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Overtime

Understanding overtime is crucial for ensuring compliance with labor laws, managing workforce costs, and promoting employee well-being.

  • Definition

  • Overtime rates

  • Working hours

  • Overtime laws

What is employee overtime?

Overtime refers to any hours an employee works beyond their normal, scheduled working hours. Generally, each country's government legislates the maximum number of hours any employee is allowed to work during a given time period, and the rate of overtime that they’re legally entitled to.

What is overtime pay?

Overtime pay is the rate of pay an employee receives for any overtime hours they work. Overtime pay is universally higher than the employee's regular rate of pay, although calculating the overtime pay rate is based on multiple factors. Some of these include:

  • The location of the organization

  • The organization's parent industry

  • The individual organization's policies and procedures

  • Existing job contracts or union agreements

  • The individual employee's job position

  • Whether an overtime pay tier structure exists within the organization or the country (such as time and a half on regular days but double time on holidays)

What are the allowed weekly working hours in each country?

The number of hours an employee is allowed to work per week can vary from country to country and even from region to region. For this reason, it can be difficult for an organization to implement a global overtime policy.

The International Labour Organization encourages multinational enterprises to provide the best possible working conditions — including working time — within the framework of each country's governmental guidance.

In many countries, full-time employment is defined as 40 hours per week, with anything above this constituting overtime. However, some countries, like China, India, Colombia, and Argentina, have higher thresholds.

Which laws govern overtime?

Each country has its own laws that regulate allowable working hours and overtime pay rates. Note that, in some countries — like the US — these laws can be localized at a state, provincial, or regional level.

Key takeaways
Remember:
  • Overtime is calculated using multiple factors, like location, industry, organizational policies, job contracts, and tier structures.

  • Weekly working hour limits vary globally, making it challenging for organizations to implement a consistent global overtime policy.

  • The International Labour Organization encourages enterprises to adhere to each country's governmental guidelines for working conditions and hours.

  • Each country has its own laws governing allowable working hours and overtime pay rates, with some countries having localized laws at the state or regional level.

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