Conducting overtime accounting at work is a key element of time management in any company. A proper approach to this issue not only helps avoid conflicts with employees but also ensures compliance with labor law regulations. In this article, we will discuss how to correctly account for overtime to protect the interests of both employees and employers.
What is overtime?
Work time standards define how many hours an employee should work within a specified period, and any work exceeding these standards is considered overtime. According to the Labor Code, the standard working time is 8 hours per day and 40 hours per week. Any work performed beyond these limits is considered overtime.
Overtime can result from various situations, such as urgent company needs, sudden orders, breakdowns, or other unforeseen circumstances that require additional employee involvement. Overtime work is usually compensated with higher pay or time off, which is regulated by law. It is important that overtime is properly recorded and accounted for to ensure compliance with regulations and protect employee rights.
When is overtime work permissible
Overtime work is permissible only in specific situations, and adhering to these is crucial for proper time management. Overtime may result from the employee's applicable work system and schedule, which defines when work beyond the standard working hours is allowed. According to the labor code, an employee performs overtime work only in specific situations, such as the necessity to conduct rescue operations, protect property and human health, or for the purpose of protecting life.
It is also permissible to assign overtime work in situations where it is crucial to remove a breakdown. Overtime may also be necessary in the case of special employer needs, for example, related to urgent orders or a sudden increase in production. In each of these situations, the employer must remember the obligation to provide employees with appropriate compensation for overtime work, in accordance with applicable regulations.
How much should be paid for overtime? correct accounting of overtime costs
Correct accounting of overtime costs is crucial for both employers and employees to ensure fair compensation for the additional working time. Labor costs, especially for overtime, can significantly impact the company's budget, so it is essential that they are accurately monitored and accounted for. First and foremost, the employer should maintain accurate records that include the number of overtime hours worked, i.e., all overtime hours.
For proper accounting of overtime hours, it is also important to regularly review and analyze data related to working time to identify patterns and potential issues, such as excessive employee workload. The employer should also consider these costs in budget planning to avoid unexpected expenses.
When is 50% and when is 100% for overtime pay?
According to labor law regulations, for each hour of work exceeding the standard working time, the employee is entitled to normal pay increased by the appropriate allowance in the amount of:
100% pay for overtime work occurring:
- at night;
- on Sundays and holidays that, according to the employee's work schedule, are not working days;
- on a day off granted to the employee in exchange for work on a Sunday or holiday, according to the applicable work schedule;
50% pay for overtime work occurring:
- on weekdays;
- on Sundays and holidays that, according to the employee's work schedule, are working days;
Who will not receive overtime pay?
The right to overtime pay and allowance does not apply to:
- employees managing the workplace on behalf of the employer;
- heads of separate organizational units;
Time off as an alternative to overtime work
It is worth noting that in some cases, overtime pay can be replaced by granting time off at the employee's request or at the employer's initiative. In such cases, the time off is granted in an amount corresponding to the number of overtime hours worked. However, if the employee is not granted time off, the employer is obliged to pay the appropriate allowance in addition to the normal pay.
Annual limit for overtime work
In any given settlement period, the employer must monitor the number of overtime hours worked to ensure that the established limit, which is 150 hours per year, is not exceeded.
Important! The employer may set a different annual overtime limit, which can be up to 416 hours per year. The new limit can be introduced in a collective labor agreement, work regulations, or in the employment contract if the company does not have a collective agreement or work regulations.
Who cannot work overtime?
Overtime at Work – Best Practices
Effective management of overtime at work requires implementing several key practices that help both employers and employees maintain a balance between efficiency and compliance with legal regulations. It is important for employers and employees to understand how the distribution of working hours affects the possibility of overtime and the rules for accounting for it.
Keeping Records of Working Time
Accurate recording of the hours worked by each employee is the foundation of proper overtime accounting. This record should be maintained systematically, including all working hours, including those worked outside standard working hours.
Granting Time Off for Overtime
It is an alternative to paying an overtime supplement. In this case, the employee may be granted time off equivalent to the overtime hours worked.
Compliance with Overtime Work Regulations
Labor law specifies the maximum number of overtime hours an employee can work in a year. Exceeding this limit can lead to financial consequences, so it's better to adhere to it from the work planning stage for your employees.
Accounting for Overtime Along with Compensation
Employers are required to pay compensation for each overtime hour worked, along with the appropriate supplement, in accordance with applicable regulations. This is essential to ensure that employees are compensated fairly for their contributions.
How to Account for Overtime: Example
Accounting for overtime can be complex, but understanding the basic principles is key to proper time management and compensation. Below is a brief example demonstrating how to correctly account for overtime according to the regulations:
Assume an employee works in a standard system - 8 hours per day and 40 hours per week with a monthly settlement period. In a given month, they worked 10 overtime hours on weekdays, and their hourly rate is 25 $. The overtime calculation is as follows:
Regular pay: 10 hours x 25 $= 250 $
Overtime supplement (50%): 50% x 250 $ = 125 $
Total compensation for overtime: 250 $ + 125 $ = 375 $
Alternatively, instead of receiving the supplement, the employee may receive 10 hours of time off for the overtime worked, if agreed with the employer. The agreed solution should be implemented by the end of the settlement period to ensure compliance with the regulations.
What is the time frame for accounting for overtime?
Daily overtime is accounted for on an ongoing basis, meaning in the same month along with the next paycheck. Weekly overtime is settled at the end of the settlement period, regardless of whether it lasts three, four months, or a year.
A Method for Efficient Overtime Accounting
Time registration is one of the many tools in the Proplanum program that allows for precise tracking of hours worked by employees. It enables real-time monitoring of clock-ins, clock-outs, and any delays, helping to better manage working time and reduce overtime.
An additional feature offered by the system is the ability to export the time records to the payroll system, which facilitates correct salary calculations, ensuring that employees are paid according to their actual working hours.
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