Overtime is a familiar part of working life for many employees in England. It allows businesses to meet peaks in demand and enables workers to increase their earnings. However, the rules around overtime are not always straightforward. In England, overtime rights and obligations are shaped by a combination of employment contracts, company policies, and statutory employment law. Understanding the legal framework is essential for both employers and employees to avoid disputes and ensure fair treatment.

What is Overtime?

In simple terms, overtime is any work carried out beyond an employee's regular contractual hours. These "normal" hours should be set out in the employment contract, although in some cases they may be implied by custom and practice. Overtime can take several forms.

Some overtime is compulsory, meaning the employee is contractually required to work extra hours when asked. This could be either guaranteed overtime, where the employer must offer a set amount of overtime and the employee must work it, or non-guaranteed overtime, where the employer does not have to provide extra hours but the employee must accept them if offered. There is also voluntary overtime, where the employer can offer additional work, but the employee has the choice to accept or decline. The type of overtime in place will usually depend on the wording of the employment contract and workplace policies.

Is There a Legal Right to Overtime Pay?

There is no general legal right to be paid extra for working overtime. Whether additional hours attract extra pay will depend on the terms of the employment contract. If the contract specifies an overtime rate, such as "time and a half" or "double time," then the employer is legally obliged to pay that rate. If the contract is silent on overtime rates, payment is at the employer's discretion, provided that the total pay for the pay period does not fall below the National Minimum Wage (NMW) or National Living Wage (NLW) when averaged out.

For salaried employees, it is not unusual for the contract to state that the salary covers "all reasonable additional hours" without extra payment. Even in these cases, the NMW/NLW rules still apply, meaning that pay cannot be allowed to dip below the statutory minimum once overtime is taken into account.

The Working Time Regulations

The Working Time Regulations 1998 (WTR) set legal limits on working hours and provide rights to rest breaks, regardless of the overtime arrangements in place. One of the most important provisions is the 48-hour average weekly limit, calculated over a 17-week reference period. This means an employee cannot be required to work more than an average of 48 hours a week unless they have signed an opt-out agreement.

The Regulations also provide that workers must have at least 11 consecutive hours' rest in every 24-hour period, at least one full day off each week (or two days every fortnight), and a 20-minute rest break during any shift longer than six hours. Night workers have additional protections, with a limit of an average of 8 hours in each 24-hour period over the same 17-week period.

Workers cannot be forced to sign a 48-hour opt-out or treated detrimentally for refusing. Rest entitlements (11 hours daily rest, 24 hours weekly rest, or 48 hours per fortnight) and the 20-minute break for shifts over 6 hours apply regardless of any opt-out.

Employer Responsibilities

Employers must ensure that any overtime arrangements comply with both the employment contract and the law. Employers must keep adequate records to demonstrate compliance with working time rules, including rest and maximum hours. This is a legal duty under the WTR. It also means applying overtime opportunities fairly, without discrimination on grounds such as gender, age, disability, or part-time status.

Another area where employers must take care is holiday pay. Case law confirms that regular and consistent overtime — even if described as voluntary — must usually be included in statutory holiday pay. Irregular, one-off overtime is generally excluded.

This prevents employers from paying less than a worker would typically earn when they take annual leave.

Employee Rights

Employees are entitled to be paid for overtime in line with their contract, and they can refuse to work more than the 48-hour average weekly limit unless they have opted out. They are also entitled to the daily and weekly rest periods guaranteed by the WTR and to rest breaks during their working day. An employee cannot be dismissed or treated unfairly for refusing to work hours that would breach these limits.

For many employees, it is also essential to understand how overtime affects holiday pay, redundancy pay, and pension contributions. Overtime may count towards redundancy pay and pensionable pay if it is regular and forms part of normal earnings, though this depends on the scheme rules in the case of pensions.

Checklist – Overtime in England

For Employers:

• Ensure contracts clearly set out overtime terms and rates.
• Keep pay above NMW/NLW, even when averaged across pay periods.
• Maintain adequate records of hours worked for WTR compliance.
• Do not require employees to work beyond the 48-hour average limit without a signed opt-out.
• Factor regular and consistent overtime into holiday pay calculations.
• Apply overtime opportunities fairly and without discrimination.
• Publish a clear overtime policy and communicate it to staff.

For Employees:

• Read your contract to understand overtime arrangements.
• Keep a personal record of hours worked in case of disputes.
• Know your right to refuse hours above the 48-hour average unless you’ve opted out.
• Check whether regular overtime should be included in your holiday pay.
• Confirm whether overtime in your role is compulsory or voluntary.
• Ensure your total pay never falls below the NMW/NLW.