Pros and cons of working overtime for employees and employers

“Time is money, especially overtime.” Larry Wall

There is a lot of preconception that working overtime is something extremely negative. It’s popularly seen as a form of abuse done by the employer against the employee.

But have you given the change to the other way of thinking? Overtime does not have to be bad if the employee desires it and if the business adequately compensates them for the work.

It’s true. People usually do it because they have to: due to poor time management, unrealistic expectations, or workforce deficit. But it can also be different. People are choosing to do it to gain flexibility or to pump up their income. Therefore, if the overtime is not imposed by the employer abusively, it can turn into a win-win situation.

In the following lines, we will cover all you need to know about this topic: what qualifies as overtime, the pros and cons of working overtime for both parties, when it becomes bad for business, and how managers can control overtime.

 Table of contents

  • What is overtime?
  • What are the causes of overtime work?
  • Pros and Cons of working overtime
  • Why can overtime be bad for business?
  • How to deal with working overtime?

What is the meaning of working overtime?

Working overtime is explained as working any additional hours that surpass the usual scheduled working time, meaning more than the 40 hours week limit. Every country has its legislation regarding this topic, and the main objective is to prevent employers from forcing their employees to work excessively long hours.

It’s worth mentioning that in Europe, the European Union's highest court ruled (in May 2019) that all employers must track the time and attendance of their employees.

If we look over to the United States, overtime compensation is set at a rate of at least 1.5 times the employee's regular pay rate, also known as "time and a half."

 

What are the causes of overtime work?

Among the most important causes that cause employees to work overtime in business of any size, we can mention the following arguments: 

  • Poor time management of project estimation
  • Insufficient workforce
  • Unrealistic expectations coming from either the manager or the client
  • Disruption in communication
  • Too many emails to keep up with
  • Toxic company culture and atmosphere.

All these are images of poor management skills and poor leadership. Letting these causes escalate will bring resentment from the employees, lack of motivation, lack of engagement, and mistrust.

 

Pros and Cons of working overtime

Working overtime brings both advantages and disadvantages. Let’s look in more detail at effects such as pay, career, or productivity on the positive side, and drawbacks such as health, stress, fatigue, and work-life balance. 

Advantages

  • The employee receives greater compensation. Usually, the employer has to pay for the overtime (more than the usual working hour), so this is the obvious advantage for an employee who does overtime. Cash comes in quickly. Another way to go is to offer more days off in exchange. Some may appreciate this way of doing things more. So it’s all about autonomy and flexibility. 
  • Overtime can be a career booster. People who work overtime are usually seen as hard-working and valued more for the flexibility to work late hours. Plus, working more hours can be an opportunity to gain more experience and develop new skills.
  • The company’s productivity will increase. There are so many industries where deadlines are crucial, and a manager will care about them being met, regardless of whether employees work on those projects for 1 day or 10 days. So an employee doing overtime with this purpose, it’s basically the most important benefit for the employer.
  • An employee who is inclined to do overtime can boost his value in the company, secure their position, and enhance performance.


Disadvantages

  • Spending more time on a chair (provided you work in an office) is a negative point for you, speaking about physical health. It may seem one extra hour is not much, but 2,3 per week will add up over and over and will end up hurting you.
  • Stress and fatigue can get to you, and even with burnout, your mental health will suffer. Studies have shown that people working long hours are more prone to depression and anxiety.
  • A poor work-life balance. You only have 24 hours a day and so much to accomplish - time for sleep, commuting, picking up the kids from school, working overtime will surely cut out from time spent with your family or enjoying a hobby. You will eventually become demotivated since you can’t prioritize your personal life.

A study by Industrial and Labor Relations, Institute for Workplace Studies- Cornell University shows that approximately “10% of US employees who work 50 to 60 hours per week report severe work-family conflicts.” The same report highlights that “the number jumps to 30% for those who work more than 60 hours. The divorce rate also increases as weekly hours increase. These factors contribute in turn to mental health and alcohol problems.”

 

4. Why can overtime be bad for business?

Find below three reasons why overtime is bad for business:

You could be paying more money for less productivity since many employees are not that productive after a specific time at night, and overtime could cost more than regular working hours.

Excessive overtime can very well lead to a high level of absenteeism due to fatigue or poor health.

If we are talking about constant overtime, this will generate chronic stress and eventually burnout. Having employees reach that level will lead to higher turnover rates.

Overtime is bad for business when it is too much, done too often, and as a result, employees can never make plans with their loved ones.

 

5. How to deal with working overtime?

Managing overtime is extremely important, as it can increase the costs within your business unplanned and cause disfunction within the overall finances, plus it can hurt some of your best people. Find two ways that will help to approach this challenge:  

  • First of all, TRACK the time. Every employee has to do this religiously. Just clock in at the beginning of every day. This way, if overtime is needed in the afternoon, there is a record, and the employer will know that he has to pay the extra hours. Transparency is key. Using a digital tool is the way to go in 2022. Forget about spreadsheets. Automatic time-tracking apps are ideal for companies who want accurate overtime records with the slightest effort. 
  • Secondly, preserve your culture as an employer. Make sure you show your team that you do not encourage staying up late working as a rule. Communicate better with your employees. They need to know precisely what is expected of them and what deadlines need to be absolutely met. Hold weekly meetings to make sure they have the power to manage their tasks within regular work hours.
  • Thirdly,  encourage flexible work. It’s a perfect way to increase productivity and boost employee well-being. So start accepting work-from-home more often and allow them flexible schedules.


Overall, while overtime can be beneficial for both employer and employee, it has some downsides, and every company should balance the pros and cons. But always make sure you avoid imposing this on your employees and offer proper compensation in return.