Manage overtime

Overtime and employment contracts

If you expect employees to work regular overtime, it's a good idea to state this clearly in the employee's contract, together with:

• whether overtime is compulsory or voluntary
• rates of overtime pay
• when overtime becomes payable
• any notice arrangements for overtime working
• the authorisation process, eg overtime must be agreed in advance and in writing by the employee's manager

Overtime payment rates

Overtime rates are for you to agree with your employees. There are no minimum statutory levels but rates may be fixed by an industry-wide agreement.

Overtime pay varies from business to business. Typical rates are:

• weekdays and Saturday mornings - time-and-a-half
• Saturday afternoons, Sundays and public holidays - double-time (Sunday shop workers may be an exception)
• Christmas Day and New Year's Eve - double-time and above

When does overtime become payable?

It's important to define the point at which overtime becomes payable. Many employers expect employees to be reasonable in finishing a task without demanding overtime payment. This may be 15 minutes for manual workers or as long as an hour for supervisory or management posts.

Other organisations vary premiums according to the length of time worked, eg time-and-a-third for the first two hours and time-and-a-half after that.

Call-out payments

Employees who are called out from home to perform urgent duties normally receive call-out allowances or guaranteed hours at overtime rates. As call out is likely to occur at nights, weekends or statutory holidays, it's usually paid at the relevant overtime rate. Many organisations pay agreed travelling time as well as actual hours worked. Usually employees are paid for being on standby ready to respond to any call outs. You may decide to pay at different rates for time on standby or pay a separate fixed allowance. See our guide on pay - an overview of obligations.

Subjects covered in this guide

• Introduction
• Overtime and employment contracts
• Health and safety issues
• Pros and cons of overtime
• Part-time employees and alternatives
• Using overtime successfully
• Time off in lieu
• Here's how I manage working hours to control costs and avoid unnecessary pressure on staff

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