By Tina Chander – partner and head of the Employment team at leading Midlands law firm Wright Hassall
The issue of working late can be a sensitive one within many businesses, as the line between flexibility and unhealthy overtime becomes increasingly blurred.
Most people don’t mind staying late occasionally if there’s a vital piece of deadline-dependent work that still needs to be completed, and this is commonplace for organisations across a range of sectors.
However, when unpaid overtime is pushed to unreasonable lengths and negatively impacts personal time and sociable hours, it can have significant implications on employees’ work-life balance.
In 2017/2018 over 600 employers were ‘named and shamed’ as having failed to make payments in accordance with the National Minimum Wage (NMW).
On the clock
Usually, the term overtime means staying behind past contracted hours.
However, this isn’t always the case, as employees who work through their lunchbreak or get to work much earlier than their colleagues are also classed as working overtime.
One of the biggest reasons for salaried staff working later hours is workplace culture, where people fear criticism if they leave on time.
It is important for employers to ensure their contracts give all staff clear guidance on what is expected with regards their working hours – clear parameters will prevent any grey areas becoming more complicated issues later down the line.
Understandably, senior staff, who are on higher salaries, should expect some additional hours just to get the job done.
The bigger issue comes when more junior members of staff are working late, as there is a risk they could end up working below the minimum wage.
Under the working time directive, UK workers cannot work more than an average of 48 hours a week unless they sign an opt-out, and most workers are entitled to a rest break of at least 20 minutes if they work longer than six hours per day.
While employers do not have to pay for overtime, an employee’s average pay for the total hours worked must not fall below the National Minimum Wage.
If an employee is continually working over their contractual hours and their average pay falls below the National Minimum Wage, the employer can face both civil and criminal penalties.
Under civil penalties, the employer will be issued with a Notice of Underpayment and they will be required to pay a penalty to the Secretary of State within 28 days. Alternatively they may be ordered to ‘self-correct’.
The current financial penalty is 200 percent of the total underpayment up to a maximum of £20,000 (reduced by 50% if it is complied with within 14 days of service).
Employers who fail to pay in accordance with NMW can be named by HMRC, which can negatively impact operations and relationships.
Where an employer refuses to engage with the civil enforcement procedures, criminal penalties can be applied, which could include the conviction of a summary offence and the fine in respect of this can be unlimited.
It is important that employment contracts address overtime.
Your contract may explain that staff can claim time off in lieu (TOIL) for some overtime, but it’s up to businesses to ensure employment contracts are legal and reflect their own needs and expectations.
Most businesses will accept busier periods require staying later, but if overtime consumes entire evenings or limits time with friends and family it can become much more serious.
It is crucial that policies and contracts are routinely reviewed to allow for overtime and make clear distinctions between what additional time will be covered and what won’t be.
If you are unsure whether your business has the appropriate measures in place, contact our legal team.