Voluntary Overtime Pay: UK Employer Guide

Voluntary overtime can provide valuable flexibility for employers managing fluctuating workloads, staff shortages, or time-critical business demands. However, employers must ensure any voluntary overtime arrangements comply with UK employment law, including correct pay, working time limits, and holiday pay calculations. Mismanaging voluntary overtime exposes employers to risks such as unlawful deduction of wages claims, Working Time Regulations breaches, and inconsistent treatment between full-time and part-time workers.

What this article is about: This comprehensive guide explains how voluntary overtime pay works in UK employment law, how it differs from compulsory overtime, when employees must be paid for voluntary overtime, how overtime interacts with the Working Time Regulations, and when voluntary overtime must be included in holiday pay. It also sets out the rights of part-time workers, the contractual rules employers must follow, and best-practice approaches for HR teams when administering voluntary overtime.

Section A: What Is Voluntary Overtime Pay?

Voluntary overtime refers to any additional hours worked by an employee beyond their contracted or normal working hours that they are not contractually required to accept. Because voluntary overtime is offered and accepted at the discretion of both parties, the employee has no obligation to work these hours, and the employer has no obligation to provide them. Voluntary overtime pay is the rate—standard or enhanced—that applies to these additional hours worked.

The distinction between voluntary and compulsory overtime is fundamental. Compulsory overtime (guaranteed or non-guaranteed) requires the employee to work additional hours if instructed, whereas voluntary overtime does not. In a voluntary arrangement, employers cannot insist employees take on extra work, nor can they discipline employees for refusing it unless a contractual provision explicitly requires certain additional hours to be worked.

Voluntary overtime is often used by employers to respond to short-term changes in staffing levels or customer demand. Typical scenarios include covering sickness absence, supporting seasonal peaks, or providing additional staffing for urgent projects. Because it is flexible and not contractual, voluntary overtime avoids binding commitments for both employer and employee.

Employees undertaking voluntary overtime may receive a higher rate of pay, but this depends entirely on contractual terms, custom and practice, or workplace policy. There is no statutory legal right to overtime pay, nor is there a statutory minimum overtime rate in the UK. Employers may also choose to offer time off in lieu (TOIL) instead of pay, but they must ensure that awarding TOIL does not reduce an employee’s average pay below the National Minimum Wage for the relevant pay reference period.

Section B: Voluntary and Compulsory Overtime Rules

Overtime can take different forms depending on what is written into the employment contract and how work is organised in practice. For employers, a key compliance step is to distinguish clearly between voluntary overtime and compulsory overtime, as the legal consequences for pay, working time and holiday entitlement can differ.

Broadly, overtime will fall into one of three categories: voluntary overtime, guaranteed compulsory overtime and non-guaranteed compulsory overtime. Although all three involve working beyond normal contracted hours, they are treated differently in terms of employee obligations and employer expectations.

1. Voluntary overtime

Voluntary overtime is where there is no contractual obligation on the employer to offer extra hours and no obligation on the employee to accept them. There is nothing in the contract of employment requiring the employee to work beyond their standard contracted hours, and the employee must be free to decline additional work without fear of disciplinary action or detriment.

Examples of voluntary overtime include:

• Inviting staff to sign up for extra shifts during a busy trading period, with no requirement to do so.
• Offering ad hoc additional hours to cover sickness or emergency absences, where employees can choose whether to accept.
• Allowing employees to stay on to help with a one-off stock-take or project, provided there is no pressure or expectation that they must do so.

Where overtime is genuinely voluntary, employees should not be criticised, disadvantaged, or overlooked for opportunities because they decline additional hours. Any such detriment risks grievances and, in some circumstances, claims linked to unfair treatment or discrimination, for example if voluntary overtime is offered in a way that disadvantages workers with caring responsibilities.

2. Guaranteed compulsory overtime

Guaranteed compulsory overtime is overtime that the employer is contractually obliged to offer and the employee is contractually obliged to work. This type of overtime is usually written into the contract of employment and forms a predictable part of the working pattern.

