If your employees have contracted hours, anything they work over and above this is considered to be overtime. As an employer, you are not legally obliged to pay for overtime provided that average pay for the total number of hours worked does not fall below the national minimum wage.
However, this does not mean that you shouldn’t pay overtime. It may be that your company has a fixed policy on overtime. If this is the case, it should be enforced for all members of permanent staff with contracted hours. Alternatively, some employees may have been offered a set amount of overtime pay within their employment contracts. If this is the case, you will need to adhere to these conditions.
Why should I pay for overtime?
Paying staff who work overtime can be worthwhile as it will help to attract new employees to the role, put extra money in employees’ pockets and help to retain staff members who feel they are being justly rewarded for their efforts. This is particularly pertinent for those who work antisocial hours on top of their contracted hours, for example, evenings, weekends and bank holidays.
However, it’s important that overtime is handled carefully so that employees don’t take advantage of your generosity. If you allow staff to work as many hours as they like at a set rate, you may find that they simply stretch out their daily tasks across a longer day, which means you are not getting any return on your investment. Make sure that overtime is controlled, recorded and used productively.
In general, it is simpler to have a blanket policy in place so that if you plan to pay overtime everyone gets paid a similar rate, for example, time-and-a-half or double their normal hourly wage. This makes it fairer for staff across the board and also makes it easier to calculate overtime pay rather than working it out for each individual employee.
Arranging overtime pay
If you don’t currently have an overtime policy in place, it might be time to have a review. If you decide to pay overtime, you will need to work out how much you are willing to pay and whether the policy will apply to all staff members. Also you will need to now how to calculate overtime. Once you have done this, it will be a case of ensuring that any overtime hours completed are carefully recorded and that employees are paid at the correct rate for these additional hours.
At Cintra Payroll, we are experts in all aspects of payroll. As payroll providers, our job is to ensure that our clients’ employees are paid on time and at the correct rate and that they pay the right amount of tax. If you need help implementing a new overtime strategy or handling your existing overtime arrangements, talk to us at Cintra Payroll. We can also take care of issues such as pay rises, bonuses, holiday pay, maternity and paternity pay, sick pay and workplace benefits.
Why not take the weight of payroll off your shoulders and let us deal with it on your behalf?