Addressing productivity in your SME before turning to overtime

January 19, 2023

Although we have escaped a recession by the skin of our teeth, the challenges facing SMEs continue.

Businesses and their owners face the same cost of living pressures as their staff including energy, travel and rent. Furthermore, many are still trying to catch up from the losses during the pandemic. This is why a focus on productivity has never been more important.

It is easy to become a little lax during the good times, but now is the time to tighten our belts and our working practices.

Sharing your vision and other good management practices
We would always suggest having your staff on board with your vision and giving them an accurate understanding of how the company is performing. This is an excellent step to improving productivity.

So too is looking at job descriptions and workloads to ensure goals are achievable and that your team are not working under too heavy workloads. Regular monitoring and feedback on performance is essential. Reintroduce and monitor timekeeping and absence so you are really running on all cylinders.

Approaching overtime carefully
Of course, whilst for some industry sectors January is a quiet month after the Christmas peak, many others face additional pressures from the terrible weather bringing in high demand for their services. Then there is the flu and cough viruses which add to staff shortages and put huge pressure on resources. Overtime can provide an immediate solution, however there are aspects to be wary of.

Hours worked and pay rates
The Working Time Regulations set out the number of hours people can work, the breaks they must have and statutory holiday provision. This is health and safety law designed so that staff are not overworked. The 48 hour ruling can be overidden with an employee’s agreement, but it must be in writing.

Traditionally overtime has attracted higher rates of pay in most industries, with the premium being set for the time of day or night and weekends or Bank Holidays. However it is not a legal requirement.

Some companies pay the normal hourly rate or offer time off in lieu (TOIL). It is a good idea to have rules about TOIL set out clearly, as if an employee accumulates too many hours it can cause havoc when they decide to take it – particularly during holiday periods.

As always national minimum wage (NMW) rules must be factored in, and pay versus hours worked must never fall below NMW rates.

Do remember that regular overtime along with on call payments, bonuses etc. all have to be factored in when calculating holiday pay.

Type of Overtime
Voluntary overtime
If there is work available, your employees may choose to accept it in order to earn more money and maybe boost their careers with new projects. You don’t have to offer it and they don’t have to accept it.

Compulsory overtime
This is when it is stated in your employment contracts that employees must perform overtime when required. You will have come to a mutual agreement with your employee over how they will be remunerated.

Further help?
Overtime can be a good solution to an acute business problem, often being less expensive than hiring additional staff. It can add an extra layer of flexibility to your workforce which enables you to meet tight deadlines for customers or get through busy periods.

If you would like help setting up well thought out overtime schemes or wish to address productivity issues, please get in touch with your local HR Dept office.

Cambridgeshire Chambers of Commerce