For example, a contract may state that employees will work an additional three hours on the last Friday of every month to support a regular client commitment. In these circumstances, those hours are part of the employee’s contractual working pattern and the employer is expected to provide them.

Because guaranteed compulsory overtime is contractual, it will normally count as part of an employee’s “normal remuneration” and must be included in statutory holiday pay calculations for at least the four weeks’ core annual leave derived from EU law.

3. Non-guaranteed compulsory overtime

Non-guaranteed compulsory overtime is where the employer is not obliged to provide overtime, but if overtime is offered the employee is contractually required to work it. The actual amount of overtime may vary, but the requirement to undertake it when requested is binding on the employee.

For example, an employer may anticipate the need for production staff to work additional hours during peak seasons but cannot predict the exact volume of overtime in advance. The contract may state that employees must work reasonable additional hours when required to meet business needs.

Case law confirms that non-guaranteed compulsory overtime that is regularly worked should be reflected in holiday pay for the four weeks of statutory leave under the Working Time Regulations. Employers must therefore ensure their payroll calculations capture this type of overtime correctly.

Although voluntary overtime is outside this compulsory framework, the line between voluntary and non-guaranteed compulsory overtime can become blurred if employees feel under pressure to accept overtime or where “voluntary” overtime in practice becomes a consistent expectation. Employers should regularly review how overtime is described and managed to ensure the label reflects the reality.

4. Protection from detriment for refusing voluntary overtime

Where overtime is voluntary, employees must be able to refuse additional hours without suffering any disadvantage. This means employees should not be subjected to disciplinary action, reduced opportunities, or less favourable treatment simply because they decline extra work. Any such detriment may give rise to legal risk, particularly if the treatment disproportionately affects workers with certain protected characteristics, such as women with childcare responsibilities.

Employers should train managers to distinguish clearly between situations where overtime is truly optional and circumstances in which additional hours are part of the employee’s contractual obligations. Performance management and disciplinary procedures should never be used to coerce employees into working voluntary overtime.

5. Good practice: setting out overtime rules

While voluntary overtime can be agreed informally, it remains best practice to set out the overall framework in writing. This may be done in the contract of employment, the written statement of particulars required under the Employment Rights Act 1996, or a staff handbook or overtime policy. The documentation should clarify:

• Whether overtime is voluntary, compulsory, or a mix of both.
• How overtime will be offered and allocated between staff.
• Whether overtime will be paid, at what rate, or whether TOIL will be used.
• Any limits on the amount of overtime that may be worked.
• How overtime interacts with working time limits and rest breaks.

Clear, well-communicated rules reduce the risk of misunderstandings and help HR teams ensure that voluntary overtime is administered fairly and consistently across the workforce.

Section C: Voluntary Overtime and Maximum Working Hours

Even where overtime is described as voluntary, employers must still comply with the Working Time Regulations 1998 (WTR). These regulations set limits on weekly working time, provide rights to rest breaks and rest periods, and offer specific protections for night workers and young workers. Voluntary overtime cannot be used to sidestep these minimum standards.

The central working time rule for most adult workers is the 48-hour average weekly limit. In general, a worker should not be required to work more than an average of 48 hours per week over a reference period, usually 17 weeks, unless they have voluntarily signed an individual opt-out or fall into a category of work that is exempt from the limit, such as certain transport workers or senior managers with autonomous decision-making powers.

1. What counts as working time?

For working time purposes, “working time” generally includes any period during which the worker is working, at the employer’s disposal, and carrying out their duties. This can cover:

• Normal contracted hours of work.
• Paid overtime, whether voluntary or compulsory, where the worker is expected to perform duties.
• Unpaid overtime that the employer has requested or expected the worker to perform.
• Job-related training undertaken at the employer’s request.
• Certain work-related travel time, such as travel between client appointments for mobile workers.
• Working lunches where the worker is required to perform duties while eating.

