and infrequent.