Overtime refers to the length of time an employee works on top of their normal working week. We also use the term when talking about payment for those extra hours.
Most workers have a fixed number of hours they work each week in their employment contract. Sometimes, they may have to or volunteer to work more than their contract requires. We refer to that extra work as overtime.
For some employees, overtime is the only way they can boost their take home pay, unlike sales representative who earn a commission or their bosses who get an annual bonus.
Overtime and the law
In some countries, special hourly rates of pay are compulsory when workers do extra hours, while in others they are not.
In the US
In the United States, employers that require or allow their workers to work overtime are usually required to pay a premium rate of at least time and a half.
According to the US Department of Labor, if your employer requires or allows overtime work, you’re generally entitled to premium pay. Under the Fair Labor Standards Act (FLSA), employees must receive one and a half times their regular rate for any hours worked over 40 in a workweek.
However, the FLSA doesn’t require extra pay for work done on weekends, holidays, or regular days off unless those days include overtime hours. Also, bonus payments must be included in your regular rate when calculating overtime. Any additional compensation for working nights or weekends is typically based on agreements between the employer and the employee.
In the UK
In the United Kingdom, however, it is up to the employer. Paying a premium rate is not compulsory.
According to the British Government, overtime is defined as any work done beyond the normal working hours outlined in your employment contract. While employers in the UK are not required to pay extra for overtime work, they must ensure that your overall average pay meets the National Minimum Wage.
Typically, the details of overtime pay rates and calculations are specified in your employment contract
Types of overtime pay
Time and a half
If you are paid $10 per hour for a 40 hour week and time and a half for any additional hours, you will get $10 + $5 = $15 for each additional hour. In this context, time means your rate of pay per hour during your normal working week, i.e., $10.
Double time
If your company has a special overtime rate of double time for Sunday, you will be paid $10 x 2 = $20 for each hour that you work on Sunday. In other words, your Sunday premium rate is double time or $20 per hour.
Triple time
Maybe your company pays triple time on, for example, Christmas Day, Easter Sunday, or New Year’s Day. If you work on those days, you overtime pay for each hour would be $10 x 3 = $30.
If you are not sure what your employer’s overtime rates are, either check in your employment contract, ask your boss, or talk to somebody in the HR department. HR stands for Human Resources.
Managers and directors
In some countries or companies, managers and directors do not get overtime pay. They are salaried rather than hourly paid employees. They are expected to work the extra hours if they are necessary. However, in most companies, they get a bonus which is typically linked to their performance or annual profits.
Whether managers receive money for doing extra hours may depend on whether they are exempt or non-exempt employees. An exempt employee is paid a salary, while a non-exempt one receives an hourly wage.
Additionally, certain professions, such as those in healthcare or emergency services, may have different overtime regulations due to the critical nature of their work, often requiring longer or irregular hours.
It’s also important to note that some collective bargaining agreements or union contracts may stipulate specific overtime terms, overriding standard company policies in certain industries or professions.