In contrast, time that is truly at the worker’s own disposal, such as commuting to and from a fixed workplace, genuine rest breaks, or social time at work events that the employee is free not to attend, will typically fall outside working time.

Where employees stay beyond their contracted hours purely of their own accord and without expectation or request from the employer, this may not count as working time. However, if managers routinely rely on staff “staying late” to complete work or tacitly expect unpaid extra hours, those periods are likely to be treated as working time. Employers should be cautious about informal cultures of unpaid overtime and should monitor working time records accordingly.

2. Voluntary overtime and the 48-hour weekly limit

Voluntary overtime contributes to the 48-hour weekly working time calculation where it involves the worker performing duties for the employer. Even if the additional hours are not guaranteed or contracted, the time spent performing voluntary overtime will usually count towards working time, unless it is genuinely occasional and entirely at the employee’s discretion without any employer expectation.

Working hours are normally averaged over a 17-week reference period, meaning it is possible for an employee to work more than 48 hours in some weeks as long as their average does not exceed 48 hours over the reference period. For some roles and sectors, a different reference period may apply.

Employers should maintain adequate records to demonstrate compliance with working time limits. This includes capturing hours worked as voluntary overtime, whether or not they are paid. Failing to track overtime properly makes it difficult to evidence compliance in the event of an investigation or complaint.

3. Opting out of the 48-hour weekly limit

Workers can choose to opt out of the 48-hour average weekly limit by signing a written individual opt-out agreement. This must be genuinely voluntary, and workers must not be subjected to any detriment if they refuse to sign or later withdraw their consent. Employers cannot insist on opt-outs as a condition of employment or promotion.

Some categories of worker are not permitted to opt out, such as certain drivers and workers involved in the operation of specific types of transport. Young workers under 18 are subject to stricter rules and cannot work more than 8 hours a day or 40 hours a week, with no opt-out available.

Even where a worker has opted out, employers retain a general duty to protect employees’ health and safety and should monitor working time to ensure staff are not overworked. High levels of voluntary overtime may still trigger concerns about stress, fatigue and compliance with rest breaks and rest periods.

4. Rest breaks, night work and voluntary overtime

The WTR also provide for daily and weekly rest periods, rest breaks during the working day, and protections for night workers. Voluntary overtime must be managed in a way that maintains these rights, particularly where additional hours are worked late at night or at weekends.

For example, night workers are subject to a normal limit of an average of 8 hours’ night work in any 24-hour period, calculated over a reference period. Voluntary overtime undertaken at night would count towards this limit. Employers must also offer night workers regular health assessments.

In planning voluntary overtime rotas, employers should ensure that additional hours do not erode minimum rest periods between shifts or weekly rest days. HR teams should encourage managers to check working patterns holistically, rather than considering voluntary overtime in isolation.

5. Recording working time accurately

To demonstrate compliance with working time rules, employers should keep accurate and up-to-date records of hours worked, including voluntary overtime. Systems for recording time should be robust enough to capture extra hours even where they are agreed at short notice or undertaken on an ad hoc basis.

Where employees are allowed to work remotely or flexibly, it is important to set clear expectations about logging hours and to reinforce that all working time, including voluntary overtime, must be recorded. Transparent record-keeping not only supports compliance but also helps identify patterns of excessive working and informs workforce planning.

Section D: Who Is Entitled to Voluntary Overtime Pay?

There is no statutory right to overtime pay in the UK, meaning employees are not automatically entitled to receive additional pay—or enhanced rates—for voluntary overtime. Entitlement depends on the terms of the employment contract, workplace policies, collective agreements or an established custom and practice. Nonetheless, employers must ensure any arrangements for voluntary overtime comply with minimum wage laws and do not result in unlawful deductions from wages.

Voluntary overtime pay is more common for hourly paid staff, but salaried employees may also be eligible for overtime payments where the contract provides for it. Employers wishing to encourage staff to work voluntary overtime may choose to offer premium rates, though there is no legal requirement to do so.

