Overtime Pay: Am I being ripped off?

Floop1977

Apologies in advance for a complex post, but I'll keep it as simple as I can! I'm good at maths (former maths teacher!) but probably need the eye of someone who understands employment and payroll issues.

I work in a young person's care setting, and a full-time salary is £26572 (which is made up of £25409 in line with NJC spine point 14, +£500 NVQ3 allowance, +£663 London Fringe Allowance).

This is for a full time role which equates to 1748 worked hours annually. 

A person who only works part time, e.g. for half of this, is paid half these amounts accordingly. 

I was asked to work some overtime and I agreed to do so, but asked what the pay rate would be. I was told it would reflect my normal pay rate, but when I asked for the specific rate of pay I was stonewalled for two months. Meanwhile I worked the extra hours.

My expectation was that dividing the total annual pay by the total annual hours would yield the overtime rate, i.e. £26572 / 1748 worked hours annually = £15.20/hour.

Today my employer has come back to me to tell me the following:

• The £500 NVQ3 allowance that forms part of my total salary is disregarded when calculating overtime pay. It is just left out. This benefits the organisation, and the employee is left out of pocket. Why would this be? Given that the value is pro-rated down for people who work less than full-time, should it not be pro-rated up for people who work more?

• They calculate overtime based on "the hours per week of a standard worker", which they reckon is 2080, by doing the calculation 52 * 40 = 2080. This assumes a person works 40 hours per week for 52 weeks per year, and are claiming that you get paid for your holiday hours. My understanding this is wrong - you actually get paid for the hours you work, and you accrue holiday entitlement accordingly.

• Given the loss of the £500 value from bullet point 1, and the inflated value of 2080 hours in bullet point 2, they therefore calculate the overtime rate to be £26072 / 2080 hours = £12.53 per hour.

• This is £2.67 per hour less - 18% less - than I believe it should be. 

So, does anybody with knowledge/experience in the field want to weigh in with views - I'd appreciate anything constructive. It may be that I've misunderstood something and if so then I'll be glad to be set straight, but at the moment I think there's something wrong going on here.

Thank you for your help.

Undervalued

Just briefly, in general terms, remember.....

Overtime, beyond your basic contracted hours, is largely a contractual matter. There is no legal requirement for it to be paid at a higher rate. In fact, as long as not below the national minimum wage, it can be paid at a lower rate if that is what is agreed!

The fact that a part time person seems to get more than you, pro rata, is not in itself unlawful. An employer cannot legally treat a part time person less favourable, just because they are part time. They can however perfectly lawfully pay them more!

Wonka_2

Unless I misunderstand then the NVQ allowance is a maximum lumpsum for a full-time worker - whether 35/37/39/42hrs per week and is pro-rated down for part-time - presumably on the basis of individual employers view of what 'full time' is

Personally I'd expect weighting to be included/added to salary for comparison

And for the hours you should be including holiday hours as the comparison to get an hourly rate, not just the hours worked

ETA All my opinion/experience rather than law

General_Grant

Floop1977 said:

Apologies in advance for a complex post, but I'll keep it as simple as I can! I'm good at maths (former maths teacher!) but probably need the eye of someone who understands employment and payroll issues.

I work in a young person's care setting, and a full-time salary is £26572 (which is made up of £25409 in line with NJC spine point 14, +£500 NVQ3 allowance, +£663 London Fringe Allowance).

This is for a full time role which equates to 1748 worked hours annually. 

A person who only works part time, e.g. for half of this, is paid half these amounts accordingly. 

I was asked to work some overtime and I agreed to do so, but asked what the pay rate would be. I was told it would reflect my normal pay rate, but when I asked for the specific rate of pay I was stonewalled for two months. Meanwhile I worked the extra hours.

My expectation was that dividing the total annual pay by the total annual hours would yield the overtime rate, i.e. £26572 / 1748 worked hours annually = £15.20/hour.

Today my employer has come back to me to tell me the following:

• The £500 NVQ3 allowance that forms part of my total salary is disregarded when calculating overtime pay. It is just left out. This benefits the organisation, and the employee is left out of pocket. Why would this be? Given that the value is pro-rated down for people who work less than full-time, should it not be pro-rated up for people who work more?

• They calculate overtime based on "the hours per week of a standard worker", which they reckon is 2080, by doing the calculation 52 * 40 = 2080. This assumes a person works 40 hours per week for 52 weeks per year, and are claiming that you get paid for your holiday hours. My understanding this is wrong - you actually get paid for the hours you work, and you accrue holiday entitlement accordingly.

• Given the loss of the £500 value from bullet point 1, and the inflated value of 2080 hours in bullet point 2, they therefore calculate the overtime rate to be £26072 / 2080 hours = £12.53 per hour.

