Guidance on Overtime

Acas has produced a useful new guide on overtime for employers, covering:

  • the different types of overtime
  • working time limits on overtime
  • payment for overtime
  • overtime for part-time workers
  • the impact of overtime on holiday calculations

Define Overtime

Overtime is usually classed as hours worked over an organisation's regular full time requirement. When a worker has fixed working hours, overtime would be any additional hours worked.

Is an employee required to work overtime?

An employer may offer overtime to cope with an increase in demand for their products or services. For example to satisfy a large customer order, or during staff shortages. It can be compulsory or voluntary. A recognised system of paid overtime is more common with hourly paid staff than salaried staff.

Whether a worker is required to work overtime depends on the employment contract. Details should be set out in their contract of employment or the staff handbook.

Is there a limit to how much overtime can be worked?

All working hours, including overtime, are governed by the Working Time Regulations. These state that a worker:

  • must not work more than 48 hours per week on average, though a worker may choose to "opt out"
  • must be allowed at least one day off each week or two days off in a fortnight
  • should have 11 hours uninterrupted rest in a 24 hour period
  • is given at least a 20 minute break if their shift lasts more than six hours.

There are some exceptions to these rules depending on the nature of the work that is being done.

Under 18’s and working time

Different rules apply for 16 and 17 year old workers. They cannot work more than 8 hours per day or 40 hours per week. Young workers cannot sign an opt -out agreement and must have two days off per week.

Pay when working overtime

There is no legal right to receive an additional payment or be paid at a higher rate for any overtime worked.

An employer should clearly state in the employee's terms and conditions of employment what, if anything, will be paid for working additional hours. An employer may also offer a higher rate of pay than normal for overtime, as an incentive for staff to work the hours.

Alternatives to paying staff for working overtime

As an alternative to pay, an employer may offer time off in lieu to workers who have worked above their contracted hours. Time off in lieu means that any overtime hours the individual works, they can take off from work in addition to their annual leave.

Both employer and worker should ensure that they keep detailed records of how much overtime has been worked and how much additional time off has been taken.

Impact of overtime on holiday calculations

Chris Dobbs, a Solicitor in our Employment Team, says “Recent court decisions have indicated that all overtime worked should be included when calculating a worker's statutory holiday pay entitlement. The only exception to this is overtime that is worked on a genuinely occasional and infrequent basis.”

These court decisions apply to the four weeks of annual leave which are required under European law. All workers in the UK must receive an additional 1.6 weeks of leave by law, and some receive more as part of their terms and conditions of employment. Many employers choose to apply the judgments to this extra annual leave. Doing this is not a legal requirement but can help to keep their processes simple and understandable.

As all court decisions are case specific an employer may want to take legal advice as to how these decisions will impact on their organisation.

You can read the whole Acas Guide to Overtime here.

At Frettens, all of our solicitors offer a free initial meeting or chat on the phone to answer your questions. If this article raises issues for you or your business, please call us on 01202 499255 and the Employment team will be happy to discuss it with you.