Where an employer offers time off in lieu (TOIL) instead of pay, they must ensure that the employee’s average hourly rate for the pay reference period does not fall below the National Minimum Wage (NMW) or National Living Wage (NLW). The employer must also track TOIL accruals accurately to avoid disagreements over entitlement or availability of leave.

The following considerations apply when determining entitlement:

1. Contractual terms

The contract of employment remains the primary source of entitlement. Contracts should specify whether voluntary overtime will be paid, at what rate, and whether enhanced rates apply. A failure to pay overtime in accordance with contractual terms could constitute an unlawful deduction from wages.

Where employment contracts are silent, employers may establish overtime arrangements through written policies or regular practice. However, where a practice becomes consistent and expected over time, it may become an implied contractual term.

2. Custom and practice

A regular and long-standing custom of paying voluntary overtime may give rise to implied terms. If employees have consistently been paid at a certain rate for voluntary overtime and reasonably expect to continue receiving that rate, the employer may struggle to withdraw or vary the arrangement without consultation.

To avoid disputes, employers should ensure overtime practices match written policies and that changes are communicated clearly and in advance.

3. Time off in lieu (TOIL) arrangements

TOIL is commonly used as an alternative to paid overtime, particularly for salaried employees. While lawful, TOIL policies must be managed carefully:

• TOIL must be recorded accurately, including accruals and usage.
• Employers should specify whether TOIL must be taken within a set timeframe.
• TOIL arrangements must never reduce a worker’s pay below the NMW/NLW for the pay reference period.
• Policies should address what happens to accrued TOIL when employment ends.

Because TOIL interacts closely with minimum wage compliance, employers should review policies regularly and ensure line managers understand the rules.

4. Avoiding less favourable treatment of part-time workers

Under the Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000, part-time employees must not be treated less favourably than full-time comparators unless the employer can objectively justify the difference. This includes the way voluntary overtime pay is handled.

Where full-time staff receive an enhanced rate for overtime, part-time workers should also receive the same rate once they reach the equivalent number of full-time hours or when they work in circumstances where full-time workers would receive enhanced pay, such as unsocial hours.

Employers should ensure overtime opportunities and pay structures are applied consistently to avoid claims of less favourable treatment.

5. Minimum wage considerations

Even though there is no statutory overtime rate, employers must ensure that pay for all hours worked—including voluntary overtime—complies with NMW/NLW requirements. Where TOIL is used instead of pay, the employer must check that the total hours worked in the pay reference period do not dilute the employee’s average hourly pay below the statutory minimum.

Records must be kept to evidence compliance. Failure to meet NMW obligations can result in enforcement action by HMRC, penalties and potential naming under the government’s naming scheme.

Section E: Part-Time Workers and Voluntary Overtime Pay

Part-time workers enjoy the same legal protections as full-time staff in relation to voluntary overtime. The Part-Time Workers Regulations prevent employers from treating part-time employees less favourably in terms of contractual benefits, including overtime pay, unless the difference can be objectively justified.

Where full-time employees receive enhanced overtime rates, part-time employees will typically become entitled to the same rate once they have worked the same number of hours that constitute full-time working hours for the organisation. Employers must avoid creating pay structures that disadvantage part-time workers or deny them opportunities for voluntary overtime.

1. Equal treatment principles

Employers must ensure that access to voluntary overtime is fair and inclusive. Mismanagement can lead to claims of less favourable treatment, especially if voluntary overtime is consistently offered to or accepted by full-time workers while part-time employees are excluded, whether intentionally or otherwise.

Fair allocation of overtime not only supports compliance but can strengthen employee engagement and retention.

2. Enhanced rates and unsocial hours

Where a workplace offers enhanced rates for overtime worked during evenings, nights or weekends, these rates must be applied consistently to part-time employees. Employers cannot apply different overtime rules merely because an employee works fewer contractual hours.

HR teams should monitor how overtime is allocated and ensure that the rules are understood by both managers and employees.