• This is £2.67 per hour less - 18% less - than I believe it should be. 

So, does anybody with knowledge/experience in the field want to weigh in with views - I'd appreciate anything constructive. It may be that I've misunderstood something and if so then I'll be glad to be set straight, but at the moment I think there's something wrong going on here.

Thank you for your help.

So just a quick partial response regarding the sentence "My understanding . . . accordingly".
Holiday entitlement is paid, so annual pay (for whatever number of hours) is spread over the worked and holiday hours to find an hourly rate.

lincroft1710

As long as you are not being paid below the National Minimum Wage, overtime payments are contractual, your employer is not contravening employment legislation

Bobbobbobingalong

What does your contract or employee handbook (or similar) say about overtime remuneration? Have a look, it will be there somewhere.

zagfles

Have you had a payslip yet? The usual way way to calculate overtime is indeed based on the whole year including paid holidays, however you are entitled to holiday pay reflecting your actual working hours not your contracted hours, see the ACAS guide for details: https://www.acas.org.uk/checking-holiday-entitlement/calculating-holiday-pay

Some employers add a "holiday pay" element of 10-15% or so to overtime claims to reflect additional holiday pay as a result of that overtime. So it should work out to about the same.

The hours per week you work shouldn't matter, if for instance they base it on 40h per week and you only work 35h per week then they should pro-rate your salary by 40/35 up so it shouldn't make any difference.

It's usual not to include allowances in overtime calculations.

Savvy_Sue

Undervalued said:

Just briefly, in general terms, remember.....

Overtime, beyond your basic contracted hours, is largely a contractual matter. There is no legal requirement for it to be paid at a higher rate. In fact, as long as not below the national minimum wage, it can be paid at a lower rate if that is what is agreed!

The fact that a part time person seems to get more than you, pro rata, is not in itself unlawful. An employer cannot legally treat a part time person less favourable, just because they are part time. They can however perfectly lawfully pay them more!

My understanding is that the total paid for the total no. of hours worked must equate to more than NMW per hour. So the overtime rate can be less than NMW, as long as it doesn't drag the total average below that. Often a problem with night allowances.

However, what does the union say? Please tell me you're in one ...

Floop1977

Thanks all. To respond to various points mentioned:

• Our contracts make no mention of overtime arrangements at all. How convenient! This allows the organisation considerable leeway, and offers little support/protection to the staff.

• Our employee handbook makes no mention of overtime remuneration either.

• I am in a union (Unison) and will be checking with them next, but wanted to get a steer from people here first (thank you all).

• I don't (yet) understand the points made about holiday pay. We aren't paid for days we aren't working - we are paid for the days we do work, and for each unit of work that we do, we accrue some paid holiday entitlement. If we did no overtime, we would still be receiving £X amount of pay for Y hours worked, so the hourly rate should be £X/Y per hour. The fact that the organisation is choosing to calculate the overtime rate of pay on values of X and Y that do not reflect our actual salary or our actual hours feels bogus, and designed to minimise their costs at the worker's expense. It might be legal but it feels immoral. Either way, this is an area where I need to do further work to figure things out.

Thank you all.

Marcon

Floop1977 said:

Thanks all. To respond to various points mentioned:

• Our contracts make no mention of overtime arrangements at all. How convenient! This allows the organisation considerable leeway, and offers little support/protection to the staff.

• Our employee handbook makes no mention of overtime remuneration either.

• I am in a union (Unison) and will be checking with them next, but wanted to get a steer from people here first (thank you all).

As you union will confirm:

Employers must state in the written terms (written statement of particulars):

• what hours are classed as overtime
• what the rate of pay is for overtime

Source: https://www.acas.org.uk/pay-for-working-extra-hours

Undervalued

Savvy_Sue said:

Undervalued said:

Just briefly, in general terms, remember.....

Overtime, beyond your basic contracted hours, is largely a contractual matter. There is no legal requirement for it to be paid at a higher rate. In fact, as long as not below the national minimum wage, it can be paid at a lower rate if that is what is agreed!

The fact that a part time person seems to get more than you, pro rata, is not in itself unlawful. An employer cannot legally treat a part time person less favourable, just because they are part time. They can however perfectly lawfully pay them more!

My understanding is that the total paid for the total no. of hours worked must equate to more than NMW per hour. So the overtime rate can be less than NMW, as long as it doesn't drag the total average below that. Often a problem with night allowances.

However, what does the union say? Please tell me you're in one ...

Yes, that is my understanding too. Sorry, I didn't phrase my earlier reply very well. My main point was that there was no law that says overtime has to be paid at a higher rate.