Payment for Overtime to Employees - Legal Conditions

The stretching of the UK workforce

Many employers are currently trying to stretch their workforce in order to get as many hours out of the existing employees rather than bringing in more employees. One of the main reasons for this is due to the economic downturn. Employers are finding it difficult to find the money to employ new staff but are still trying to keep their business running to maximum capacity. The upshot of this is that the existing employees are often asked to work longer hours.

What is meant by the term overtime?

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

Do all employers pay their staff for any extra hours worked?

When staff is required to work longer hours often they will not get paid for this. For example if a member of staff is on a salary this salary will be calculated in accordance with working a prescribed amount of hours on a weekly basis. Anything done over this amount in some circumstances will not be paid.

Will all employers not pay their staff for overtime worked?

It is not the case that all employers will not pay staff for overtime worked. Some employers will have a specific policy in relation to the rate of pay for overtime and how this is calculated.

What is the possible effect on a workforce required to continually work longer hours?

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 therefore have a detrimental effect on productivity. Furthermore increased working hours may also create a higher risk of employees suffering work related stress.

As an employee can I be forced to work overtime?

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

Even if a contract of employment provides for this an employee still cannot be forced to work more than an average of 48 hours per week. If an employee is told to do so and they do not want to, they should first take it up with their employer.

Is it common for employers to require employees to sign an agreement of this nature?

Many employers will ensure that a contractual term regarding working over the 48 hour week is included in the standard contract of employment used with all employees. In many cases employees will not always 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 over worked.

Are employers under a legal obligation to pay for any extra hours worked?

Under the laws of England and Wales there is no legal right to pay for working extra hours.

If I do get paid for extra hours is there a minimum level of overtime pay?

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.

How will I know if I am entitled to overtime pay?

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.

How much will I get paid for overtime?

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.

Will I be provided with time off for overtime worked rather than extra money?

Some employers will put together a policy whereby their employees do not get paid for any overtime worked but they are offered “time off in lieu” (TOIL) 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.

Will overtime be taken into account when calculating holiday pay or leave?

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

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

If I wish to work overtime, can my employer stop me doing this?

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.

As a part-time worker will I be able to be paid for overtime?

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.

When can an employer change employees’ terms of employment?

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.