Overtime is a regular feature of working life in England, helping businesses manage busy periods while giving employees the chance to earn extra income. At times rules surrounding overtime are not always clear. Rights and obligations depend on employment contracts, workplace policies and employment law. Understanding how these interact is key for both employers and employees to ensure fair treatment and avoid potential disputes.
What is overtime?
Overtime simply means any work done beyond an employee’s normal contractual hours. These hours are usually set out in the employment contract, though they can sometimes be implied by custom and practice.
Overtime can be compulsory or voluntary. Compulsory overtime may be guaranteed, where extra hours must be offered and worked, or non-guaranteed, where hours are offered as needed but must be accepted. Voluntary overtime gives employees the choice to accept or decline extra work. The type of overtime usually depends on the terms of the contract and company policies.
Is there a legal right to overtime pay?
There is no automatic right to extra pay for overtime. Whether additional hours are paid depends on the employment contract. If a contract sets an overtime rate, such as time and a half or double time, the employer must pay it. If not, payment is at the employer’s discretion, as long as average pay does not fall below the National Minimum or Living Wage. For salaried staff, contracts often state that the salary covers all reasonable extra hours, but employers must still ensure overall pay meets the legal minimum.
The Working Time Regulations
The Working Time Regulations 1998 (WTR) set legal limits on working hours and entitle workers to rest breaks. Employees cannot be required to work more than an average of 48 hours a week over a 17-week period unless they have signed an opt-out agreement.
Workers must have at least 11 consecutive hours of rest every 24 hours, one full day off each week (or two every fortnight), and a 20-minute break during shifts longer than six hours. Night workers are limited to an average of eight hours in any 24-hour period.
Employees cannot be forced to opt out or penalised for refusing, and rest break entitlements apply regardless of any opt-out.
Employer responsibilities
Employers have broader responsibilities when managing overtime, they must ensure overtime arrangements comply with employment contracts and the law. Employers are legally required under the WTR to keep records showing compliance with working time limits and rest breaks, and to apply overtime opportunities fairly without discrimination.
Holiday pay must also reflect regular and consistent overtime, even if voluntary, to ensure workers are not paid less than usual when on annual leave. Irregular or one-off overtime is generally excluded.
Employee rights
Employees are entitled to be paid for overtime in line with their contract, and they can refuse to work more than the 48-hour average weekly limit unless they have opted out. They are also entitled to the daily and weekly rest periods guaranteed by the WTR and to rest breaks during their working day. An employee cannot be dismissed or treated unfairly for refusing to work hours that would breach these limits.
For many employees, it is also important to understand how overtime affects holiday pay, redundancy pay and pension contributions. Overtime may count towards redundancy pay and pensionable pay if it is regular and forms part of normal earnings, though this depends on the scheme rules in the case of pensions.
Understanding the rules around overtime helps both employers and employees maintain fairness, compliance and good working relationships. For further information or advice please contact Hannah Funnell on 01628 962232 or email Hannah.funnell@blasermills.co.uk.