3. Contractual clarity

Employment contracts for part-time workers should state how overtime will be treated, including when enhanced rates apply and how voluntary overtime interacts with the worker’s normal hours. Clear documentation reduces the likelihood of disputes and ensures consistent practice across the workforce.

4. Monitoring hours for minimum wage compliance

Because part-time workers may undertake a mix of regular hours and voluntary overtime, employers must carefully track working time to ensure compliance with minimum wage laws. This is particularly important where TOIL is offered instead of pay.

Accurate time recording protects employers, supports payroll accuracy and ensures staff are paid fairly for all time spent working.

Section F: Voluntary Overtime Pay and Holiday Entitlement

Holiday pay remains one of the most complex areas of UK employment law, particularly where workers perform variable hours or overtime. Employers must ensure that voluntary overtime is treated correctly when calculating statutory holiday pay, especially because case law has established that certain types of overtime must be included to ensure workers are not financially disadvantaged when taking annual leave.

In the UK, most workers are legally entitled to 5.6 weeks’ paid annual leave each leave year. The question for employers is what constitutes “a week’s pay” for holiday pay purposes when overtime is involved. While workers with fixed hours and no overtime receive their normal weekly pay, those who work overtime—compulsory or voluntary—require a different approach.

1. Overtime and “normal remuneration”

Case law has made it clear that holiday pay must reflect “normal remuneration” for the four weeks’ statutory leave derived from EU law. The following principles apply:

• Guaranteed compulsory overtime must be included in holiday pay calculations.
• Non-guaranteed compulsory overtime must also be included where it is regularly worked.
• Voluntary overtime must be included when it is sufficiently regular and settled to form part of a worker’s normal pay.

The landmark cases shaping these rules include:

• Bear Scotland Ltd v Fulton – established that non-guaranteed overtime must be reflected in holiday pay.
• Dudley Metropolitan Borough Council v Willetts – confirmed that regular voluntary overtime counts as normal remuneration.
• Flowers v East of England Ambulance Service NHS Trust – reinforced that voluntary overtime must be included where it is regularly and consistently worked.

The common theme across these decisions is that employees should not be deterred from taking holiday because they lose earnings normally received during working time. As a result, employers must review patterns of voluntary overtime and determine whether the overtime forms a sufficiently regular part of normal pay.

2. Holiday pay reference period (52 weeks)

Since 6 April 2020, the holiday pay reference period for workers with variable pay has been extended from 12 to 52 weeks. Employers must look back over the previous 52 paid weeks (excluding weeks with no pay) to calculate average weekly pay. This ensures that workers with seasonal or fluctuating hours receive a fair reflection of normal remuneration.

Where employees have worked voluntary overtime regularly within this period, those earnings should be included in the calculation.

3. Holiday pay reforms (2024 changes)

From January 2024, reforms to the Working Time Regulations introduced new rules for irregular hours workers and part-year workers. These include:

• A statutory definition of “normal remuneration”.
• The option for employers to use rolled-up holiday pay for irregular hours and part-year workers only.
• Clarification that voluntary overtime, when regularly worked, forms part of normal remuneration and must be reflected in holiday pay.

Rolled-up holiday pay cannot be used for workers with fixed or regular hours. Employers must therefore assess each category of worker and apply the appropriate calculation method.

4. Assessing whether voluntary overtime is “regular”

There is no statutory definition of “regular” overtime. Instead, employers must assess the pattern of overtime worked. Factors include:

• The frequency of voluntary overtime.
• Whether there is a settled pattern over time.
• Whether employees reasonably expect overtime to be available.
• Whether the employer relies on voluntary overtime to meet operational needs.

Employers should follow a consistent approach, ensuring overtime that forms part of normal pay is reflected appropriately. Failing to include regular voluntary overtime in holiday pay may result in unlawful deduction of wages claims and potential tribunal proceedings.

