The pandemic crisis has enhanced this scenario. The lockdown restricted external interactions and at the same time indirectly encouraged overtime work. According to a survey between 2,000 workers in the UK, conducted by TOG (The Office Group), 51% reported that they have been working overtime, with an average of 59 extra hours over 5 months, between March and August.
In fact, some employees are so eager to prove themselves as hard-workers, that some won’t complain about staying extra hours in the office. According to TUC, in 2018 more than 5 million people worked an average of 7.5 hours a week in unpaid overtime in the UK. Out of all, employers are the ultimate winners, benefiting from free labour worth £2 billion.
This new norm in the workforce can have more negative effects than positive in your business. Even if you’re cashing out from it. Especially when failing to comply with EU working time directive rules.
Read on to find out what these effects are and how to guard against them by implementing a rock-solid overtime policy.
The problem with unpaid/excessive overtime
There are a few problems associated with employees working excessive overtime, as well as with cases of wrongfully unpaid overtime. Let's take a look at what these are.
There is the potential for labour disputes and litigation
While you might enjoy cashing out from unpaid work, keep in mind that it can motivate a legal action. Even if your employees log hours without charging, you should not turn a blind eye to this behaviour. After all, the consequences might be far more costly than actually paying them for their work, should they decide to pursue legal action later on.
Increases health problems among employees
Several studies across the globe have compared employees who leave on time and those who do overtime. They have found that overtime could cause increased risks for the physical health. For example high blood pressure, back injuries that involve manual lifting, heavy alcohol consumption and even mental health problems.
Decreases employee productivity
Increased health problems and fatigue can contribute to high absenteeism levels. Therefore, lowering productivity and impacting employees' morale levels. Especially, when employees don’t see any benefit from working longer.
High employee turnover rates
Sooner or later overworked employees will give up on your company. Tired of lacking a good work-life balance, they will look elsewhere for employment. This happens even more often when workers aren’t paid overtime.
High employee turnover rates are costly for businesses, onboarding can eat up budget allocations and time. Productivity can also suffer as new employees usually need time to get up to speed with their roles.
Top tip: to take the stress out of onboarding, we have created a revolutionary onboarding process tool.
How to manage overtime more effectively
Excessive overtime can cost a business in many ways. Fortunately, there are a number of things one can implement to improve managing overtime in the workplace.
Track employees’ working hours and overtime
A time and attendance software will be your best friend in tracking working hours and overtime. Tracking employees’ working time with a time tracking app will help you visualise patterns at an individual level and company-wide. By getting the big picture, managers will also know when an employee is at risk of burnout and better calculate overtime compensation. Accurately tracking working hours also helps prevent time theft and rounding up of hours.
Get familiar with wage compensation laws
Laws are subject to federal and local regulation, which is why is essential you research which rules apply in your location. In the UK for instance, the average hourly paid combined must never be below the National Minimum Wage. As mentioned earlier, failure to pay overtime can potentially result in costly lawsuits.
Clearly communicate your company's policies regarding overtime
Do set the specifics as far as what constitutes overtime in your company. Especially, regarding technology. While the digital era is great, it is almost impossible to completely disconnect from work during off-hours.
As meaningless as it may look, checking emails and answering calls count towards working time and can stack up to many minutes of overtime. This can set the ground for labour litigation. Make sure your employees understand the importance of recording overtime accurately to protect your company against legal action. It is also recommended to have any overtime agreement in writing and signed by both parts added to the employment contract.
Always compensate employees for working overtime
61% of people believe they do not have a balance between work and life. In efforts to fight this, many companies offer time off in lieu as compensation for overtime. Some others decide to pay 1.5x the normal hourly rate of an employee. Whichever you choose, compensating overtime will reduce the negative effects of overtime.
Steps you can take to reduce overtime
Besides managing overtime effectively, you can also take steps to reduce overtime. Here are some things you can do.
Assess employees’ workload
Over half of employees' work overtime due to too much work (53%). Make sure to distribute the workload more equally among employees. By clearly setting your employees’ responsibilities and storing them in a single system, you’ll have a better overview of the workload distribution.
Manage work schedules effectively
By having a clear overview of how time at work is spent, you’ll be able to spot if there are enough staff members during a shift, or at an office location. This will ensure employees are not overburdened or need to work extra to meet deadlines.
Plan ahead
In some situations, you might be able to tell when a busy season is coming or a project will take longer. A smart planning can prevent employee to work overtime, especially in the firm's departments where this behaviour is more frequent, such as the IT. You could avoid overtime by working ahead of schedule and allowing employees to take time off before the busy season.
Monitor employees
Know exactly what your employees are working on by allowing them to enter comments on their time entries. You can also create a policy in instances where overtime work can be compensated with additional time off days.
Get on top of overtime
Overtime can either make or destroy your organisation. Keep in mind overworking staff hurts productivity and employees’ morale. Leaving workers stressed and exhausted will not only result in high absenteeism levels but also hurts your employer brand. So make sure you have an effective overtime tracking tool like ours to enhance your overtime management and other HR tasks.