Overtime Payments- The Lowdown

Peninsula Team

April 08 2011

There is no statutory right for an employee to be paid any extra money over their normal rate of pay for working more hours than they are contractually obliged to work. In fact, there is no statutory right to be paid at all for working overtime. However, National Minimum Wage Regulations provide that, on average, employees should be paid at least the minimum wage for all hours that they have worked during their pay reference period, including all normal contractual hours and overtime hours.

Because there are no statutory rules on the payment of overtime, it is the employee’s contract of employment which dictates how much the employee should be paid when they work hours which are over and above the normal hours which are stipulated in their contract.

There are several calculations used when paying overtime depending on when the overtime is being worked, but these are all at the discretion of the employer themselves and are set at the time the contract is entered into with the employee. It is not common for employees to receive no pay for working overtime, and most will be paid at least their normal time rate. Some of the common calculations that are used are a payment of time and a half for working on a Saturday, and this commonly rises to double time to be paid for hours worked on a Sunday. Time and a third is also frequently used. Some employers don’t offer different overtime rates according to what day is worked, and instead will increase the hourly rate offered the more hours that are worked e.g. payment will be made at normal time for the first 5 hours of overtime worked in a week, then at time and a half for the next 5 hours on top of that, then at double time where more than 10 overtime hours are worked. It is important to consider the Working Time Regulations here though, because, unless the employee has signed an ‘opt out’ form, working hours should not exceed an average of 48 per week.

Whilst it is at the employer’s discretion to set the overtime rates, it is advisable to have a set rate across your entire workforce, and not to have separate rates for men and women, or separate rates for those working full time and those working part time.

There are some industries where workers are subject to separate legislation relating to overtime rates and specific advice should be taken in this regard.

For more information on overtime, please contact our Advice Line on 0844 892 2772.

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