Manage overtime

For many businesses, overtime is a useful way of dealing with fluctuations in demand or coping with production bottlenecks. However, where it is used excessively it can be an expensive and inefficient way of organising work.

Where needed, ensure there are managers or supervisors in place, for example, to make sure that health and safety regulations are being followed. See overtime and health and safety issues.

Working time regulations

• Limit maximum weekly working hours and set minimum daily and weekly rest periods. See hours, rest breaks, and the working week. If necessary, you can ask employees, but not young workers, to sign individual agreements opting out of some of the regulations. Do not pressure them to do so - they must willingly agree. Note that employees who opt-out will also have the right to opt back into the regulations after giving the notice contained in the individual agreement.
• Restrict night-work shifts to an average of eight hours daily, including overtime, and offer health assessments to night workers. See Sunday working and night working. You should note that where a night worker's shift involves special hazards or heavy physical or mental strain, there is an absolute limit of 8 hours on the worker's working time each day - this is not an average.  
• Set minimum paid annual holidays - see know how much holiday to give to your staff.

Guarding against excessive overtime

To help guard against any excessive overtime, many employers:

• monitor overtime levels to identify areas where it could be reduced
• watch out for instances where overtime working becomes regular and unvarying
• limit the overtime employees may work over a given period
• reduce basic working hours, eg from 40 to 38, and ensure that employees work the first two hours of overtime at a flat rate - note that reducing hours may constitute a variation of a contractual term and would therefore require agreement
• enhance employees' annual earnings or basic hourly rate, or pay them a lump sum, to compensate for the loss of overtime

If you're planning on reducing basic working hours, note that this may potentially constitute a variation of contractual hours and must be agreed upon with the employee.

The Labour Relations Agency (LRA) can advise on agreeing and changing contracts of employment.