How to Write an Overtime Policy for Your Company (with Template)

Most companies have nonexempt employees, which means they can work overtime. Therefore, companies have to regulate overtime and pay for any hours worked over the mandatory weekly amount. The overtime policy is the intern document that outlines the company's rules and procedures regarding working overtime. For some businesses, it isn't an optional document; in many cases, the labor legislation requires your business to have an overtime policy.


  • The benefits of having an overtime policy
  • What to include in the overtime policy?
  • Overtime policy template

The benefits of having an overtime policy

Optional or not, an overtime policy should exist in any company that has employees working overtime. Furthermore, the employees should be aware of it and notified each time the document is modified. The overtime policy is an official document that establishes whether an employee can work overtime, in what conditions, and how much they will be paid for the work.

The overtime policy allows you to control the labor costs and manage overtime fairly. It also helps you prevent conflicts and reduce overtime abuse. The document should be easy to understand, support equity and fair chances, and be available to anyone interested. The overtime policy has other benefits as well:

  • It establishes the ground rules of working overtime
  • It provides transparency
  • It establishes disciplinary actions for abuses and increases employees' responsibility
  • It reduces HR workflows by giving employees access to information
  • It outlines clear eligibility criteria.

What to include in the overtime policy

The overtime policy should be a comprehensive document in which the employees find answers to all their questions regarding overtime. It should be concise and easy to understand. If your employees have different native languages, make sure you translate the document and avoid any misunderstanding.

Include in your company's overtime policy the following chapters:

  • The general approach of your company over overtime – It's essential to outline from the beginning whether your company authorizes overtime or not. In some companies, overtime is mandatory, while in others, it's completely prohibited. Ensure the employees know whether they must accept working overtime, refuse it, or notify the HR department if they receive overtime proposals.
  • The eligibility criteria – Outline which categories of employees are eligible to work overtime. Exempt employees aren't allowed to work overtime. They usually have executive, administrative, or professional job duties, receive a salary and have high-level responsibilities. Check the labor legislation in your country and make sure you update the overtime policy if the legislation changes. For example, in some countries, minors aren't allowed to work overtime. In others, computer workers are considered exempt employees but may be authorized to work overtime in special conditions.
  • The authorization procedure – In companies where overtime isn't mandatory, employees may need authorization for working overtime. Explain the process of requesting approval in detail, from how to send the request to persons authorized to approve overtime. Don't forget to mention when the employee should send the request and how long the authorization procedure takes.
  • The overtime procedure – The overtime policy should include a step-by-step process for working overtime, security issues, and everything needed for a healthy work environment. The employees should understand how overtime is tracked, how to report their progress, and how often they can work overtime. The document should also outline extended working hours and procedures for approving flexible schedules.
  • Overtime limitations – Make clear all the limitations, whether imposed by law or by your company. For example, the number of overtime hours may be limited by law. Or you may want to limit the number of overtime hours to reduce costs. You may also have a rotation system that splits up overtime among employees of the same department. Some companies limit overtime over weekends or nights.
  • Payment – Employees should know how much they will be paid for overtime, the withheld taxes that come with the payment, and when they will receive the payment. Employers shall also advise employees to notify the authorities if they aren't fairly paid for overtime. Most companies use an HR software solution to track overtime and make sure employees are paid according to their worked hours.
  • Disciplinary actions – Outline in the document the corrective actions taken in case of overtime abuse, errors in tracking overtime or payment, or violations of the overtime policy of any kind. Include the disciplinary procedure, people in charge, and timelines.
  • The date and version of the document – Ensure you date the document and update it when necessary. All employees should be notified when a new version of the overtime policy appears. Also, check with the legal department that your document is compliant with labor legislation, GDPR, and other regulations available in your company.

Overtime policy template

[Date]  [Version] [Person in charge]

[Approved by] [Legal visa]

[Company name] defines "overtime" as any additional hours worked over the mandatory working schedule.

[Company name] acknowledges that employees may require working overtime to complete projects and meet deadlines. The overtime policy outlines when employees are eligible for overtime, the authorization procedure, overtime limitations, and the company's compensation procedure. In addition, the document explains the disciplinary action procedures followed in case of violation of this policy.

The eligibility criteria

All non-exempt employees, including part-time, full-time, and/or seasonal employees working for the company for more than one year, are eligible for overtime. 

An employee classifies as exempt or nonexempt according to the labor law [number/from].[details]

e.g., exempt employees – executives, employees with administrative responsibilities, minors

The authorization procedure

Each team's supervisor is responsible for determining if overtime is needed and approving overtime requests received from the team members. The requests will be sent [via email] with at least [X days] before overtime taking place. The request will include the number of hours needed, the project for which overtime is necessary, the duration of overtime, and a schedule proposal.

The approved request will be sent to Finance Department, HR Department, and Legal Department.

The overtime procedure

Overtime will take place in the same workplace as regular working hours. The employees will mark their hours in the web-based attendance system provided by the company. Overtime can be done only outside the regular working hours. The employees will send weekly reports to their supervisors describing the work done during overtime. 

Communication will be maintained through the collaborative tools used by the company.


Employees cannot work overtime for more than half of their mandatory working hours. Overtime has to be done during weekdays between 5 AM and 11 PM. An employee is allowed to request overtime one time per month with a minimum of three requests per year.


Overtime will be paid starting with the following pay cycle. Overtime will be paid using the same payment methods as for the salaries. The withheld taxes, according to law [number from section number] are [tax percentage].

Disciplinary actions

Violations of this overtime policy are subject to disciplinary action, up to and including termination. Employees suspected of violating the policy must undergo a thorough investigation. The circumstances of each violation will determine the severity of each scenario.

Unintentional violations may warrant a verbal and/or written warning.

Intentional violations may lead to suspension and/or termination.

Overtime Policy - Free Template

Download our free overtime policy template in Word format.

Overtime policy template