UK Overtime Laws

April 9th 2024

It is common for employees in numerous industries to have to work beyond their regular hours, exceeding the standard workday or 4 workweek hours.

In the UK, employers are not obligated to compensate workers for overtime hours worked according to UK Labour Laws.

Nevertheless, it is required that the average pay for all hours worked by an employee must meet or exceed the National Minimum Wage.

Information regarding the payment rates and calculation of overtime compensation is typically included in an employee’s contract.

This guide aims to address questions and offers court cases in the UK to present the right measures to be taken when it comes to the fair execution and payment of overtime.

This article covers:

Working Overtime in the UK

Employees in the UK are not obligated to work overtime unless their employment contract specifies that they are required to do so.

According to the Work Time Directive of 1998, it is not permissible to compel an employee to exceed an average of 48 hours of work per week.

However, employees have the option to voluntarily agree to work beyond this limit, provided there is a written agreement in place. They may agree to work additional hours, but this agreement must be documented in writing and signed by the employee.

If the contract does not guarantee overtime, employers may prohibit their employees from working it.

Employers cannot discriminate against employees by prohibiting some from working overtime while allowing others to do so.

Overtime Pay in the UK

There is no legal requirement in the UK for employers to provide payment for extra hours worked by employees.

Furthermore, there is no set minimum statutory amount for overtime pay.

The rates for overtime compensation depend on the policies of the company and the industry in which the employee operates.

Nevertheless, it is crucial to guarantee that the average pay for the total hours worked meets or exceeds the National Minimum Wage.

Whether or not employers choose to provide overtime pay to their employees is contingent upon the contractual agreements established.

Should overtime be determined in employment, the specifics of overtime pay rates and how they are calculated would typically be outlined in the employment contract.

It is advisable to include clear provisions regarding overtime pay and calculations in the contract to prevent legal complications or misunderstandings.

Night Working Hours in the UK

Employees who work at least 3 hours during the “night period” on a regular basis are considered night workers.

The night period typically runs from 11 p.m. to 6 a.m., but employers and workers can agree to a different period, as long as it is 7 hours long and includes the hours between midnight and 5 am.

For employees to work night shifts, an agreement must be made in writing.

Alternatively, employees may be classified as night workers if there is a collective agreement in place, such as a trade union agreement, which defines their work as night work.

Night workers are subject to the National Minimum Wage, but there is no special rate for working at night.

Sleep-in-shifts in the UK

When it comes to sleep-in shifts, workers are paid the National Minimum Wage for certain hours depending on the type of shift they are assigned to.

If workers are expected to sleep for the majority of a sleep-in shift, such as care workers who are provided with appropriate sleeping arrangements, they will only receive the National Minimum Wage for the time spent performing tasks while they are awake.

However, if workers are expected to work for most of their shift, even if they are permitted to rest between tasks, they will be paid the National Minimum Wage for the entire duration of their shift.

Employers are required to ensure that night workers do not work beyond an average of 8 hours within a 24-hour period, which is typically calculated over a 17-week period.

However, if agreed upon by both the workers and the employer, this average can be calculated over a longer period of up to 52 weeks.

Regular overtime is factored into the average calculation, while occasional overtime is not and it is not possible for workers to opt out of this limit.

Night workers facing hazards or strain cannot exceed 8 hours of work within a 24-hour period. A risk assessment and free health assessment are required, and agreements may outline the hazards. Exceptions to night work limits may apply.

Opting for Time off Instead of Pay for Additional Hours Worked (Time Off in Lieu) in the UK

Time off in lieu (TOIL), also known as “banked hours” in the UK, is an arrangement where employees are compensated for any additional hours worked with paid time off.

In essence, this agreement allows employees to accumulate their extra hours (bank them) to be used as paid annual leave in the future. Under the TOIL system, employees must receive payment at a rate of time-and-a-half for every hour of overtime worked.

It is important to note that employers who choose to implement TOIL must have a written agreement in place. This agreement should be signed by the employee, confirming their understanding and acceptance of the TOIL arrangement.

Overtime Pay and Annual Leave in the UK

For workers who frequently work overtime in the UK, compensation and holiday pay calculations must include the additional worked hours, as per a ruling implemented by Employment Appeal Tribunal (EAT) in 2017.

A “regular” overtime worker is defined as someone who has worked overtime in 5 out of the last 8 weeks.

Although there is no legal obligation to pay employees for working extra hours in the UK, the effect of overtime is reflected in the holiday pay of employees who regularly receive overtime, commission, or bonuses.

Almost all employees in the UK have a legal entitlement to 5.6 weeks of time off known as statutory leave or annual leave.

