Overtime must be regulated and treated within the ambit of the law. A carelessly managed overtime work could lead to negative consequences for the organization as well as the individual workers. Some of the effects of a badly managed overtime system are:

1. Increased overhead cost and payout
The benefits of overtime work and payout should be weighed against its cost if the job could be pushed to normal working hours it would be in the best interest of the organization. Overtime pay is an additional expense that should necessarily be met by a corresponding revenue generation or productivity increase.

2. Idleness during the normal work period
Except there is a checklist or an automated system to check workers commitment at their official time, a phony employee might decide to waste time on frivolities during the official work hours only to request for overtime at the expense of the organization.

3. Fatigue and breakdown
One attendance consequences of unregulated overtime are the excess burden and stress that is placed on the staff. Rest is a necessary requirement for healthy living and when this is compromised it could lead to fatigue, shoddy performances and in some cases breakdown of the employee.

4. The rise in medical needs and bills
Following on the heels of the above point is the negative impact on medical related illnesses, absenteeism, and rise in medical calls and bills by the staff and organization. This on its own will ultimately override the benefits of overtime; hence it should be properly regulated.

LEGAL BASIS FOR OVERTIME PAYMENT

Section 13, subsection (2) of the Nigerian labor Act justifies the legality of overtime work as cited in the preceding paragraphs. Also, it should be noted that overtime work is regulated by law in order to prevent employers from forcing workers to work long hours without their consent and without compensating them adequately for such commitment.

EXEMPTION TO OVERTIME

Although not expressly stated in the Act, however, it is standard practice all over the world to exempt some categories of workers from being paid overtime allowance. This does not mean that they cannot work long hours beyond their official scheduled, such extra is seen as part of their work by reason of their position and remuneration.
This rule applies to those in managerial positions, such as managers and supervisors or anyone who direct two or more full-time workers and whose earning is above a certain benchmark.
In fact, in some countries, this will include anyone who has a determining say in the hiring and firing of a junior worker.

OVERTIME WORK PROCEDURE AND CHECKLIST

In the absence of a direct supervisor that compromises on his or her responsibility and deliberately tries to please a subordinate by granting extended work hours so that such staff could earn additional pay, it is recommended that important checklist should be in place before overtime work is granted.
Firstly, it must be asked, can this task be completed within the normal work hours? If yes, then it should be done within the stipulated time frame. If no, we should ask, can it be deferred to the next working day? If it can, then it should wait until the next day.
Secondly, before overtime work is clocked in; it must have the express approval and permission of a supervisor or staff immediate boss.
Thirdly, a specific timeline must be set for the completion of the task that has been extended to ensure that the task does not drag unnecessarily.
Lastly, a threshold must be established to determine those who are not entitled to overtime benefits and for those who are, a benchmark for the maximum overtime that can be done per month should be documented.

Continue to: COMPUTATION OF OVERTIME AND MODE OF PAYMENT

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Having established the legitimacy of overtime work, the next question is how is overtime payment determined? It is important to states that the Labour Act does not prescribe the criteria for payment other than the statement that any time worked in excess of the normal working hour should constitute overtime.
Also, citing Section 13 subsection 1 of the Nigerian Labour Act, it was pointed out how official working hour can be determined, by mutual agreement, collective bargaining and by an enactment of a wage board. This implies, therefore, that overtime pay will be determined by any of the above-mentioned procedures.

PRACTICE

The standard practice that determines the computation of overtime in Nigeria is basically through mutual agreement and collective bargaining. However, there are judgments of the National Industrial Court of Nigeria that clarifies and stressed the importance of these two factors in the determination and computation of overtime payment.
Computation
Overtime works for the purpose of payment are divided into 1) ordinary days and 2) special or non-standard work days.

ORDINARY DAYS

The ordinary days works are those that fall within the standard working days of Monday to Friday in Nigeria. Hence, work done in excess of an agreed standard time with the approval of the organization shall constitute an ordinary day overtime work which is computed as time-and-a-half. This means that every extra one hour spent shall be paid as an hour-and-a-half.
Lets take as an example:
Johns gross pay is N 45,000 per month; based on the assumption his basic salary is said N 13,500 which is 30% of his gross earning per month.
If John put in a cumulative 5 hours of overtime in the month of October 2017, Monday to Friday only, his overtime for the period will be computed as:
Basic Pay/working days in October * 1.5*5 hours
13,500/22*1.5*5 = N 4,602.27

SPECIAL DAYS

These are days that fall outside the standard working days in a week, and this will include public holidays, weekends (where the worker normal work days are Monday to Fridays), special duty for example when a worker is requested to make it work during a National strike or during his or her off-duty days.
This is computed as DOUBLE-TIME-WAGE
Taking the example of John still, his special days overtime shall be computed thus:
13,500/22*2*5 = N 6,136.36
NOTE: It is important to state here that the above criteria are the commonly used, and it has come to form the standard practice in most part of the world, however, this does not necessarily mean that organization should and cannot adopt or negotiate a higher percentage as they considered appropriate for their organization.
Thereafter, my position is based on a mostly adopted percentage and method and should not be taken as a prescription for all organization.

MODE OF PAYMENT FOR OVERTIME

Overtime Payment

Overtime is paid along the workers salary at month end. It is required to be shown as an item on the payroll and on the workers pay slip.

IS OVERTIME EARNING TAXABLE?

The Personal Income Tax (Amendment) Act, 2011 (PITA) requires that all income earned by an employee be subject to taxation, including upfront payments and other entitlement. The Act provides that except for expenses incurred by the employee in the course of duties for which the employee does not expect to make profit or gain shall be tax-free. Since overtime is an earning by the employee, is subject to taxation.

CONCLUSION

This article has provided an extensive insight into the rules and practices guiding and regulating overtime, it has looked deeply into the benefits and implication of an unregulated overtime system. Justifications have been made within the ambit of the Nigerian Labour Law to back overtime and we I have looked at measures that can be put in place at ensuring maximum productivity when overtime is done.
It is important to state in closing that overtime is a legal prescription and it must be treated as such because it carries legal consequences as we have seen from the judgment of the National Industrial Court of Nigeria.
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Start Reading from: OVERTIME WORK:THE BASES, THE NIGERIAN LABOUR LAW, COMPUTATION, AND MODE OF PAYMENT.

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