Compensation and Working Time
Overtime Compensation
The daily working hours are not clearly defined in legislation; however, the maximum weekly working hours (including overtime) are 48 hours averaged over a reference period of 17 weeks. There are some special exemptions allowing a 26-week reference period and the possibility of its extension to even one year, where a collective or workforce agreement or an agreement between the worker and employer provides for this. Workers can also opt out of the maximum weekly hour limit of 48 hours. For employees who have normal working hours, overtime usually means any time worked beyond these hours. Employers do not have to pay workers a premium rate for overtime. However, employees’ average pay for the total hours worked must not fall below the National Minimum Wage.
The Workers (Predictable Terms and Conditions) Act 2023 was meant to introduce a right for workers (including agency workers) to request a more predictable working pattern, but it required separate commencement regulations and therefore did not take effect in practice. It has since been repealed by the Employment Rights Act 2025. The Employment Rights Act 2025 introduces stronger “secure hours” style protections by creating rights to guaranteed hours, reasonable notice of shifts and shift changes, and payments where shifts are cancelled at short notice, with corresponding protections for agency workers. The government has stated these measures will be implemented in stages through secondary legislation, and its published roadmap indicates the reforms on “exploitative zero-hours” are planned for 2027.
An employee’s employment contract will usually include details of any overtime pay rates and how they are worked out. Employees only have to work overtime if their contract says so. Even if it does, by law, they cannot usually be forced to work more than an average of 48 hours per week. An employee can agree to work longer - but this agreement must be in writing and signed by them. Since the overtime rate has not been defined in the legislation, an employment contract must have information on whether overtime is compulsory or voluntary, the rates of overtime pay, when overtime is payable, etc. Overtime rates are agreed on an industry-wide basis or between worker and employer. There is no minimum statutory level, and overtime pay rates vary from business to business.
The amendment to Regulation 9 of the 1998 Working Time Regulations updates employer record-keeping requirements. Employers must now keep records demonstrating compliance with working time limits. The regulation offers flexibility in record formats and storage methods, and they are no longer required to record each worker’s daily hours if compliance can be proven otherwise.
Source: §234 of the Employment Rights Act (ERA), 1996; Regulation 4 of the Working Time Regulations 1998; Reg 7 of the Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023, No. 1426; §27B of the Employment Rights Act 2025 www.gov.uk/overtime-your-rights
Night Work Compensation
Night is defined as a period which is not less than 07 hours and includes the period between midnight and 05:00 in the morning. The precise night period can be determined in a collective or individual agreement. However, in the absence of such an agreement, this period will be from 11:00 p.m. to 06:00 a.m. A worker is considered a night worker if he/she works at least 3 hours of his/her daily working time during the night or some other hours, as determined under a collective agreement, if he/she works these hours on the majority of days on which he/she works. Employers must make sure that workers do not work more than an average of 8 hours in a 24-hour period. Workers cannot opt out of this working limit. Employers must keep records of night workers’ working hours to prove they are not exceeding night working limits. Employers must keep the records for at least 2 years. Before someone starts working at night, they must be offered a free health assessment. There are no premium rates found in the UK legislature for night work.
Source: §www.gov.uk/night-working-hours/hours-and-limits
Compensatory Holidays / Rest Days
When a worker is required to work during a period, which would otherwise be a rest period, or rest break, the worker is entitled wherever possible to take an equivalent period of compensatory rest. In exceptional circumstances when this is not possible, the worker is afforded such protection as appropriate in order to safeguard the worker’s health and safety. Compensatory rest breaks are of the same length as the break (or part of it) that the workers have missed.
A worker is entitled to compensatory rest if he/she is involved in following occupations/activities:
- shift workers who cannot take daily or weekly rest breaks
- workplace based in a far-off place (e.g. an oil rig)
- working in two different workplace with considerable distance between them
- involved in security and surveillance-based work
- involved in seasonal industries – like agriculture, retail, postal services or tourism
- workers forced to work due to an exceptional event, force majeure, or accident happened or about to happen
- Medical staff where round-the-clock staffing is required
- workers in rail industry
- workers who working day is split up (a cleaner who works for part of the morning and the evening)
- there is an agreement between management, trade unions or the workforce (a ‘collective’ or ‘workforce’ agreement) that has changed or removed rights to these rest breaks for a group of workers
The total rest entitlement for a week is 90 hours a week on average (11 hours daily rest breaks + 24 hours weekly rest period) - this does not include breaks at work, which are additional. (www.gov.uk/rest-breaks-work/compensatory-rest)
Weekend / Public Holiday Work Compensation
There is no provision in the legislation, which requires the employer to pay a higher rate to the workers employed on weekly rest days and public/bank holidays. Employers only have to pay staff a higher rate for working on Sundays if the contract says so. (www.gov.uk/sunday-working)
Regulations on Compensation
- Employment Rights Act (ERA), 1996 last amended in 2012
- Working Time Regulations 1998 (as amended by 2007 Amendment Regulations)
Overtime Compensation
The daily working hours are not clearly defined in legislation; however, the maximum weekly working hours (including overtime) are 48 hours averaged over a reference period of 17 weeks. There are some special exemptions allowing a 26-week reference period and the possibility of its extension to even one year, where a collective or workforce agreement or an agreement between the worker and employer provides for this. Workers can also opt out of the maximum weekly hour limit of 48 hours. For employees who have normal working hours, overtime usually means any time worked beyond these hours. Employers do not have to pay workers a premium rate for overtime. However, employees’ average pay for the total hours worked must not fall below the National Minimum Wage.
