Need some advice on overtime and the related pay calculations? Unsure as to the rules for overtime worked on a public holiday? Here’s a handy guide to help you...
The Working Time Act states that an employee must not work more than an average of 48 hours per week in any four-month period. Overtime is included in this calculation, so if your employees have been working a lot of overtime, it’s important to ensure that you’re not breaching the rules concerning maximum weekly working hours.
While in general, the four-month reference period applies, certain industries may be subject to a longer reference period.
Do I have to provide a higher rate of pay for overtime?
While overtime is work that’s done over and above normal working hours, employers aren’t obliged to pay a higher or premium rate for such overtime unless the employer is required to do so due to one of the following:
- An industry agreement
- A collective agreement
- A contractual agreement
When calculating an employee’s holiday entitlements, all time worked will qualify for paid holiday time,
including overtime. As such, do be mindful that overtime can have a significant impact on your employees’ annual leave entitlements – and this is particularly the case when it comes to part-time employees.
Despite overtime contributing to the amount of time an employee may take off, it does not, as a general rule, contribute to the holiday payment the employee is entitled to for such time off.
As noted, the general rule is that an employer does not have to factor in any overtime worked when calculating an employee’s ‘normal weekly remuneration’ for holiday pay purposes.
However, the tribunals have been very clear that when any overtime worked is ‘regular and rostered’ - such that it forms a normal part of working practices and a normal part of an employee’s working week - then overtime should be factored into the calculation.
What are my responsibilities for public holiday pay (allowances)?
When it comes to an employee’s entitlement to public holiday pay, an employer is not required to factor in overtime at all.
If an employee is getting a paid day off, or they’re getting an additional payment for having worked the public holiday, then their pay calculation is as follows:
- If the public holiday falls on a day the employee has worked or would normally have worked, then they’re entitled to be paid the equivalent of the hours they had worked on their last working day before the public holiday.
- If the public holiday falls on a day that the employee doesn’t work and where they don’t normally work on that day, then they’re entitled to be paid the equivalent of 1/5th of their last working week.
However, when calculating the employee’s last working day, in respect of (a) above, or 1/5
th of their last working week in respect of (b), then an employer is entitled to exclude any hours worked as overtime.
If you have any questions regarding the issues in this article, please don’t hesitate to contact our 24 Hour Advice Service on 0818 923 923, where an advisor is on hand to help.
