Small Business

What are the Laws on Employee Overtime in the UK?

Your complete guide to the rules surrounding overtime in the UK...
Sean QuinnPosted on Friday, March 31st 2023

When things get busy in your business, sometimes employees working overtime can be inevitable. Understand your responsibilities for paying employees for overtime, and keeping track of their approved overtime hours.

What is overtime?

Overtime is generally considered to be any hours which are worked above your contracted hours, as set out in your employment contract.

Should employees be paid for overtime?

If employees work longer than their contracted hours, there is no legal right to be paid for overtime. However, the average amount they are paid per hour worked (including overtime hours) should not fall below the National Minimum Wage.

Most employers do pay employees for the hours they work as overtime, but this will be stipulated in their employment contract.

Some employers will offer additional time off instead of paying employees for overtime; this is known as Time Off In Lieu, and employees would need to agree with their employer when this time off is to be taken.

Should overtime always be paid at a higher rate?

Again, employees have no legal right to special rates of pay for overtime hours. However, many businesses will apply a pay rate multiplier to overtime hours, particularly any which are worked during unsociable hours, during the weekend or on a Public Holiday.

Whether or not an employee is due a special rate of pay for their overtime hours should be stipulated in their employment contract.

Are part time workers entitled to overtime?

There is no legal definition of a part time worker, but generally a full time worker is assumed to be someone working greater than 35 hours a week.

Part time workers should be treated in the exact same way as full time workers with regard to overtime. Generally, a part time worker will be paid their usual rate until their hours match those of a normal full time worker in their business. Any overtime above this should be paid at a special rate, if a full time worker would also receive additional pay for those hours.

Part time workers might also receive additional pay for overtime if they work unsociable hours, if a full time worker would also receive additional pay for those hours.

Can employees be forced to work overtime?

An employee in the UK cannot be made to work overtime, unless they have already agreed to it as part of their contract of employment.

Even if they have agreed to work overtime, employees in the UK are still covered by the Working Time Directive, which states that employees must not work greater than 48 hours per week on average (usually calculated over a 17 week period).

Employees can voluntarily opt-out of the 48 hour maximum if they wish to, but they can also cancel their opt-out agreement at any time.

Can an employer stop someone from working overtime?

Yes - unless an employee's contract guarantees them overtime, an employer can stop them from working more than their contracted hours. This policy must be applied fairly across all employees without discrimination though, meaning that employers cannot offer overtime hours to some employees but not others.

Is overtime pay included in holiday pay calculations?

Usually, an employee's holiday pay should be the same as their average pay, worked out over the previous 52 weeks. According to a ruling in 2022, employers must also take into account any pay for overtime (as well as bonuses and commission earned) when calculating an employee's holiday pay due for at least 4 weeks of their annual leave.

Employers can decide whether to include overtime pay in their average pay calculations for the remaining 1.6 weeks of statutory annual leave, but they are not obligated to do so.

For more helpful information about tracking your employee's time and UK legislation, check out our guide to working time regulations in the UK.

The information provided here is intended as a guide only and is our best interpretation of current legislation. This does not constitute legal advice; consult with a legal professional for advice on your business' specific situation.

Ready to save your
business time and money?