Regular Overtime and Contractual Obligations

When you employ staff, you will have employment contracts or written statements of employment particulars with them. These will specify the fixed hours they must work for your company, where anything additional will be counted as overtime. Employment laws apply when your staff work overtime, and it is important that you are aware of your legal obligations to avoid breaching them. This article will explain regular overtime and contractual obligations and give legal advice to employers like you.

 When May My Staff Work Overtime?

As an employer, you might need your employees to work overtime for various reasons. Sometimes, you will know in advance that you will require them to, but sometimes, only at the last minute. For example, employees may work overtime because:

• other staff are on sick leave;
• it is a busy period for your business, such as during Christmas time; or
• your business has more work to carry out than usual. 

What Types of Overtime Can My Employees Work?

Your employment contracts should detail any overtime hours employees may work for you. They can do so as:

• voluntary overtime;
• compulsory and guaranteed overtime; and 
• compulsory but not guaranteed overtime.

Voluntary overtime means that your contract will say that you may offer overtime hours, and your employees can take any available if they wish. However, neither of you is obligated to do so.

Compulsory overtime is where there are contractual obligations to work overtime. As an employer, if you offer compulsory guaranteed mandatory overtime, you are obligated to provide overtime hours, and your staff must accept them. However, you are not under a contractual obligation to offer additional hours for non-guaranteed compulsory overtime. However, when you do, your employee is under a contractual obligation to accept them and carry out the work. 

Is My Employee’s Regular Overtime Contractual?

You must be clear about whether your employees’ regular overtime is a contractual obligation that you and they must honour. Essentially, your employee’s overtime is contractual where your employment contract details:

• that you require your employee to work overtime; and
• the terms and conditions of overtime work. 

The employment contract does not need to say how many hours of overtime are required. However, where it says what these are and a separate clause exists which says what the rate of pay for the overtime is, this is another indication that the overtime is contractual.

Additionally, overtime is an implied term of an employment contract where it is in a consistent pattern, such as weekly over 12 months. Overtime can also be an implied employment contract term because it is a vital aspect of the employee’s role, so they cannot carry out their duties without it.

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Opt-Out Agreements

A further way to tell if your employee’s overtime may be contractual is when you do not have an opt-out agreement with them. This relates to the legal obligation which protects your staff from having to work more than an average of 48 hours over 17 weeks. Your staff can, however, work more than this where they wish to by signing an opt-out agreement. This effectively means they voluntarily opt out of this law. 

When your staff sign an opt-out agreement, is it advisable to get advice from an employment lawyer to ensure you do not damage their health through long hours.

Legal Implications of Contractual Overtime 

When overtime for your employees is contractual, there are legal implications for you and your employees. This means you must try to document any overtime, such as in a policy or in your employment agreements so there is clarity about it. 

If your employee’s overtime is contractual and they fail to work it, they have breached their employment contract. This means you can take disciplinary action against them, as it could, for example, be employee misconduct. 

Overtime Pay 

A further legal obligation regarding contractual overtime concerns overtime pay. You may offer your employees an enhanced pay rate for this. If you do not state what contractual overtime pay rates are in your employment contract but make overtime a contractual obligation, you are not legally obligated to pay them over their regular pay for these jobs. However, you must ensure that what they receive overall for the total hours worked meets the hourly National Minimum Wage (NMW) rate. 

Also, there are legal implications concerning the amount of holiday pay and pay in lieu of notice an employee has rights to where overtime is contractual. Therefore, it is crucial that you take legal advice from a solicitor. 

Key Takeaways

You may require your staff to work overtime beyond their fixed contractual hours. If so, you may have the following three types of overtime in place: 

• voluntary overtime; 
• compulsory guaranteed overtime; and 
• compulsory non-guaranteed overtime. 

You need to be aware of whether your staff’s overtime is contractual. For example, it will likely be contractual if their employment contracts specify that they must work overtime. Contractual overtime can also be implied, so it is not written in the employment contract. It is important to note that there are legal implications arising from contractual overtime. For example, employees who refuse to work may breach their contract, and you may be able to take disciplinary action against them.

If you are implementing overtime, 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. Call us today on 0808 196 8584 or visit our membership page.

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