Editor's message: Meeting short-term business needs through the use of overtime working allows an organisation to take advantage of the flexibility of the workforce without the need to take on additional staff. Employees who work overtime do not have an automatic right to any additional pay; this will depend on the terms of their contract of employment, or on custom and practice. But where there is a premium attached to overtime working, employees can see this as a welcome enhancement to their basic salary.
Employers usually define rates of overtime pay as a multiple of regular or normal pay; other methods include a set hourly rate for overtime or a higher salary to recognise an element of overtime.
Employers should also be aware of the implications of recent case law on the issue of how overtime should be treated in the calculation of holiday pay.
Rachel Sharp, HR practice editor
Updated to include information about changes to the rules on time limits for making good on benefits-in-kind, effective from tax year 2017/18 onwards.
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An employment tribunal has held that payments for purely voluntary overtime should be included in holiday pay.
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Ambulance workers in four counties will receive backdated holiday pay after a victorious claim for "overrun" payments.
In Patterson v Castlereagh Borough Council  IRLR 721 NICA, the Northern Ireland Court of Appeal held that a Northern Ireland industrial tribunal had erred in excluding voluntary overtime from the calculation of the claimant's outstanding holiday pay
The Northern Ireland Court of Appeal has held that there is no reason in principle why voluntary overtime should not be included in holiday pay, if it is normally carried out and is an "appropriately permanent feature" of the worker's remuneration.
In Bear Scotland Ltd and others v Fulton and others; Hertel (UK) Ltd v Woods and others; Amec Group Ltd v Law and others  IRLR 15 EAT, the EAT held that payment in respect of overtime that the worker is obliged to work when it is available, but that is not guaranteed by the employer, constitutes part of the worker's normal remuneration and as such should be included in the computation of the worker's holiday pay.
Consultant editor Darren Newman discusses the ruling on overtime and holiday pay in Bear Scotland Ltd v Fulton and another. While he suggests that the very narrow view of what constitutes "a series of deductions" for the purposes of back pay may not stand up to scrutiny, he considers that any appeal is extremely unlikely to result in a different ruling on the main issue of including overtime in holiday pay calculations.
HR and legal information and guidance relating to overtime pay.