In the last decade the relationship between employers and employees has witnessed many overtime disputes which consumed considerable amounts of human and financial resources. Due to this, labour legislations should be taken into consideration when developing and implementing HR overtime policies and procedures to have a solid case for any anticipated challenge in the judicial system.

Getting promoted to a managerial position is a common desire for many employees, yet employers will be more generous in giving managerial titles if they can save money by exempting the managers from overtime pay. So are all managers holders exempt from overtime pay? To answer this question there are three main elements that should be examined to provide a general guideline. First, do the primary duties of the position include direct control and authority over human and/or financial resource? Second, are there subordinate employees have less managerial experience/ responsibility than their manager? Third, are the salaries of managers not subject to deductions regarding their attendance or for being late? Do the managers not have to punch in and out? If the answer to all these questions is yes, then this is an indication that the holder of a managerial title is exempt from overtime pay.

Another important factor is the compensation method for compensating the manager which could indicate the managerial duties. If a manager is paid on an hourly basis, this is an indication that the manager is not exempt from overtime, because his hourly wage is determined on a flat-rate pay system. If the manager’s salary is determined by their output as a percentage of outside sales revenue, which is directly generated by their direct efforts or their teams’ efforts, this is an indication that the manager is exempt from overtime pay. Is the manager being paid for the knowledge they obtained through education or expertise? Is the manager an artist or musician where the output is characterized with imagination and talent? If the answers are yes, then this is an indication that the manager is exempt from overtime pay.

The policy, procedure, nature and justification of overtime are all critical factors. The policy should be distributed, clearly communicated through appropriate channels of communication and in an easily understandable language to all employees. This is to reduce any misunderstanding between employees and their direct manager, especially if the company is more generous than the provincial legislations and at the same time to have a safe harbour for the employer. The appropriate use of overtime forms for pre-approval and post-approval by the employees is highly recommended. Also monitoring and maintaining overtime records is an essential responsibility of the employer. Many employees do not obtain pre-approval for working overtime and further more some of the employees do not ask for over time pay until they leave the organization. In this case maintaining overtime records is vital. Another aspect related to the procedure of overtime recording, is if the mangers’ work is conducted outside the office site or at the employee’s home. It would be the managers’ responsibility to track the time and overtime worked.

The nature of the overtime work is a controversial area of discussion. The question arises on whether the overtime work is directly related to the essential job functions of the manager or if it is related to the essential job functions of one of their team members? If it is the function of one of the manager’s team members, this could be due to the inefficient management practices of the manager or it could be related to external factors such as sick leave or the end of the fiscal year. In general, the manager is entitled to overtime pay, if the performed work does not meet the elements of the general guideline (control and authority, subordinates and salaries deductions). Does the justification of the overtime meet the standard performance expectations of the job and do other managers with same duties meet the standard performance expectations without overtime? Well, this needs a high performance management system to decide on whether the manager is effective in his/her work as the extra needed hours to perform regular duties should not be paid as over time. Does the employer know that the manager is working overtime to obtain more commission or incentives compared to the average manager? This is another factor to be considered when determining if the overtime should be paid. In this situation the overtime is voluntary and therefore not a requirement of the job and the assumption would be made that the overtime should not be paid.

The operational structure of the company also has an influence on the nature of overtime. For example, if the company has highly motivated creative professionals, where teams choose their own tasks with or without a team leader (manager) and at the same time tasks and results determine the reward, rather than the time spent, without any financial risk if the results were not satisfactory to the employer. Generally in this case no overtime should be paid to all creative team members.

Furthermore, there are social and psychological factors that affect overtime. Work and family life balance is one of the most sought after employees’ satisfaction factor and when the work load is too high for a long duration, the employee’s personal life will be negatively impacted. Therefore some highly paid employees will highly appreciate the days off instead of overtime pay, i.e. time in lieu for the overtime hours worked.

Naturally people expect a return for the effort they put into, and the fact that they are highly paid is because of the revenue they generate, through the hard work they already have put in over the years to reach a managerial position. The focus on getting the job done efficiently, sometime needs more than normal working hours, such as attending social events and meetings. This means that managers could be entitled for overtime pay, yet in some other cases they could be not entitled. The ideal solution would be to study the managers’ requests on a case by case basis. For example, a store manager is more likely not to be entitled for overtime pay if he/she spends long hours utilizing the human and financial capital, but the same manager is more likely to be entitled for overtime work if he/she was restocking the store’s shelves.

My recommendation would be that employers should pay overtime to all employees through the appropriate channels even if there was no pre-approval for the overtime worked. A reminder of the pre-approved overtime procedures should be given to those who did not obtain pre-approval for the overtime worked, before proceeding with disciplinary measures if the pre-approval is continuously ignored.

* The opinions expressed in this document is not considered an official guideline, but rather the opinion of writer.