UK Overtime Law and Pay — Complete Guide for 2025
Overtime is any time worked beyond the contracted hours set out in an employment contract. Unlike many other countries, UK law imposes no blanket requirement to pay a premium rate for overtime. However, several important legal rules and common contractual provisions govern how overtime is handled, and understanding them can mean the difference between correctly calculating your earnings and losing money.
Is There a Legal Right to Overtime Pay?
No. The Employment Rights Act 1996 and the National Minimum Wage Act 1998 do not create a general right to receive a higher rate for overtime hours. The only legal floor is that average pay across all hours (including overtime) must not fall below the National Minimum Wage / National Living Wage for the applicable age band.
National Living Wage from April 2025:
- Age 21+: £12.21/hour
- Age 18–20: £10.00/hour
- Under 18 (above school leaving age): £7.55/hour
- Apprentices (first year or under 19): £7.55/hour
Common Overtime Rates Explained
| Rate Name | Multiplier | Example at £15/h | Common in |
|---|
| Plain time / no premium | ×1.0 | £15.00/h | Flexible hours, retail |
| Quarter extra | ×1.25 | £18.75/h | Some office roles |
| Time and a half | ×1.5 | £22.50/h | Most common; many sectors |
| Double time | ×2.0 | £30.00/h | Bank holidays, nights |
| TOIL (1:1) | N/A | 1h off per 1h OT | Many professional roles |
| TOIL (1.5:1) | N/A | 1.5h off per 1h OT | Some public sector roles |
Worked Example — Time and a Half at £15/Hour
Scenario: 37.5h contract, worked 42h, base rate £15/h, overtime at ×1.5
Overtime hours: 42 - 37.5 = 4.5 hours
Normal pay: 37.5h × £15.00 = £562.50
Overtime rate: £15.00 × 1.5 = £22.50 per hour
Overtime pay: 4.5h × £22.50 = £101.25
Total weekly gross: £562.50 + £101.25 = £663.75
Time Off in Lieu (TOIL)
Time off in lieu is an alternative to financial overtime pay, allowing workers to "bank" hours worked beyond their contract and take them as paid leave later. TOIL arrangements must be set out in the employment contract or agreed in writing. Key points:
- Accrual rate: Some contracts give TOIL at 1:1 (one hour off for each hour worked). Others give enhanced TOIL at 1.5:1 (one and a half hours off per overtime hour), reflecting the value of time and a half.
- Expiry: Many contracts set a limit on TOIL accrual (e.g. maximum 40 hours) or a deadline for taking accrued TOIL (e.g. within 3 months).
- Termination: Unused TOIL at the point of resignation or dismissal may be paid out in lieu, but this depends on the contract terms.
Working Time Regulations and the 48-Hour Limit
The Working Time Regulations 1998 impose an average limit of 48 working hours per week, measured over a reference period (usually 17 weeks). Employers cannot require workers to exceed this average without a signed opt-out agreement. The opt-out:
- Must be voluntary and in writing
- Workers cannot be dismissed or penalised for refusing to sign
- Can be withdrawn by the worker giving 7 days' notice (or a longer period agreed in writing, up to 3 months)
- Does not apply to young workers under 18
Bank Holiday Overtime
Many employers pay double time (×2) for working on bank holidays, particularly in retail, hospitality, and healthcare. The legal position is that there is no statutory right to bank holidays as paid time off — they are a contractual matter. If your contract gives you bank holidays as paid leave and you work on one, you are entitled to an extra day in lieu plus any contractual premium.
Night and Weekend Differentials
Beyond standard overtime, many contracts include shift allowances or differentials for antisocial hours. Common examples:
- Night shift enhancement: Often 30% or 33.3% uplift on base pay for hours worked between 22:00 and 06:00
- Saturday working: Commonly time and a quarter (×1.25) or time and a half (×1.5)
- Sunday working: Often double time (×2) or time and a half (×1.5)
NHS Band Enhancement Example
NHS Agenda for Change contracts provide detailed enhancement rates. As of 2025:
- Saturday 00:00–midnight: 30% enhancement
- Sunday and Bank Holidays 00:00–midnight: 60% enhancement
- Weekday nights (20:00–06:00): 30% enhancement
- Overtime (beyond contracted hours): 37% enhancement (time ×1.37)
Does Overtime Affect Tax?
Overtime is taxed through PAYE in exactly the same way as regular earnings. There is no special overtime tax rate. If the additional overtime pushes your total income above a tax band threshold (e.g. £50,270 for higher rate in 2025/26), only the income above that threshold is taxed at the higher rate (40%). National Insurance contributions apply at the same rate for overtime earnings above the weekly threshold (£242 per week in 2025/26).
Frequently Asked Questions
Is there a legal right to overtime pay in the UK?
No. UK law does not require employers to pay a premium for overtime. The only legal requirement is that average pay across all hours worked must not fall below the National Minimum Wage (£12.21/hour for workers aged 21+ from April 2025). Any right to overtime pay, or to a higher rate, must come from the employment contract or a collective agreement.
What does time and a half mean?
Time and a half means you are paid 1.5 times your normal hourly rate for overtime hours. At a base rate of £15/hour, time and a half equals £22.50 per overtime hour. This is the most common overtime premium in UK employment contracts, particularly in manufacturing, logistics, and public sector roles.
What is TOIL (Time Off in Lieu)?
TOIL allows workers to take paid time off instead of receiving extra pay for overtime. For example, working 2 extra hours earns 2 hours off (or 3 hours off at time-and-a-half TOIL rate). TOIL arrangements must be agreed with the employer and set out in the contract or a written agreement. Many employers cap TOIL balances to prevent large accruals.
Does overtime count toward holiday pay?
Following Employment Appeal Tribunal decisions, regular voluntary overtime must be included in holiday pay calculations for the first 4 weeks of statutory annual leave (the Working Time Regulations element). The reference period used is the most recent 52 weeks when pay was actually received. The remaining 1.6 weeks of statutory leave may be calculated on basic pay only, though many employers apply the full 5.6 weeks for consistency.
What is the 48-hour opt-out and does it affect overtime?
Workers can voluntarily sign a written opt-out from the 48-hour average weekly limit under the Working Time Regulations 1998. Without an opt-out, employers should not require more than 48 average weekly hours over a 17-week reference period. The opt-out does not affect pay rates — those are solely governed by the employment contract.
How is overtime tax in the UK calculated?
Overtime pay is taxed through PAYE in exactly the same way as regular earnings — income tax at 20% (basic rate) or 40% (higher rate) and National Insurance contributions at 8% for earnings between £242–£967/week. There is no special overtime tax rate. If overtime pushes your weekly earnings above a threshold, only the excess is taxed at the higher rate.
Can my employer force me to work overtime?
Only if your employment contract includes a mandatory overtime clause. Without such a clause, you cannot be required to work overtime. Even with a mandatory overtime clause, hours must remain within the Working Time Regulations 48-hour average limit (unless you have signed a valid opt-out). Refusing to work unreasonable overtime that was not agreed contractually is generally protected under UK employment law.