Payment for overtime to employees

Overtime is taken to mean any work which is over and above the basic working hours included in an employment contract.

Employers do not have to pay workers for overtime. Some employers will have a specific policy in relation to the rate of pay for overtime and how this is calculated. An employee’s employment contract will usually contain details of any overtime pay rates and how they’re worked out.

If a workforce is required to continually work longer hours without pay, this can have a significant impact on the morale of the individuals working these hours. Often, requiring more work can have a detrimental effect on productivity and create a higher risk of employees suffering work-related stress.

The Working Time Regulations 1998 stipulate that most workers cannot be made to work more than an average of 48 hours a week. However, workers can agree to work longer. This agreement must be in writing and signed by the employee.

Many employers will ensure that a contractual term regarding working more than a 48-hour week is included in the standard contract of employment used with all employees. In many cases, employees will not have to work over this amount of hours, but it is good practice for an employer to include this term so it can be relied upon at times when the business is extremely busy and overworked.

Currently under the laws of England and Wales there is no minimum statutory level of overtime pay. However, the average pay rate must not fall below the amount specified as the National Minimum Wage.

When an employee takes up a position in a new job, they will be provided with information regarding rates of pay for overtime when they sign their employment contract.

Overtime rates will vary between different employers. For example, some employers will pay extra for working weekends or over Bank Holidays, whereas other employers will not.

Some employers will have a policy whereby their employees do not get paid for any overtime worked but they are offered ‘time off in lieu’ instead. This will be agreed between an employer and employee and any time off provided to the employee will usually be at a time that suits their employer.

Often companies will have specific rules on when time off will be taken, but others will simply deal with it on a case by case basis.

Overtime isn’t usually taken into account when calculating holiday pay or paid maternity, paternity or adoption leave.

However, when the overtime is guaranteed and employees have to work the overtime as part of their contract of employment, it will be taken into account.

Unless overtime is provided for in an employee’s contract of employment, an employer can stop that employee working it. However, an employer cannot discriminate against a specific employee, or bully them by letting others work overtime but stopping that particular employee from doing so.

Unless it is provided for in their contract of employment, employers will only pay overtime to part-time workers when they work:

• longer hours than are included in their contract;
• more than the normal working hours of full-time staff – they must receive extra payments if these are received by full-time staff;
• unsocial hours for which full-time staff would get more pay.

It is a legal requirement that part-time workers must not be treated less favourably than full-time staff.

In certain situations an employer may need to change the conditions or patterns of work due to certain business or economic factors.

A contract of employment, however, can only be changed if both the employee and employer agree to it. It will be deemed a breach of contract for working conditions to be changed without the agreement of the employee.