Company Overtime Policy Example

company overtime policy

Company Overtime Policy aims to control labor costs by managing the expense of overtime pay to employees who put in extra hours to meet deadlines. We as a company are committed to compensate overtime pay at correct pay rates in a timely manner.

We may require employees to work overtime during busy times to ensure that specific projects, products or assignments are completed on time. However, we will, at a minimum, comply with all applicable wage and hour laws and regulations and provide legally mandated benefits. The policy will cover minimum wages, overtime hours, piece rates, nonexempt or exempt classification and other elements of compensation.

Purpose

Our company’s overtime policy also explains how we’ll compensate employees for hours worked beyond their standard schedule.

Through this policy we aim to:

  • Ensure employees are consistently and correctly compensated for the extra time they put into their assigned project to finish on time.
  • Minimize incidents of overtime abuse, loss of productivity, health and safety risks and other relevant issues.

Scope

The policy covers all current eligible employees working in off-hours, weekends and holidays. Paid leave such as holiday and sick leave do not apply toward work time. Managerial staff is not entitled to overtime benefits.

At (name of company), a regular workweek consists of (number of hours) worked. Overtime pay at a rate of (rate of pay) will be paid for hours worked over and above (number of hours) hours of work time in a workweek.

  • Extra time worked at the employee’s discretion, or without supervisory approval (working through lunch or breaks, arriving early or staying late), may not be used towards overtime.
  • The workweek runs from [Monday morning at (time) and ends at (time) on Sunday night].
  • Overtime compensation may also be taken in the form of paid time off if the employee and supervisor agree to this.

Paid time off work must be taken within (number of months) months after it was earned unless otherwise approved by a supervisor. Supervisors may extend this period to no more than (number of months).

Eligibility

  • All non-exempt employees are eligible for overtime compensation.
  • Exemptions include non-union members working in management or supervisory positions.

Overtime Approval

Supervisors are required to obtain approval from managers prior to the use of overtime. Employees who think they need overtime to complete the week’s work must notify their supervisors in advance. They need to obtain prior approval to working hours that extend beyond their normal schedule. Approval is required for hours that exceed number of hours in a workweek.

Mandatory Overtime

During busy periods, the company may require employees to work extended hours. Overtime is considered a condition of employment at the time of need. Refusal to accept it when reasonable notice has been given is cause for disciplinary action including termination.

Limitations

There are overtime limitations that every employee should be aware of.

  • All employees are expected to complete their work within the stipulated working hours.
  • Whenever necessary, overtime shall be restricted to emergencies or where work is clearly outside the normal daily scheduled hours.
  • Overtime must not be considered as an additional source of income. At all times, it remains at the discretion of the Management.
  • Work on Public Holidays (including weekends) shall also constitute overtime.

At (name of company), we do not encourage unwanted overtime. At any cost, we want to avoid productivity and morale loss or work-related accidents due to fatigue.

To achieve a healthy working environment, we:

  • Record overtime hours accurately and consistently.
  • Advise employees to work overtime only when they have to finish urgent work or have to meet a deadline.
  • Have all necessary provisions to allow employees to complete their work during standard working hours.
  • Take measures to gradually reduce overtime when we observe a decline in work quality or other issues due to excessive working hours.
  • Set a daily/weekly cap for overtime at (number of hours) per day/ (number of hours) per week. Employees who work more than that will be compensated according to legal requirements. However, we advise employees to respect this limit.

Excessive Overtime

Overtime may be necessary to handle emergencies, heavy workloads or issues that require tight deadlines. However, frequent and excessive overtime isn’t good for employees’ health and performance.

Supervisors who authorize staff members to work overtime without prior approval from management will be subject to disciplinary action. Supervisors must refrain from continually relying on the use of overtime hours to complete a week’s work without it being deemed justified by management. In such cases, the supervisor may be placed on a performance improvement plan or may be subject to disciplinary action.

We want to avoid any incidents of abuse of the overtime system, either by our company or employees, that may result in legal confrontation. In this respect:

  • Managers must avoid asking or encouraging their team members to work excessive overtime.
  • Employees should avoid working unnecessary overtime aiming for the highest pay, as this may result in a trade-off with the quality of their work

To get rightly compensated, employees and managers should follow our timekeeping systems for us to maintain accurate records.

Employees should read this policy and direct any questions to our Human resources (HR) department.

Consequences Of Unauthorized Overtime

Employees working overtime without obtaining prior approval that extends beyond their normal (number of hours) hour workweek will be subject to disciplinary action up to and including termination.

Procedure

You should record overtime timely to get compensated. Employees and supervisors need to follow the below procedure to comply with record-keeping and overtime compensation requirements.

  • Team members and their managers agree on the hours of overtime needed. Before approving any overtime request, managers must ensure that the overtime period does not exceed any legal limits and employees do not end up working excessive hours.
  • Managers should know whether their team members are non-exempt or exempt and ensure their team members are aware of whether they are eligible for any such benefit.
  • Team members and managers accurately record overtime.
  • HR calculates overtime pay according to legal pay rates.
  • Team members receive their overtime compensation in the next scheduled pay period.

Terms You Should Know

  • Overtime – Work completed outside of regular working hours.
  • Overtime pay – Monetary or paid time off compensation (depending on your employment type) for the hours eligible employees work in excess of (number of hours) hours in one workweek.
Contributing Author
vijay