A balanced life is a happy life. That’s why organisations need to effectively manage overtime, to enable a healthy work-life balance for their workforce.

Overtime management is the process of managing and regulating overtime hours. These are hours worked beyond the scope of the scheduled working hours, like evenings, weekends, and holidays.

A successful overtime management strategy streamlines the process of tracking and managing employee overtime. Tracking overtime helps to ensure accuracy and keeps you compliant with labour laws.

Planning and monitoring overtime can provide added insight, maximising productivity and reducing the threat of employee burnout. We’ll guide you through overtime management best practices and solutions in this helpful walkthrough.

Table of Contents

Understanding overtime requirements

In the UK, overtime regulations are enforced by employment laws designed to ensure fair and adequate compensation. They make sure there’s a balance between work and personal life, prioritising employee wellbeing. HR teams need to stay knowledgeable about these laws. It’s a two-pronged solution: to avoid legal ramifications and to maintain a respectful, positive relationship with your workforce.

To stay compliant, consider the following aspects of overtime management:

  • Eligibility: Decide who qualifies for overtime based on their contract terms and job specifications.
  • Overtime rate of pay: Design an overtime pay rate, typically higher than the standard hourly rate.
  • Tracking hours: Keep up-to-date records, tracking employees’ working hours, including any overtime.
  • Rest breaks: Make sure employees take their legally entitled rest break at work.

Basics of overtime management

Once you’ve grasped the essentials, it’s wise to consider the various factors influencing overtime eligibility. Employment contracts should clearly define the eligibility criteria for overtime.

Be aware that some roles have unique overtime practices that are baked into the industry at large, like advertising and FMCG (fast-moving consumer goods).

Traditionally, these are the benchmarks we use when defining types of overtime:

  • Standard overtime: This is when employees work outside their defined hours, calculated at a higher pay rate.
  • Unsocial hours overtime: Any work outside normal hours (evenings, nights, and weekends).
  • Holiday overtime: When an employee must work during annual leave or on public holidays.

How you classify your employees will make a difference to your overtime entitlements: this will look different for full-time, part-time and temporary employees.

Consider your business needs and changing workloads: overtime is often necessary in peak periods like Christmas, or when completing a project to deadline.

Benefits of Effective Overtime Management

Overtime management is crucial for managing budgets correctly. By staying aware of overtime, and minimising it where possible, you can reduce your labour costs. Properly managed overtime contributes to a culture of employee satisfaction, where employees receive just and correct pay for their extra efforts, helping staff retention and reducing turnover.

Correct overtime management helps to streamline compliance with employment laws. Keeping up-to-date records and tracking overtime hours can help you avoid any penalties, staying in line with legal and ethical considerations.

Overtime Management

Key components of overtime management

In 2024, companies should have robust systems in place for tracking overtime hours. A well-oiled overtime management system is a boon for any organisation and its workforce.

Overtime management systems can help you track employees’ work beyond traditional hours, ensuring overtime is correct. It also helps you recognise any patterns which need to be addressed.

For example, if one manager is overspending on overtime to meet a project’s requirements, but others working on similar projects are within budget, there could be an issue with how the manager is handling requirements and timescales.

Accurate tracking of overtime hours is essential. Be clear about any internal rules around overtime: enumerate eligibility criteria, allowable hours and overtime pay structures.

A successful overtime management system relies on open and transparent communication. Keep employees informed about overtime opportunities and timetable changes, and make sure they understand the policies. Transparency breeds trust, which is vital for employee well-being and retention.

Tools and software for overtime management

Overtime management tools enable you to address scheduling issues and oversee a healthy work-life balance for your workforce. With real-time visibility into overtime hours, it provides added insight and improves workforce productivity.

Different tools provide different functionalities. A desirable overtime management solution should be able to provide you with the following tools to improve your organisation:

  • Time tracking
  • Overtime calculation
  • Real-time monitoring
  • Compliance and policy enforcement
  • Reporting and analytics
  • Integration with payroll systems
  • Employee self-service
  • Customisation and scalability

ADP’s Overtime Management is a comprehensive solution that combines global payroll and HR functions for a smoother way to pay staff and stay compliant.

Implementing overtime management

Before deciding on your overtime management strategy, take some time to identify your pain points. These might relate to resource allocation and struggles with outdated manual systems. They could be socially driven, for example, low morale due to perceived overreliance on overtime. It could also be related to scalability, and current solutions underperforming.

After you’ve identified your paint points, consider an overtime management software solution that works for you. Choose based on the features you need – some solutions are more advanced than offers and offer full integrations with HR and payroll. The most important thing is accurate recording, reporting and real-time visibility to help you stay on track.

Once you’ve decided on a system, it’s important to communicate the benefits with employees and stakeholders. Educate your teams on how it works, and provide training. Once implemented, assesses the functionality and success of the new system, measuring efficiency gains against employee satisfaction.

Monitoring and Reporting in Overtime Management

Effective monitoring and reporting are essential in overtime management. With real-time visibility across a variety of locations (office, remote, or hybrid-working), organisations can proactively address potential scheduling issues and pursue a healthy work-life balance for their workforce. Use reporting and analytics to optimise resource allocation, and to control your costs.

Challenges in overtime management

Organisations face a raft of challenges when managing overtime. These are some of the most common:

  • High costs: Overreliance on overtime increases labour costs, affecting your bottom line.
  • Employee burnout: Mismanaged overtime causes employee fatigue and burnout, which reduces productivity and increases staff turnover.
  • Compliance errors: Mismanaged overtime flouts established employment laws, resulting in big fines and legal headaches.
  • Scheduling errors: Complex working patterns become unmanageable and arranging shifts can become an intricate, complex process.
  • Poor communication: A lack of transparency and clear overtime policymaking leads to employee dissatisfaction.

Thankfully, there are resourceful systems and strategies to help you with overtime management. You must always distribute tasks evenly across your workforce to reduce the need for overtime.

Track everything accurately so you have crystal-clear insight and understanding of what’s going on. Be flexible with your scheduling, making it easy for employees to change shifts or work remotely.

Regular check-ins and reviews can provide 360 insight into overtime strategies, which can be adjusted accordingly.

Real-World applications of overtime management

ISTOBAL specialises in vehicle wash and care solutions. They wanted new global software to streamline reporting and information gathering, to support day-to-day operations plus audits. The solution needed to meet the following criteria:

  • Perform the payroll process at the local level.
  • Provide monthly visibility of employee data, including overtime management.
  • Establish standardised payroll reports to guarantee 100% reliable data.
  • Ensure compliance with the General Data Protection Regulation (GDPR).
  • Enable the Finance Department to access accounting data and payment files while safeguarding sensitive information.

ADP provided a comprehensive solution combining global payroll and HR functions across several international locations. They’ve now automated the time-demanding manual processes and can access employee data with ease. That includes tracking promotions and pay rises through to managing overtime. The self-service functionality means that employees can access the cloud-based system anywhere, and can see their information on an easy-to-use dashboard. In addition, the solution strengthens ISTOBAL’s GDPR compliance.

Conclusion

Overtime management can be a complex process that risks unfairness and employee burnout. There are technological solutions that help mitigate this risk while making the process easy, transparent and compliant with labour laws.

ADP’s solution is a proven tool for streamlining overtime management, with real-time monitoring and automated calculations. See how ADP can help optimise your overtime management system today.