Overtime payment calculations - breach of contract?
I have an issue with how overtime is calculated at work and wanted to see where I stand, as the inconsistencies in calculation shouldn’t be allowable in my eyes, but I wanted to see if employers can do what they want in this respect.
My employment contract is 15 hours a week permanent, 0.4FTE. Paid an equal amount monthly.
My contract states that to calculate any salary payment due to you for whatever reason, one day’s pay, including holiday, is 1/260th of annual salary.
Contract also says overtime is paid according to handbook and handbook says for overtime above full time weekly hours, the rate is time and a half.
For overtime below full time weekly hours (37.5) they calculate it as:
FTE annual salary/52.2/net full time hours (37.5) for one hour’s pay.
Thus using 261 days as a basis, which is different to the contract; if 260 days is your method to represent working days, then it follows that 52 weeks is used in calculations. Can they do it differently because it is overtime?
For overtime above 37.5 hours a week (stated in online handbook as paid at time and a half) they calculate it as:
FTE annual salary/52/gross full time hours (i.e. 42.5) *1.5.
In this case using 260 days as a basis, and including unworked, unpaid lunch hours.
For example, if you are paid 19500 FTE, for 1 hour of overtime below 37.5 hours you might expect £10 of pay if going by 1/260th method (19500/52/37.5). However it is actually £9.96 (19500/52.2/37.5).
1 hour at ‘time and a half’ is £13.23 (19500/52/42.5/5*1.5) when most logical people would expect £15 for 1 hour at time and a half if your normal rate is £10 p/h. £13.23/1.5=£8.82 so the amount to represent 1 hour of pay is different.
Yes, employers can pay what they want above minimum wage and don’t have to do an increased rate for overtime above full time hours. However, can inconsistently using 52 and 52.2 weeks be allowed when the contract is so clear? Does a day of overtime not have to be the same as a day’s pay, i.e. 1/260th? Also regarding overtime above full time weekly hours, I never thought time and a half could have any different interpretation!
In my eyes part time overtime should use 52 weeks. Also, overtime above 37.5 hours should be single time, i.e. your hourly rate, *1.5. If an employer only wants to pay time and a third for example that is their call, but to state it as time and a half then create a calculation which doesn’t equate to that seems bonkers to me.
It seems like a way to save money and hope no one notices, as being a lower paid employee the differences can be small individually depending on how much you work, but I am sure it adds up across departments and company as a whole.
Can they officially be so inconsistent?
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A year is 52 weeks and 1 day (or 52 weeks and 2 days in a leap year).
Lunch hours are generally unpaid, if you work 37.5 hours a week, this won't include breaks. So using 42.5 in your second calculation is incorrect.
Companies can work out overtime however they like. In my industry you're unlikely to actually get it, and if you do it certainly won't be at time and a half!
On your own, you're unlikely to persuade your employer they've got it wrong.