The Workers (Predictable Terms and Conditions) Act 2023 was meant to introduce a right for workers (including agency workers) to request a more predictable working pattern, but it required separate commencement regulations and therefore did not take effect in practice. It has since been repealed by the Employment Rights Act 2025. The Employment Rights Act 2025 introduces stronger “secure hours” style protections by creating rights to guaranteed hours, reasonable notice of shifts and shift changes, and payments where shifts are cancelled at short notice, with corresponding protections for agency workers. The government has stated these measures will be implemented in stages through secondary legislation, and its published roadmap indicates the reforms on “exploitative zero-hours” are planned for 2027.
An employee’s employment contract will usually include details of any overtime pay rates and how they are worked out. Employees only have to work overtime if their contract says so. Even if it does, by law, they cannot usually be forced to work more than an average of 48 hours per week. An employee can agree to work longer - but this agreement must be in writing and signed by them. Since the overtime rate has not been defined in the legislation, an employment contract must have information on whether overtime is compulsory or voluntary, the rates of overtime pay, when overtime is payable, etc. Overtime rates are agreed on an industry-wide basis or between worker and employer. There is no minimum statutory level, and overtime pay rates vary from business to business.
The amendment to Regulation 9 of the 1998 Working Time Regulations updates employer record-keeping requirements. Employers must now keep records demonstrating compliance with working time limits. The regulation offers flexibility in record formats and storage methods, and they are no longer required to record each worker’s daily hours if compliance can be proven otherwise.
Source: §234 of the Employment Rights Act (ERA), 1996; Regulation 4 of the Working Time Regulations 1998; Reg 7 of the Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023, No. 1426; §27B of the Employment Rights Act 2025 www.gov.uk/overtime-your-rights
Night Work Compensation
Night is defined as a period which is not less than 07 hours and includes the period between midnight and 05:00 in the morning. The precise night period can be determined in a collective or individual agreement. However, in the absence of such an agreement, this period will be from 11:00 p.m. to 06:00 a.m. A worker is considered a night worker if he/she works at least 3 hours of his/her daily working time during the night or some other hours, as determined under a collective agreement, if he/she works these hours on the majority of days on which he/she works. Employers must make sure that workers do not work more than an average of 8 hours in a 24-hour period. Workers cannot opt out of this working limit. Employers must keep records of night workers’ working hours to prove they are not exceeding night working limits. Employers must keep the records for at least 2 years. Before someone starts working at night, they must be offered a free health assessment. There are no premium rates found in the UK legislature for night work.
Source: §www.gov.uk/night-working-hours/hours-and-limits
Compensatory Holidays / Rest Days
When a worker is required to work during a period, which would otherwise be a rest period, or rest break, the worker is entitled wherever possible to take an equivalent period of compensatory rest. In exceptional circumstances when this is not possible, the worker is afforded such protection as appropriate in order to safeguard the worker’s health and safety. Compensatory rest breaks are of the same length as the break (or part of it) that the workers have missed.
A worker is entitled to compensatory rest if he/she is involved in following occupations/activities:
- shift workers who cannot take daily or weekly rest breaks
- workplace based in a far-off place (e.g. an oil rig)
- working in two different workplace with considerable distance between them
- involved in security and surveillance-based work
- involved in seasonal industries – like agriculture, retail, postal services or tourism
- workers forced to work due to an exceptional event, force majeure, or accident happened or about to happen
- Medical staff where round-the-clock staffing is required
- workers in rail industry
- workers who working day is split up (a cleaner who works for part of the morning and the evening)
- there is an agreement between management, trade unions or the workforce (a ‘collective’ or ‘workforce’ agreement) that has changed or removed rights to these rest breaks for a group of workers
The total rest entitlement for a week is 90 hours a week on average (11 hours daily rest breaks + 24 hours weekly rest period) - this does not include breaks at work, which are additional. (www.gov.uk/rest-breaks-work/compensatory-rest)
Weekend / Public Holiday Work Compensation
There is no provision in the legislation, which requires the employer to pay a higher rate to the workers employed on weekly rest days and public/bank holidays. Employers only have to pay staff a higher rate for working on Sundays if the contract says so. (www.gov.uk/sunday-working)
Regulations on Compensation
- Employment Rights Act (ERA), 1996 last amended in 2012
- Working Time Regulations 1998 (as amended by 2007 Amendment Regulations)
