Should you pay staff for working before or after their contractual hours? - MLP Law

Should you pay staff for working before or after their contractual hours?

Employees are obliged to work the hours set out in their employment contract. However, many employees are also required to work additional hours in order to ensure the proper performance of their duties and many others may also be specifically required (or able) to work overtime.

In both scenarios, the employment contract should be clear about what is expected and how the employee will be paid for any additional hours worked. If overtime is a regular feature of the business, a clear policy on how overtime is requested, authorised and recorded, and how overtime pay is calculated, should be put in place.

Authorised overtime may be fairly simple to deal with as a business, as employees will be paid for the additional time they work. However, situations in which employees are expected to arrive at work early or stay late to complete duties which they are unable to complete within their contracted hours may not be quite so straightforward.

Time at work is determined as when the employee is “at their employer’s disposal”. This includes any time that the employee is at work or needs to be available for work and may even include time spent travelling in connection with work (for example, travelling to a training course or between work locations).

This means that, if an employee is expected to turn up fifteen minutes before the start of their shift in order to set up their work station for the day ahead, they may be entitled to be paid for this time (subject to what their employment contract states) and any failure to pay them for this time may bring their average hourly pay under the national minimum wage for the hours spent at work.

The Employment Tribunal has recently heard the case of Fitz v Holland and Barrett, a case which was brought by an employee who had to cover for their store manager by opening and closing the store. The employee’s contract did not say that he was expected to work overtime, and had no mention of being paid for working additional hours. The employee successfully claimed that he had suffered unlawful deductions from wages and was awarded £1,019 in lost wages to cover the additional time it had taken him to open and close the store.

The above case shows that if you expect your staff to work additional hours, you should expressly set this out in their contracts, with explicit details of whether or not this will be paid (and if so, at what rate). If you don’t intend to pay your staff for overtime, make sure that their pay exceeds the National Minimum Wage on average for the hours they have worked (including the additional time) and ensure that employee receive the appropriate rates of pay for the hours they work. Failure to do so could lead to Employment Tribunal claims and even a huge penalty from HMRC.

If you are confused about rates of pay, or need help with your employment contracts, please contact our Employment Team on 0161 926 1508 or follow our employment-law specific Twitter account @HRGuruUK.