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New ACAS Guidance on Overtime Rules

What is Overtime?

Overtime is basically considered as hours that an employee has worked for, over and above their regular full time working hours. If an employee works fixed working hours, any amount of time worked additionally will be considered as overtime.

An employer may request overtime to meet with increasing demand for their services. For example, a waiter may be asked to work for additional hours during peak holiday season or during a shortage of staff. Any overtime may be either compulsory or voluntary. It has been seen that a well-designed system of paid overtime is more common with staff who are paid on an hourly basis, as compared to fixed salary staff.

An employee’s decision to work overtime is mostly dependent on the contract of employment. It is required that the details pertaining to overtime may be set out in the contract of employment at the time of recruitment.

Categories of Overtime

Overtime is an obligation of both employer and employee depending on the category of overtime concerned. There are three common categories:

  • Voluntary overtime
  • Guaranteed and compulsory overtime
  • Compulsory and non-guaranteed overtime

In case of voluntary overtime, there is no obligation to either employer or employee. The employer is not liable to pay for overtime to the employee and if the employer chooses to offer overtime, the employee has full rights to accept or deny it.

In case of compulsory and guaranteed overtime, the employer is obliged to pay for the overtime to the employee, whilst the employee is obliged to accept the offer and work those hours.

When compulsory and non-guaranteed overtime is concerned, the employer is not obliged to offer overtime to the employee. But, if the employer chooses to offer overtime, the employee is obliged to accept the proposed offer and work extra hours.

The recently updated guidelines by ACAS provides that if an employer is willing to rely on either guaranteed or non-guaranteed overtime, he should clearly lay out the terms of employment, stating that overtime is mandatory. Details pertaining to this policy can also be added in the staff handbook.

There are certain regulations on working hours, including overtime hours for an employee, in order to protect their safety and health. As per the Working Time Regulations Act 1998, the regulations state:

  • an employee must not work more than 48 hours in a week. In order to opt out of this regulation, a written agreement between employer and employee is necessary.
  • An employee has a right to take one day off per week, or two days off in a fortnight.
  • For every 24 hours, a minimum of 11 hours’ rest is mandatory for an employee.
  • An employee has a right to take a 20 minute break if his shift lasts for longer than 6 hours.

While it may be prudent for employers to offer overtime payment, or a higher pay for additional hours worked, as an incentive to accept the overtime, there is no particular rule that requires the employers to pay overtime to their employees.