An employer’s guide to overtime pay

Sometimes, running a business means employees need to work extra hours. This can happen during busy times, unexpected emergencies, or when you’re short-staffed. While overtime can be necessary, it’s important to ensure that employees aren’t working unreasonable hours.  In this article, we’ll discuss what is considered overtime and what constitutes reasonable additional hours.

Employment agreements and overtime

Overtime work provisions are usually outlined in individual employment agreements or collective agreements. Employers and employees should agree on terms related to overtime in these documents. Typically, the standard working week is 40 hours, but this can vary based on the agreement between the employer and employee. There are no set obligations to what hours to put into individual contracts.

Overtime pay advice

New Zealand employment law doesn’t mandate overtime pay rates. Instead, whether or not overtime is paid, and at what rate, is determined by the employment agreement or collective bargaining agreement. It’s common for agreements to specify higher pay rates for overtime hours. For example, an employer might offer time, and a half or double time for hours worked beyond the standard workweek. However, this isn’t an obligation. It’s also common for employers to include reasonable overtime in their normal pay.

Hours of work

Employers have the right to ask employees to work beyond their standard hours as long as this is compliant with the terms agreed upon in the employment contract. The law doesn’t impose strict limits on overtime hours, but there are requirements for rest periods and meal breaks to ensure that workers aren’t overworked.

Record-keeping and compliance

Employers are required to keep accurate records of hours worked, including overtime. This helps ensure compliance with agreed-upon terms and provides clarity in case of disputes. If there’s a disagreement over overtime pay or hours worked, employees can seek resolution through their employer’s grievance process or escalate the issue to the employment relations authority.

Health and safety considerations

While the law provides flexibility for overtime, it also emphasises the importance of maintaining a healthy work-life balance. Employers are encouraged to manage work schedules in a way that doesn’t negatively impact employees’ health and well-being,

and complies with health and safety laws. Such laws include ensuring that employees aren’t working excessive hours that could lead to fatigue and potential hazards.

Key takeaways

The specifics of overtime pay and conditions are primarily determined by employment agreements and not by statute. While there’s flexibility in the law regarding overtime, it must be managed in a way that aligns with agreed terms and health and safety requirements. Should a dispute arise, employees should have avenues to address disputes related to overtime through internal processes or external authorities if necessary.

If anything in the article has brought up concerns about your HR processes, policies or compliance we’re here to help. We’re offering a no-obligation consult with our workplace experts to help you identify any potential risks facing your business. You can book a call here.