03/08/2012
By Carol Smith, Senior Employment Consultant at Croner
Overtime has traditionally been viewed as a necessity, particularly for low-income workers. Basic wages paid for the essentials and overtime afforded the luxuries such as a holiday or a car. Many organisations still use overtime, sometimes on a large scale, either because their employees ask for it and it suits the organisation, or as a means of meeting peaks in demand.
Is it safe?
As with so many areas of personnel management, you need to do all that you reasonably can to safeguard the health, safety and welfare of your employees. Working long hours with insufficient breaks can take their toll on employees. Tiredness can lead to accidents and mistakes, plus productivity can suffer as they slow down and take longer to complete jobs. Regular long working hours can also have an effect on health.
What about welfare?
Overtime may well bring in more income, but can hardly benefit employees in any other way. Consider these points carefully before having your employees work anything more than occasional overtime.
Indications of what are appropriate lengths of working time and frequency of rest breaks are set out in the Working Time Regulations 1998. Generally adults should work no more than 48 hours per week averaged over a 17-week period. Younger people have even more limited work periods.
These limits may be exceeded in only two circumstances. First, they do not apply to executives, who have control over their own working time. The second is employees voluntarily signing an agreement to opt out of the 48-hour limit.
Compensation
Surprisingly, there is no obligation to pay employees for working extra hours. For example many middle and senior managers are contractually required to work reasonable amounts of overtime without additional remuneration. However, most employees are paid for overtime work either at their normal rate of pay or, more commonly, at an enhanced rate.
Overtime compensation often features in national or local trade agreements or results from negotiations with domestic trade unions. However, if these aren’t in place, you can set your own conditions. If you want to change existing arrangements find out what is stated in the employees' terms and conditions of employment, or what has become custom and practice and thus contractually binding.
Your contracts of employment should make clear the arrangements for overtime work. For example, is it compulsory, and if so, how much? If overtime is not a regular feature but is compulsory when there is a business need, give examples of when this might be the case and indicate a reasonable amount of notice that will be given to enable affected employees to make any necessary domestic arrangements.
Take care not to discriminate when organising overtime work. Do not, for example, assume that only men need overtime or are prepared to work it. Part-time employees are entitled to the same rates of overtime as full-time employees, but should work to the same hour’s threshold so that they do not earn more for the same hours as their full-time colleagues.
Instead of payment for overtime you may choose to compensate people by giving them time off in lieu. If you do this you should make clear when the owed time off may be taken. The danger in this approach is that employees can accumulate large amounts of time off, which they then demand to take as weeks of holiday. This is useful if work runs out, but otherwise can be catastrophic. To avoid this problem, insist that no more than, say, eight hours of time off may be accumulated and that it must be taken, say, within one month.
Overtime does have its uses, in which case think carefully how you plan and regulate it. But at a time of high unemployment, increasing demands for leisure, and greater use of flexible work arrangements, is it really the answer to your manpower needs?
Croner, provides information, advice and practical online tools to help employers deal competently and confidently with a wide range of HR issues. Find out more at www.cronersolutions.co.uk