5. Ensuring compliance in holiday pay calculations

To ensure legal compliance, employers should:

• Conduct periodic reviews of voluntary overtime patterns.
• Update payroll systems to ensure relevant overtime is captured in reference periods.
• Maintain clear written policies explaining how holiday pay is calculated.
• Train managers to understand the distinction between different types of overtime.

Accurate and transparent holiday pay ensures compliance and helps prevent disputes, while also supporting employee trust and wellbeing.

Section H: Managing Voluntary Overtime — Best Practice for Employers

Managing voluntary overtime effectively requires clear communication, structured processes and an understanding of the legal framework governing working hours, pay, rest periods and holiday calculations. By implementing robust systems, employers can meet operational needs while ensuring compliance with UK employment law and protecting employee wellbeing.

The guidance below outlines best-practice approaches for HR teams, operational managers and business leaders responsible for allocating and managing voluntary overtime.

1. Develop a clear overtime policy

An overtime policy should set out the organisation’s approach to voluntary and compulsory overtime, including how overtime will be allocated, any pay or TOIL arrangements, record-keeping requirements and rules on rest periods. The policy should be accessible to all employees and consistently applied across teams and departments.

• Define voluntary, compulsory, guaranteed and non-guaranteed overtime.
• Clarify pay rates or TOIL arrangements for each type of overtime.
• Explain how overtime interacts with working time limits and rest breaks.
• Define when and how overtime will be offered to employees.
• Ensure the policy aligns with employment contracts and statutory requirements.

Policies should be reviewed regularly to reflect operational needs, legislative changes and relevant case law developments.

2. Train managers on overtime rules

Line managers play a central role in implementing overtime arrangements. Proper training ensures they understand:

• The legal differences between voluntary and compulsory overtime.
• The organisation’s policy framework and contractual requirements.
• How to avoid placing pressure on employees to undertake voluntary overtime.
• How overtime decisions affect working time limits and holiday pay.
• The importance of fair and non-discriminatory allocation of overtime.

Managers should be reminded that voluntary overtime must be genuinely voluntary and that staff who decline overtime must not be subjected to detriment.

3. Monitor working patterns and wellbeing

Employers should monitor the number of hours employees are working, including voluntary overtime, to ensure compliance with the Working Time Regulations and to protect staff from fatigue-related risks. Excessive overtime, even where voluntary, can affect employee wellbeing, morale and long-term productivity.

Monitoring working patterns helps employers:

• Identify staff members working consistently high hours.
• Ensure compliance with daily and weekly rest periods.
• Determine whether additional staffing or resourcing is required.
• Assess whether voluntary overtime has become a de facto expectation.

Employers should take proactive measures where working time concerns arise, including reviewing staffing levels and supporting employees with workload management.

4. Ensure fairness and inclusion in overtime allocation

To comply with the Part-Time Workers Regulations and equality legislation, employers must ensure that voluntary overtime opportunities are allocated fairly and without discrimination. A transparent allocation process helps prevent claims of unfair treatment, particularly where certain groups—such as part-time workers or those with caring responsibilities—may be disadvantaged by ad hoc or informal systems.

Best practice includes:

• Offering voluntary overtime to all eligible employees before allocating it selectively.
• Recording who is offered overtime and who accepts or declines.
• Ensuring selection decisions are based on objective criteria, not manager preference.
• Making reasonable adjustments where appropriate to support disabled workers.

Objective and transparent allocation strengthens employee trust and reduces legal risk.

5. Keep accurate records

Accurate record-keeping underpins compliance with:

• The National Minimum Wage legislation.
• The Working Time Regulations.
• Holiday pay calculations.
• Internal overtime policies.

Employers should maintain reliable systems for recording all hours worked, including voluntary overtime and TOIL accruals. Where remote or hybrid working arrangements apply, digital systems or self-reporting frameworks must be reinforced to ensure accuracy and transparency.

6. Review overtime patterns regularly

Periodic review of overtime patterns helps employers identify operational issues, such as persistent understaffing, workload imbalances or overreliance on overtime. Regular reviews support effective workforce planning and ensure compliance with legislation regarding normal remuneration for holiday pay.

