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Working Overtime: A Complete Guide for Employers


Working overtime is sometimes inevitable, especially when you’re approaching an important deadline, employees are absent or on annual leave or you are simply approaching a busy period. But when it becomes too frequent, you need to question whether the extra hours are actually causing employee burnout in your company.

The rules surrounding working overtime can cause great confusion for UK employers. Common queries often relate to payments, holiday entitlement and more. In this article, we’ll define the term, how it should be paid, and other queries.

Related video: 5 Ways to Combat Workplace Stress and Burnout Culture: In this video, we share some tips that employers should take into account to improve their workplace environment. 

What is Overtime?

Overtime refers to any extra hours worked outside of an employee’s contracted hours. There is no statutory requirement for an employee to work overtime. And on the other hand, there is no statutory requirement for an employer to offer additional hours.

Overtime Law UK

There is no statutory requirement for a UK employee to work overtime, just as there is no statutory requirement for an employer to offer additional hours.

There’s no legal obligation to pay employees for working extra hours. However, you must ensure that the average pay for the total hours the employee works do not fall below the National Minimum Wage.

To avoid any legal issues or confusion, your employment contract should include essential details regarding overtime pay and calculations.

Additionally, there is no minimum statutory overtime amount that you must pay. Overtime rates depend on your company and industry. Whether you pay your employee for overtime or not depends on the contractual agreements that are in place.

Remember, you cannot force your employee to work more than an average of 48 hours per week. This law is stated within the Work Time Directive 1998. Employees can agree to work longer, but there must be a signed written agreement.

Time off in Lieu (TOIL)

Time off in lieu (TOIL) of overtime is the agreement that you’ll reimburse your employees for any extra hours with paid time off work. This can also be referred to as “banked hours”. Which is exactly the same concept, where the employee agrees to bank their extra hours in order to use them for annual leave in the future. With banked hours, employees must be paid time-and-a-half for every hour of overtime worked.

But bear in mind, that if you decide to incorporate TOIL into your organisation, you will need to confirm this type of agreement in writing, signed by your employee.

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UK Laws Regarding Days Off

It’s important to take into consideration the laws regarding days off. All UK workers over the age of 18 are entitled to one day off a week. These days off can be averaged over two weeks, which means your employees are entitled to two days off a fortnight.

Adult workers are entitled to a rest break of 20 minutes if they have to work more than six hours at a time. Alternatively, young workers cannot usually be made to work over 8 hours a day or 40 hours a week.


Advantages of Working Overtime

Overtime can be considerably beneficial for both the employee and the business. A few of these advantages include:

  • Promotes a more flexible workforce
  • Eliminates the need to recruit extra staff during employee absences or busy periods
  • Gives the employee the opportunity to get paid more or bank hours (if written within the contract)
  • Helps business maintenance easier for the employer, and keeps their staff secure

Disadvantages of Working Overtime

Although overtime can be beneficial for employers, there are limits. When overtime becomes more frequent and is extended over a long period of time, there are some disadvantages.

  • Health and safety issues
  • Increased expenses
  • Higher levels of absenteeism
  • Lower productivity and work quality

Managing Employee’s Hours with Time Tracking App

With a time-tracking app, you can create an hour bank to manage employee overtime. This technology will help you and your team to track the extra hours that they are working, whether this is on a regular basis or not. This helps to increase employee retention rates, as they know that their extra work efforts are recognised and “banked” rather than taken for granted or expected.

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