Organisations warned to consider true 'cost' of unpaid overtime

The rise in unpaid overtime for UK workers presents a huge risk for both organisations and their staff

A recent study commissioned by Totally Money found that British employees work an average of over 10 hours overtime per week, totalling 469 hours of extra work a year. Just under 6 in 10 of these workers will not receive any pay from working these additional hours.

It is common for organisations to feature a standard clause on overtime within employment documentation stating staff may be required to work additional hours without pay to in order to fulfil their workplace duties. Organisations are, however, now encouraged to consider the true cost of this widespread practice.

Unpaid overtime can pose a risk to an organisation’s compliance with the national minimum wage (NMW). Requiring individuals who earn at or just over the age appropriate NMW rate to work extra unpaid hours could take their average rate, over the pay period, below the legal minimum pay threshold. British retail store Argos were forced last year to correct hundreds of employees’ wages to address previously unaccounted overtime work. Staff were required to attend unpaid briefings before the start of their shifts as well as wait for security checks after the end of their working day. The time was not correctly accounted for and when factored into the NMW calculation, meant that individuals’ average pay was below NMW. Given the recent government issued fines surrounding NMW requirements organisations are encouraged to consider how unpaid overtime impacts their obligation to abide by statutory requirements.

More than half of the 2,000 individuals surveyed admitted the reason for working extra hours was because there was too much work. Organisations should ensure work is fairly and evenly distributed amongst staff. If employees are routinely staying late due to excessive workloads then organisations should work to find a solution which may include hiring additional staff.

Many employees reported they felt pressured into working overtime to be considered for a promotion, with 15 per cent admitting to working late due to pressure from line managers and bosses. To counter this, organisations should demonstrate to staff that any promotion or bonus decisions are based on the quality of work completed rather than the number of overtime hours worked.

Whilst many believe working additional unpaid hours represents a good work ethic, organisations should consider the true cost of this practice. Those who find unpaid overtime regularly taking place should consider amending workplace policies to pay staff for this extra time, not least to meet NMW obligations, or adapting working practices to reduce workloads and increase efficiency.

« Back to News