The new Acas guidance on overtime rights highlights the different types of overtime available; the connection between overtime and pay; and how overtime has an impact with other legislation which protects part-time workers and working time. This quick update is essential to you as a business owner!
Categories of Overtime
1. Voluntary: No contractual obligation for employer to offer overtime or for an employee to accept.
2. Compulsory & Guaranteed: Employer is contractually obliged to offer overtime and the employee is contractually obliged to accept.
3. Compulsory but not guaranteed: Employer may or may not offer overtime. However, if the employer does, the employee has to accept.
It is vital to identify the type of overtime that is in place and should be set out clearly in the employment contract. Stating clearly which overtime is in place allows you as an employer to be able to deal with an employee who refuses. For example, if compulsory overtime is contracted and the employee refuses, disciplinary action may be justified, or if overtime is purely voluntary there is little an employer can do.
Be aware of limits under the Working Time Regulations in relation to working hours and minimum rest periods. Also, working overtime may affect pay. There is no statutory right to be paid overtime worked, however, employers tend to offer it as an incentive. If you choose not to pay overtime, make sure it is line with employment contracts and that additional hours worked do not take staff below Nation Minimum Wage.
Overtime may also have an affect on holiday pay calculations. A recent court decision indicates that all overtime payments should be included when calculating the first 4 weeks of a worker’s statutory holiday pay. The only exception is voluntary overtime worked on a genuinely infrequent basis.
There has been confusion with the types of holiday allowed. Bear Scotland Ltd V Fulton suggested that it is for an employer to choose which type of leave is taken and when. To minimise this confusion, employers can include a clause in their employment contracts.
Alternatively to paying staff for overtime, as an employer you could offer them time off in lieu. This should be checked to make sure you have the contractual right to do so. However, time off in lieu may not always be a practicable option for the business need and payment may be a preferred option still.
Working overtime can be an essential part of the business, which is why it important for you as an employer to be careful not to breach legislation or your employee’s contractual rights. Thus it is important to have clear contracts and policies in place to minimise the risk. Get in touch today to make your overtime policies clear for your business requirement!