Do I Have to Pay Overtime Rates in the UK?

As an employer, you may fix specific working hours within your employee’s employment contract. These are considered an employee’s normal hours of work. Where an employee works beyond these hours, it is considered overtime. Sometimes you may require your staff to work overtime. For example, this may be to ensure your business is sufficiently staffed for a busy period. Employment law in the UK contains rules relating to employees working overtime that you must be aware of. This can help you avoid timely and costly problems for your business, including legal disputes. This article will briefly explain the basic rules associated with employees working overtime and look in more detail at the rules surrounding overtime rates in the UK.

What Are the Basic Rules About Working Overtime?

There is no compulsory requirement for an employee to work overtime unless their contract states so. However, you can require your employees to work overtime, as stated in the contract, in the following capacities.

There are rules regarding the maximum number of hours an employee can work in the UK, including any overtime work. Generally speaking, this should be no more than 48 hours per week, on average. However, where an employee has agreed in writing to exceed 48 hours, they can do so.

Does an Employer Have to Pay Their Employees Overtime?

There is no legal requirement in the UK for you to pay employees overtime rates. There is, therefore, no statutory amount of overtime rate of pay. However, there are some rules concerning overtime pay. For example:

• there is a legal requirement that when working out the total hours an employee has worked and the total pay relating to this, that the pay does not amount to less than the National Minimum Wage per hour. This will vary depending on the age of the employee; and
• you must treat part-time employees fairly and, therefore, the same rules must apply as for full-time employees.

Paying Your Employee Overtime

Where you opt to pay your employees for working overtime, you will call this overtime pay. You may choose to pay overtime as a way to persuade your employees to work over their standard hours. It is more usual to pay hourly employees overtime than those you pay a salary. 

As an employer, it is helpful to ensure that you detail any overtime pay rates in your employee’s employment contract and also detail the methods for calculating overtime pay. You can also agree on these details with the employee verbally.

Examples of Overtime Pay

Here are some examples of what overtime pay might look like:

• time off instead of extra pay termed ‘time off in lieu’ (TOIL); or
• paying hours worked outside of the employee’s regular hours at a higher rate than usual hours.

Furthermore, unless you have otherwise stated in the contract, you have no obligation to pay a part-time employee overtime. However, you must pay them overtime when: 

• they have worked the equivalent hours to a full-time employee, and a full-time employee would usually receive extra pay for working above these hours; or
• your employee is working unsocial hours, and you would typically pay full-time staff working these unsocial hours overtime.

Unsocial hours include hours of work that are outside of hours that would be considered normal working hours. For example, employees who work night shifts are usually considered as working unsocial hours. Usually, if an employee commonly works outside of 9am-5pm Monday to Friday, this category will apply to them.

Finally, where you offer TOIL instead of overtime pay, you should detail this in any written agreement with the employee. Therefore, the employee has the right to agree on the terms of this. These terms should contain information concerning how to book the leave, options regarding when to take it, and should outline the situation should it not all be taken before the annual leave ends.

Key Takeaways

There is no legal requirement in the UK for you to pay employees overtime rates when requiring them to work overtime. However, where you choose to, there is no statutory amount you are required to pay. This article has detailed the basic rules regarding an employee working overtime and the rules relating to any overtime rates paid. You must follow these rules and detail any of your own rules within the employment contract or any other written agreement with the employee for clarity.

If you need help with rules regarding employees working overtime and overtime pay, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today on 0808 196 8584 or visit our membership page.

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