The Company Overtime Policy is designed to manage labor costs by controlling the payment of overtime to employees who work additional hours to meet deadlines. We are dedicated to ensuring that overtime pay is calculated accurately and provided promptly at the appropriate rates.At times of high demand, employees may be required to work overtime to complete projects, products, or tasks on schedule. In doing so, we will always comply with wage and hour laws, ensuring that employees receive all required compensation and benefits. This policy includes provisions for minimum wage, overtime hours, piece rates, and employee classifications, such as exempt or nonexempt status, along with other compensation factors.
Elements includes in Company Overtime Policy
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 qualify for overtime pay. Those exempt from overtime include non-union employees who hold management or supervisory roles.
Overtime Approval
Supervisors must seek approval from managers before authorizing overtime. If employees believe they need overtime to finish their work for the week, they must inform their supervisors ahead of time. Employees must obtain prior approval before working beyond their regular hours, including any hours exceeding the standard [number of hours] in a workweek.
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 required to manage emergencies, heavy workloads, or urgent deadlines. However, frequent or excessive overtime can negatively impact employees’ health and performance. Supervisors who allow employees to work overtime without obtaining prior management approval will face disciplinary action. Supervisors should not consistently rely on overtime to complete weekly tasks unless management considers it justified. If this continues, the supervisor may be placed on a performance improvement plan or face disciplinary measures. To prevent misuse of the overtime system, either by the company or employees, which could lead to legal issues, the following guidelines must be followed:
Managers should avoid requesting or encouraging their team to work excessive overtime.
Employees should not work unnecessary overtime solely to increase pay, as this can affect the quality of their work.
Both employees and managers must adhere to the company’s timekeeping procedures to ensure accurate record-keeping and proper compensation.
Employees should familiarize themselves with this policy and contact the Human Resources (HR) department with any questions.
Penalties for Unauthorized Overtime
Employees who work overtime without prior approval may face consequences, as unauthorized overtime violates company policy. Supervisors who allow or assign overtime without management approval will also be held accountable and may face disciplinary action. In such cases, both employees and supervisors could receive warnings, be placed on performance improvement plans, or face further disciplinary measures based on the severity and frequency of the violation.
Procedure
To ensure timely compensation for overtime, employees and supervisors must adhere to the following procedures for record-keeping and overtime pay:
Agreement on Overtime Hours: Team members and their managers should discuss and agree on the required overtime hours.
Approval Process: Before approving any overtime requests, managers must verify that the overtime does not exceed legal limits and that employees are not working excessive hours.
Employee Classification Awareness: Managers should be aware of whether their team members are classified as non-exempt or exempt and ensure that employees understand their eligibility for overtime benefits.
Accurate Recording: Both team members and managers must accurately record any overtime worked.
Overtime Pay Calculation: The HR department will calculate overtime compensation based on the appropriate legal pay rates.
Compensation Timing: Employees will receive their overtime pay in the next scheduled pay period.
Disclaimer:
This template is meant to provide general guidelines and should be used as a reference. This is not a legal document. Easy HR will not assume any legal liability that may arise from the use of this template.