Overtime – who should get it?

Today the TUC report that the amount of paid overtime has fallen significantly over the last year. This is not surprising given the depth of the recession. Much of the reduction will have come from reduced output; especially in manufacturing; some will have come from organisations where overtime was reduced to save jobs. Countering this will be situations where job losses result in essential overtime for those remaining.

The working population falls into two groups. Those for whom paid overtime is a regular part of life and those whose monthly pay rarely differs from their basic salary divided by 12. Overtime is a valuable management tool for flexing costs in situations where attendance equals output (manufacturing) or where attendance is a necessity (counter or call centre staff). However, there is a grey area, particularly for office-based jobs, where output is not quantified and allocation of time is down to the individual.

Much administrative and managerial work requires social interaction as well as form-filling and decision-making. The HR Officer who never asks staff how they feel about their work or discuses last night’s football will be seen as aloof and will not understand employee attitudes as they should. But when, at the end of the day, they have to stay on to complete a promised report are they working legitimate overtime or did they spend too long discussing last night’s match? Did they choose the wrong priorities for that day’s many tasks?

Common practice, and the law, require specified hours work but there are many jobs where a day at work may not always equal a day’s work.

It’s snow matter

This week’s snow brought all the usual cries of doom and gloom and national self-deprecation (“Canada copes with snow much worse than this.” ” The buses never stopped during the war” etc, etc.). The estimate, by the Federation of Small Businesses, that this has cost us £1.2m has been picked up by most of the press. But is that really the case?

They base their estimate on a figure of £6m as being the normal cost of a bank holiday and a calculation that about 20% did not make it to work on Monday. But do bank holidays really cost us money? Employers calculate their staffing levels on productive capacity excluding holidays. Assuming the average working year is 227 days (5×52 minus 25 annual and 8 bank holidays) would the country really be just under half a per cent (1/227) richer if we cancelled Good Friday? We could always follow the example of French revolution when they experimented with a system of 10-day weeks and 3-week months!

Of course, not every hour lost this Monday is lost money. Yes there are obvious losers; city-centre caterers, petrol stations and wheel-clampers perhaps? Then energy companies will have heated otherwise empty homes during the day and toboggan shops should have cleaned up. In many cases, however, spending and production will simply have been deferred and any immediate shortfall will soon be made up. This is especially true for all those manufacturing companies that are currently on short-time working, imposing extended holidays or announcing redundancies. And it is always true for many office and administrative workers who easily catch up on lost time (once they have finished swapping snow stories that is).

Can I go home now please – unpaid hours

The TUC ushered in the New Year with its annual protest that vast numbers of employees in the UK do obscene amounts of unpaid overtime. More than five million people, they report, worked unpaid overtime in 2008, bringing its total value across the UK to a record £26.9 billion: according to an analysis of official statistics published by the TUC. The figures, which only count overtime of more than one hour in a week, show that the average amount of extra time for these 5.24 million people is seven hours six minutes. That is, very roughly, 20% of the working population, which I think is low. Probably because the rise in extended hours operations (shops and call centres, for example) means more of us are in rostered jobs where overtime is much more likely to be paid automatically.

The TUC implies that these figures reflect downtrodden workers who stay late for fear of losing their jobs. But is that always the case? If you stay until six because you had not finished at five-thirty have you given your employer an extra half-hour or did you under-deliver earlier in the day because of an extended business debate about last night’s Eastenders? Or were you simply feeling a bit lethargic and took longer than you should have over various tasks. Of course, there are no official statistics of those who are a few minutes late in the mornings or come back late from lunch.

Nobody condones organisations where staff are pressured into staying late but the danger of focusing on unpaid overtime is that it reinforces the negative view that you are paid for your time rather you’re your output or contribution.

That pay gap again

The announcement last week that the gender pay gap had widened in 2008 brought the usual screams of indignation and demands that the government do something. The HR press was a little more temperate, though not exclusively so. The ONS announcement, of course, gives a much more considered interpretation. I have written before (The gender pay gap) about the need to break the gap down into its constituent causes if any useful progress is to be made so I will just highlight a few interesting aspects.

Who gets paid overtime

Staff working extra hours for no extra pay is a frequent news topic these days so I was interested to read an ONS statistic that around a quarter of full-time employees work paid overtime and that the median amount is four hours per week. Typically this is paid at time and a half during the week and on Saturdays; double time Sundays and Bank Holidays (sometimes also Saturday afternoon). The parable of the workers in the vineyard never has applied much in the modern world.

This looks very much like the traditional manufacturing pattern that has been around for many years where workers would typically do one or two hours mid-week and a four-hour shift on Saturday mornings (harking back to when men did not help with the shopping and football matches were always at 3pm on Saturday afternoons). I might have expected a greater change.

Of course that was a statistic for full-timers and nowadays there are many more part-time staff who may work extra hours (but at flat rate), people putting in unpaid hours and all those working in 24/7 organisations where weekends and evenings are now simply contractual hours.

Paid overtime needs to be carefully controlled but is a tried and tested mechanism for flexing costs to demand. Used too readily it can simply bloat your cost-base. Used sensibly it helps over-staffing for the base level of demand or too frequent lay-offs. In many ways it is a type of performance-related pay.