By law, employers are required to incorporate overtime into a minimum of 4 weeks of annual leave pay. They can decide whether to include this additional salary in the remaining 1.6 weeks of the statutory annual leave or pay at the basic rate. The choice is at the discretion of the employer.

Calculating overtime holiday pay may be more challenging when an employee’s overtime hours vary from week to week. In such cases, the average weekly pay from the last 52 weeks should be used.

For part-time workers, as of 2022, overtime entitlement is now based on the past 52 weeks of work, as opposed to the previous 12-week period. Additionally, it is a legal requirement to apply the same overtime pay policy to part-time employees as it is for full-time employees.

In summary, holiday pay should always align with an employee’s usual earnings, and for some employees, overtime constitutes a significant portion of their earnings.

Part-time Workers Overtime in the UK

In the case of part-time workers, UK employers should provide overtime payment under the following circumstances:

  • If part-time workers work more hours than full-time staff (and the full-time staff receive higher pay for those additional hours).
  • If part-time workers work during anti-social hours (and the full-time staff receive higher pay for such anti-social hours).

Legal Cases Relating to Overtime Compensation in the UK

Below, we present law cases relating to fair overtime compensation for employees in the UK:

1. UK Court of Appeal Gives Verdict on Inclusion of Non-Guaranteed and Voluntary Overtime in Holiday Pay Calculation

In Flowers and others v East of England Ambulance Trust, Mr Flowers and his colleagues, who worked in various roles for the National Health Services Trust in the ambulance services, argued that their holiday pay should include both non-guaranteed overtime and voluntary overtime.

Their employment was governed by the NHS terms and conditions of service known as Agenda for Change, which stated that pay during annual leave should include certain supplements and payments for work outside normal hours. It was calculated based on what the individual would have received if they had been at work, taking into account the previous three months or any other agreed reference period.

The Employment Tribunal (ET) ruled that the workers were entitled to have their holiday pay calculations include non-guaranteed overtime, as it was an integral part of their contractual obligations and they couldn’t leave their job in times of emergency. However, the ET did not include voluntary overtime in the calculation, as it was not compulsory, had no clear pattern, and was not relied upon by the Trust.

Further, this principle is applicable to the four weeks of annual leave mandated by the Working Time Directive and does not extend to the additional 1.6 weeks of annual leave provided to workers in the UK under the Working Time Regulations.

Key lessons from this case:

  1. Employers should carefully review their employment contracts and relevant regulations to ensure compliance with the correct calculation of holiday pay, taking into account the specific terms and conditions applicable to their workforce.
  2. The terms and conditions of employment, such as the NHS Agenda for Change, can play a crucial role in determining the inclusion of overtime in holiday pay calculations.
2. UK Employment Tribunal Rules Against Employee Fired for Refusing to Work Overtime

In the Edwards v Bramble Foods Ltd case, employees of Bramble Foods were required to work additional hours when necessary, according to the employees’ terms of employment.

Starting mid-September 2015, the company experienced its busiest period for eight weeks and sought to change its overtime system and requested employees to select four to eight Saturday mornings during the busy period for overtime work. 

However, one employee declined, stating that she preferred spending those mornings with her husband. The company engaged in informal discussions with the employee to understand her reasons for refusing the new system, explaining that the proposed changes aimed to distribute the workload more equitably among all employees and meet the increased demand during the busy period.

Despite these discussions, the employee persisted in refusing to work on Saturday mornings and openly criticized her colleagues who had agreed to the new system, boasting about her plans to have a leisurely lie-in while they were working. Her behavior caused dissatisfaction among her coworkers, and the employer initiated disciplinary proceedings. Eventually, she was dismissed and claimed unfair dismissal.

The Employment Tribunal supported the employer’s position, stating that the employee had been provided with a contract of employment that indicated she may be required to work additional hours. She lacked a legitimate reason for refusing a reasonable management instruction and appeared to simply be unwilling to perform the assigned work. The Tribunal concluded that dismissal was unquestionably within the range of reasonable responses in a challenging situation.

Key lessons from this case:

  1. Employers have the right to change overtime systems or work schedules to meet business needs, as long as they communicate the changes clearly to employees and engage in discussions with them.
  2. Employees may be required to work additional hours or overtime if it is stated in their terms of employment or contract.
  3. Employees who unreasonably refuse to comply with reasonable management instructions, especially when it is necessary to meet business demands, may face disciplinary action, including dismissal.
  4. When evaluating the fairness of a dismissal, the Employment Tribunal considers factors such as the reasonableness of the management instruction, the employee’s refusal without a legitimate reason, and the potential impact on the business if the behavior were left unchecked.
  5. It is important for both employers and employees to engage in open and constructive communication to address concerns and reach mutually beneficial solutions whenever possible.

Learn more about UK Labour Laws through our detailed guide.

Important Cautionary Note

This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.