Overtime pay laws are statutes that guarantee regulations for employees who are asked or required to work overtime. The purpose of most overtime pay laws is to ensure that employers are not overworking employees by making it more costly to require excessive hours. Overtime pay laws may vary by region, but many nations also have national laws that serve as a bottom line standard that regions cannot undercut.
One of the most common type of overtime pay laws manage the rate of overtime pay. Since different jobs have widely varying wages, these laws typically state overtime as a percentage of the individual wage, such as 150% of the normal wage. Regional laws and even employment contracts can specify additional overtime pay rates, such as double time or extra pay for overtime worked in swing or graveyard shifts, or for working on holidays. So long as the specified rate is equal to, or greater than, the national overtime pay rate, it is generally considered legally valid.
Overtime pay laws can also specify at what point overtime pay is required. In the United States, workers begin receiving overtime pay for working more than 40 hours in a seven-day period. Some countries, such as the United Kingdom, regulate the amount of hours that can be legally worked in a seven-day period, but do not put specific regulations on the pay rate of overtime. The length of the workweek and requirements for specific overtime pay rates are hotly debated topics throughout the European continent.
Another area that overtime pay laws may cover are exemptions to overtime rates or the kick-in point of overtime. Exemptions are common for workers who receive salaries rather than hourly wages, since salaries are meant to indicate that the worker will perform required tasks regardless of time necessary. Though salaried workers are still generally protected from excessive work, they are not necessarily guaranteed special overtime pay for some extra hours.
Alternate options for overtime compensation are sometimes worked into overtime pay laws. One method, popular throughout the European nations, is known as “time off in lieu” or TOIL. This type of law gives employers an alternative to increased overtime rates, by offering workers the opportunity to have additional time off of work instead of extra pay. Usually, the time off granted is equal to at least 50% the hours of overtime worked. In many cases, the negotiation of overtime pay versus TOIL is determined by individual employment contracts rather than legislative statutes.