Overtime conundrum

Overtime conundrum

Excessive, unpaid working hours can suddenly come back to haunt companies, warns Tina Chandler


Tina Chandler

Partner

Wright Hassall

Working late can be a sensitive issue within many businesses as the line between flexibility and unhealthy overtime becomes increasingly blurred. Most people don’t mind staying back occasionally if there’s a vital piece of deadline-dependent work and this is commonplace across a range of sectors. However, when unpaid overtime is pushed to unreasonable lengths, it can have significant implications on employees’ work-life balance. In 2017/2018, more than 600 employers were ‘named and shamed’ as having failed to make payments in accordance with the National Minimum Wage (NMW).

The culture of overtime
Usually, the term overtime means staying behind past the contracted hours and working late into the evening. However, this isn’t always the case, as employees who work through lunchbreaks or get to work much earlier than their colleagues are also classed as working overtime. One of the biggest reasons for salaried staff working longer is workplace culture, where people feel they cannot leave the office on time for fear of criticism. It’s important for employers to ensure their contracts give all staff clear guidance on what’s expected – clear parameters will prevent any grey areas becoming more complicated issues later down the line.

Junior and senior staff
Understandably, senior staff on higher salaries should expect some additional hours to get the job done. The bigger issue comes when junior staff are affected, as there’s a risk they could end up working below the minimum wage. Under the working time directive, UK workers cannot work more than an average 48 hours a week unless they sign an opt-out, and most workers are entitled to a rest break of at least 20 minutes if they work longer than six hours per day. While employers do not have to pay for overtime, an employee’s average pay for the total hours worked must not fall below the NMW.

Possible penalties
If an employee is continually working beyond contractual hours and their average pay dips below the NMW, employers can face both civil and criminal penalties, once it’s been reported by the worker. Under civil penalties, the employer will receive a Notice of Underpayment and they’ll be required to pay a financial penalty to the Secretary of State within 28 days. Alternatively, they may be ordered to ‘self-correct’. The current financial penalty is 200 percent of the total underpayment up to a maximum £20,000. Those who fail to pay in accordance with NMW can also be named and shamed by HMRC, which has obvious negative consequences. Where an employer refuses to engage with civil enforcement procedures, criminal penalties can apply.

Comprehensive contracts
It is important that all employment contracts address overtime and reflect your policy. It may be necessary to specify that staff will sometimes have to work unpaid overtime, but you must not ask them to work beyond 48 hours a week for legal reasons. Your contract may also explain that staff can claim time off in lieu for some overtime, such as working evenings or weekends, but it’s up to businesses to ensure their employment contracts are legal and reflect their own needs and expectations. For those unsure, it’s vital to seek professional guidance during the drafting of contracts.

Finding the perfect balance
While overtime has become an accepted part of modern business, with employees favouring increased flexibility over rigid and structured days, a fair balance is essential. Most people will accept that busier periods require staying later so work is completed, but when this consumes entire evenings or limits time with loved ones, it can quickly escalate.

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