Reviews should include:

• The frequency and distribution of voluntary overtime.
• Whether voluntary overtime has become expected rather than optional.
• Trends in TOIL usage and accruals.
• Working time limit compliance.

Employers should use these insights to adjust staffing levels, shift patterns or resourcing strategies where needed.

7. Address disputes promptly and transparently

Disagreements about overtime pay, TOIL, working hours or holiday pay calculations should be addressed quickly and openly. Inconsistent handling of overtime disputes increases legal risk and damages employee relations.

Good practice includes:

• Providing a clear route for employees to raise overtime concerns.
• Investigating disputes promptly and fairly.
• Documenting decisions and the rationale behind them.
• Ensuring outcomes align with contractual terms and organisational policies.

Engaging early with employees can prevent small issues escalating into formal grievances or employment tribunal claims.

8. Integrate overtime management with workforce planning

Voluntary overtime should complement—not replace—structured workforce planning. Where employers repeatedly rely on overtime to meet operational demand, it may indicate that core staffing levels are too low or that shift patterns require redesign.

Strategic workforce planning may involve:

• Recruiting additional staff during predictable peak periods.
• Adjusting shift patterns or rota systems.
• Reviewing job design to distribute workloads more effectively.
• Using temporary or agency workers where appropriate.

Aligning overtime management with broader workforce strategy helps ensure sustainable operations and reduces excessive reliance on voluntary overtime.

Section I: Voluntary Overtime Pay FAQs

1. What is voluntary overtime pay?

Voluntary overtime pay refers to payments made to employees for additional hours they choose to work beyond their contractual hours. Employees are not obliged to work these hours unless their contract specifies otherwise.

2. Do employers have to offer voluntary overtime?

No. Employers may offer voluntary overtime when there is additional demand, but they are not legally required to do so. Similarly, employees can refuse voluntary overtime without detriment.

3. Does voluntary overtime need to be included in holiday pay?

Yes, if voluntary overtime is worked regularly enough to form part of the employee’s “normal remuneration”. Case law confirms that excluding regular voluntary overtime from holiday pay may result in underpayment claims.

4. What counts as “regular” voluntary overtime?

There is no statutory definition, but overtime is generally considered regular if it is undertaken frequently, consistently or forms a predictable part of the worker’s pay pattern.

5. How is voluntary overtime included in holiday pay calculations?

Where overtime forms part of normal remuneration, employers must include it in average weekly pay calculations using a 52-week reference period, excluding weeks where no pay was received.

6. Can employees be disciplined for refusing voluntary overtime?

No. Refusing voluntary overtime should not result in disciplinary action unless the overtime in question is contractual. Penalising employees for refusing voluntary overtime may constitute detriment or lead to grievances.

7. Is voluntary overtime pay subject to tax?

Yes. Voluntary overtime pay is treated like any other earnings and is subject to income tax and National Insurance contributions.

8. What are the risks of excluding voluntary overtime from holiday pay?

Failing to reflect regular voluntary overtime in holiday pay calculations may lead to unlawful deduction claims, backdated liability for arrears and potential tribunal proceedings.

Section J: Conclusion

Voluntary overtime remains a valuable mechanism for meeting fluctuating operational demands, supporting workforce flexibility and enhancing earning opportunities for employees. However, employers must manage voluntary overtime carefully to ensure compliance with UK employment law. This includes ensuring working time limits are respected, minimum wage obligations are met and holiday pay accurately reflects normal remuneration when overtime is worked regularly.

Clear contractual terms, well-designed policies and consistent record-keeping are essential to administering voluntary overtime effectively. Employers who take a proactive and structured approach can minimise legal risk, promote fairness and support employee wellbeing, all while ensuring operational efficiency.

Section K: Useful Links

Author

Gill Laing

Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.

Gill is a Multiple Business Owner and the Managing Director of Prof Services - a Marketing & Content Agency for the Professional Services Sector.

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