When considering the requirement for employees to work overtime, the starting point should be the contract of employment. Many employers will have an ‘express right’ to require an employee to work supplementary hours as the needs of the business dictate.
However, even with an express right, this is not the whole story. Case law has shown there are three broad categories of overtime:
- Guaranteed overtime – a compulsory requirement, but even if the employee is not actually required to work it the employer must pay them for it.
- Non-guaranteed overtime – the employer does not have to provide overtime but if it is provided the employee is required to work it.
- Voluntary overtime – where an employee cannot be required to work overtime, and the employer does not have to provide it.
Holiday pay implications
Employers will have struggled to ignore the raft of case law on holiday pay over the last couple of years. The current position is that overtime (even voluntary overtime that is sufficiently regular and settled) must be taken into account when calculating holiday pay entitlement for periods of holiday following the period where overtime was worked.
The reasoning behind this principle is that the courts require employers to enable their employees to take their Working Time Directive annual leave entitlement (which has roots in health and safety, among other factors) and not disincentivise them from doing do.
If the employee is reluctant to take holiday because of the financial implications – for example, because they have no opportunity to earn overtime payments – this could result in a claim for the underpayments.
The fact that overtime payments need to be factored in when calculating holiday pay for holidays taken during subsequent pay periods may also mean employers should think carefully about whether there is actually a business need to insist on overtime worked in the run-up to Christmas. The overtime bills will be high, as will the holiday pay bill for annual leave taken at Christmas or early in the new year.
There is, quite rightly, an increased emphasis on work-life balance and mental health in recent times. Employers should be mindful of the social and moral implications of insisting that employees work overtime at Christmas, but also be aware that some individuals may be financially reliant on it being offered – particularly if this has been the case in previous years.
With schools closed over the festive period this also poses a challenge for parents who may be less able to work overtime if they do not have access to childcare. A policy of insisting on overtime being worked by all employees could cause a disadvantage to this category of employee, which, in turn, could lead to discrimination claims.
An employer insisting on overtime being worked across the board should be comfortable they are able to show there were clear business needs for this, and no less discriminatory ways of reasonably achieving those aims. Where possible, it would be best practice to offer overtime – rather than insist that it is worked – and, where this process is adopted, ensure that overtime is offered fairly to all.
Religion and beliefs
Finally, remember that some individuals will prefer to avoid working over Christmas for religious reasons. Conversely, those who do not celebrate Christmas may be very happy to earn some extra pay during this period.
It is important that no assumptions are made in relation to religion and belief. Again, if possible, best practice would be to offer rather than require that overtime be worked.
Nina Robinson is a director at ESP Law