Last updated on January 29, 2025
Having to work overtime or on holiday is already frustrating enough. Can you imagine not being fairly compensated for it?
Even the company’s hardest and most ambitious employees appreciate having enough time for themselves and their loved ones. As an employer, if you put this theory too many times on a test, one day, you might be unpleasantly surprised.
Making your employees feel appreciated for the time they put into your business is a key factor in advancing your business.
In this blog, we will clarify what holiday premium pay and overtime pay are, some main differences, and how you can use a leave management tool to help you organize certain aspects of it.
Holiday Premium Pay
What is Holiday Premium Pay?
Holiday premium pay is the extra pay companies give employees for regular, non-overtime work on a holiday.
It is not mandatory in all countries, nor do their labor laws consequently regulate it. Consequently, the “rules” regarding the holiday premium pay usually depend on the company’s leave policy, your contact details, or a mutual agreement.
How to Compensate Your Employee For Working On Holidays?
Holiday premium pay is often referred to as “double time” for its most common type of compensation. Namely, it usually equals an employee’s rate of basic pay. Therefore, for every hour an employee works on a holiday, you add one holiday premium hour.
Additionally, holiday premium pay can be compensated in the form of PTO. Employees who have worked on a holiday can request paid leave on a weekday of their choice. This type of PTO is called Time Off in Lieu, and it’s considered a good practice adopted by many companies. Namely, this way, companies give their employees a paid day off to recuperate and spend some time with their loved ones, something employees would have done on a holiday if they weren’t required to work.
Info To Keep In Mind
Ideally, working on a holiday should be agreed upon in advance and regulated by your work contract. In that case, employees must treat it as a regular work day when it comes to sick days or time-off requests. Suppose an employee is expected to work but cannot due to illness, unexpected life situation, or simply wishes to take time off in that period. In that case, they should submit a regular leave request to their HR for approval.
If you have doubts about your holiday premium pay or were asked to work on a holiday without knowing about it. In that case, it’s best to consult your HR and the details of your contract before making any decisions.
Overtime Pay
What is Overtime Pay?
Overtime Pay is the extra pay companies give their employees for working additional hours after their regular shift hours.
How to Compensate Your Employee For Working Overtime?
Just like holiday premium pay, it is not regulated in all countries, and it greatly depends on the labor laws of the country in question, type of work, company policy, how an employee is compensated, etc. However, if regulated, it’s usually not paid less than time and one-half the employee’s regular pay rates.
Like holiday premium pay, an employee and their employer can agree to take paid time off instead as compensation for overtime. In that case, it’s a good practice to convert overtime hours at a rate of one and one-half hours of time off for each hour worked. Simply put, you will get more paid-time-off hours for fewer hours of overtime work.
Info To Keep In Mind
The best way to know if you’re eligible to be compensated for overtime hours is to consult your country’s labor laws and check how those laws apply to your situation in particular. If that’s too complicated to understand, you can always contact a labor law professional for additional explanation.
Whatever the situation is, it’s always good, if possible, to have a written agreement or proof that you consented to stay after your work hours to cover specific tasks. If doing overtime is a matter of emergency, or something comes up toward the end of your shift, let your HR and management know as soon as possible. This way, you will avoid misunderstandings and a potential lack of transparency in these scenarios.
How Can Leave Management Software Help?
Vacation Tracker has the amazing benefit of fully customizing your employees’ profiles and easily adjusting to different countries’ leave laws.
How does that help?
Let’s say an employee wants to put their overtime or holiday premium pay toward their PTO. You can add those hours or days in just a few clicks to the employee’s profile without disrupting your company’s leave policy for other team members. Furthermore, thanks to its detailed reporting system, there won’t be any misunderstanding regarding different types of leaves at the end of the year.
Furthermore, if you hire global talent, Vacation Tracker allows you to import all religious and public holidays for each country in which your company has an office. Consequently, Vacation Tracker will remind you of the upcoming holidays in advance so that you can ensure all holiday shifts are covered on time if that’s what your business model requires. At the end of the year, you will also have a clear report on who worked when and why.
Manage leave across all your locations
Leave policies and public holidays for every office, state or country, in Microsoft Teams, Slack or Google Workspace.
Summary
Time is the only thing that cannot be earned back. Hence, it’s the most valuable thing someone could give you and your business.
If you show your appreciation and don’t take it for granted, your employees will never mind doing that extra task that might help your business advance better and faster.
Jelena Cerovic
Jelena turned her love for storytelling and the written word into a full-time job as a B2B content writer and copywriter in the SaaS industry. She reads, dances, and explores new places in her hometown and beyond in her spare time.
