Payment for overtime hours: what's the law?
According to data from salary survey company Cendex, more than half of UK employees are now working additional unpaid hours every day. Where staff work more than their contracted hours, do employers have to pay them for the extra hours?
In the case of salaried employees working in professional roles, it’s common for their employment contracts to state that they may be required to work such additional hours in excess of their normal working hours as are reasonably necessary for the proper and effective performance of their duties and/or to meet business needs, without any additional payment for any hours worked in excess of their normal hours of work. Subject to compliance with the Working Time Regulations 1998 relating to rest breaks, rest periods and the maximum 48-hour working week and national minimum wage (NMW) provisions, this is a lawful contractual provision, and it means that the employer wouldn’t then need to pay such employees for their additional overtime hours.
Conversely, if employment contracts contain a right to payment for overtime hours (whether that’s voluntary or compulsory overtime), which is often the case in respect of hourly-paid employees, that’s legally binding too, and the employer would then need to pay employees who work overtime accordingly. There is nothing though in law that says overtime needs to be paid at time and a half, double time, etc. and therefore employers can set overtime pay rates as a matter of contract, subject to NMW compliance.
If employment contracts are completely silent on the issue of overtime, employees’ consent is required to their working additional hours and the employer will also need to agree with them what they’re to be paid for those overtime hours.
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