The Hidden Costs of Overtime: Why Managing Overtime is Critical for Your Business

There are many reasons why you should stay on top of employee overtime. It is essential for controlling costs, promoting employee well-being, ensuring compliance, and maintaining a fair and productive workplace.

Did you know that the average overtime for employees in the US is over four hours every week (Bureau of Labor Statistics, 2021)? In the EU, average overtime varies considerably by country and sector. For example, in 2019. The average overtime hours worked per week in the manufacturing sector in the EU ranged from 1.6 hours in Sweden to 10.5 hours in Greece (source: Eurofound).

Reduce costs and improve employee health

While overtime hours can vary significantly depending on factors such as the industry, occupation, and employer, it’s fair to say that overtime is a common phenomenon in businesses everywhere. Managing it effectively is important for several reasons, such as cost control. Overtime rates are usually higher than the regular hourly rate (for instance, in Germany the overtime rate is usually 1,5 times the regular hourly rate) and this can impact a company’s bottom line. Managing overtime helps control costs and ensures that labour expenses are within budget.

Another reason is employee health. Working too many hours can lead to employee burnout, which can result in decreased productivity, increased absenteeism, and high turnover rates. Also important to keep employees engaged and motivated, is that you have to make sure that overtime is distributed fairly among employees. This can help prevent resentment and promote a positive work environment.

Labour laws and overtime

Finally, compliance is a good reason why you should keep a sharp eye on overtime. Many jurisdictions have laws and regulations governing overtime pay and working hours. Managing overtime ensures that a company follows these laws and avoids potential legal issues. Take for example in Germany. According to a report by Safeguard Global, German employees are allowed to work up to 10 hours in a day, if the average workday does not exceed eight hours over a six-month period.

So we know managing overtime is important. But how do you do it? Steps to take include setting a clear overtime policy, tracking hours worked, and reviewing overtime. Employees should remain informed about their worked (over)time, overtime opportunities and restrictions, and the process that comes with it. If you find your employees work too much overtime, you can consider alternatives, such as adjusting work schedules or hiring additional staff. This can help reduce overtime expenses and promote work-life balance for employees.

How does TimeMoto help with overtime?

With our Time Clocks, or just by using TimeMoto Cloud and/or our mobile clocking in app, the ability to clock in work is made easy. Overtime management is a feature in the Essential and Plus Plans of our cloud environment, which works seamlessly together with our Time Clock units. If you are on a Free Plan and wish to use this feature, you always choose to upgrade your plan. With the click of a button, you can consult timesheets to keep track of the accumulated additional hours of each employee. It’s even possible to set notifications to alert you when somebody is working too much overtime. You can also consult pay and overtime reports to see the payments that your employees receive in a reported period, including overtime. It is easy to define and use payout rules for worked hours, including compensation for overtime. You can, for example, use time off in lieu (time-for-time) or pay out overtime.

Looking for a single, easy-to-use system that can handle all your timesheets, scheduling, and reporting needs in a fraction of the time? Discover all the features of our time & attendance management solution that our customers around the world love and use daily. Start with a free 30-day trial of our most extensive Plus Plan. After your trial, you can switch to our Free or Essential Plan, or just stick to our Plus Plan.