What to do with overtime? Not easy!

Overtime in the Netherlands cannot be freely arranged: the general rule is that structural overtime must be reimbursed or compensated, unless you have made valid deviating agreements in the employment contract or collective labour agreement. Furthermore, as an employer, you must keep records of hours worked and rest periods. If you fail to do so, you will quickly find yourself in a difficult evidentiary position in the event of a dispute regarding overtime. Below, you can read which rules apply, what risks you face, and how to prevent overtime claims.

What exactly is overtime?

Overtime occurs when an employee works more hours than the working hours agreed upon in the employment contract. It therefore concerns hours in addition to the agreed schedule. It is important to distinguish this from the question of whether those hours must also be reimbursed or compensated: that depends on the employment contract, any applicable collective labour agreement, and the statutory framework.

The reason for many questions on this subject was a ruling by the European Court of Justice, in which it held that Member States must require employers to set up an objective, reliable, and accessible system to record employees' daily working hours. The purpose of this is to verify compliance with the rules regarding maximum working hours and minimum rest periods. In the Netherlands, the Working Hours Act already requires employers to keep track of working and rest times.

Who has to prove that overtime was worked?

In principle, the burden of proof lies with the employee claiming the overtime: he must make it plausible that he actually worked the extra hours. As an employer, you may attempt to refute that evidence. In practice, however, this position is becoming increasingly difficult for employers.

The Court of Appeal in 's-Hertogenbosch ruled on May 28, 2019, that when an employer does not maintain proper time records themselves, a detailed timesheet provided by the employee can serve as a starting point. The employer must then prove that less overtime was worked. This line aligns with European case law regarding time recording. The practical conclusion is clear: a comprehensive time recording system protects you as the employer in particular.

Why time tracking protects you

Without your own registration, you are left empty-handed when dealing with an employee's records. With reliable registration, you can substantiate claims, prevent unexpected wage garnishments afterwards, and immediately comply with your obligations under the Working Hours Act. It is therefore not an administrative burden, but a form of risk management.

When are overtime hours at the employer's expense?

The employee must not only demonstrate that he worked overtime, but also that those overtime hours at the employer's expense . After all, it is not the intention that an employer should have to bear the cost of an employee's unilateral, voluntary choice to work longer without an instruction or necessity to do so.

Nevertheless, the employer may also be obliged to compensate overtime on the grounds of reasonableness and fairness . This requires a form of consent, which may also be tacit. The court considers the practical circumstances. In managerial or senior executive positions, tacit consent to overtime is more likely, as is the case in sectors where overtime is customary. Consequently, an employer who sees overtime arising and fails to intervene may be deemed to have consented to it.

The crucial role of the employment contract

The above rules apply only insofar as the parties have not agreed otherwise. Consequently, the provisions of the employment contract take center stage. Clear agreements regarding overtime are increasingly included in a good employment contract.

For example, you can stipulate that work fluctuates throughout the year and that overtime is assessed on an annual basis rather than per day. This allows for flexible working hours and helps prevent overtime claims. You can also practical arrangements regarding overtime compensation: you can determine that overtime is included in the salary, that it is compensated separately, or agree on a specific overtime rate. Please note: not every agreement is legally binding. Read also why the importance of a good employment contract extends beyond just the overtime policy.

Please note: you cannot arrange full time off for overtime

Although you can stipulate a great deal in the employment contract, your legal freedom of action is limited. This is because collective labour agreement (CLA) provisions governing overtime often apply , and you usually cannot simply deviate from them. Therefore, always check first whether a CLA applies and what it prescribes regarding overtime and any allowances.

In addition, the statutory minimum wage plays a role. Since overtime and extra work fall under the Minimum Wage and Minimum Holiday Allowance Act, an employee may not fall below the minimum wage for all hours worked combined, including overtime, per pay period. If the wage falls below that limit due to unpaid overtime, you are, in principle, required to pay it out. Compensation in time (time-for-time) is subject to strict conditions for minimum wage earners, which may also be regulated in a collective labour agreement. Because these rules change regularly, it is advisable to have the current amounts and conditions reviewed.

Practical example: the butcher without time tracking

The magnitude of the risk posed by missing records is illustrated by a real-life example. An employee claimed over a thousand hours of overtime and meticulously recorded them in a diary. The employer had no time records of their own and merely asserted that fewer hours had been worked, without being able to substantiate this. The judge took the employee's records as the starting point and awarded a substantial sum. The lesson: without your own records, you often lose the dispute over overtime before it even properly begins.

Next steps regarding an overtime issue

• Check whether a collective labour agreement applies to your company and what it stipulates regarding overtime.
• Set up an objective and reliable system for time tracking and maintain it consistently.
• Establish clear agreements regarding overtime and its compensation in the employment contract.
• Intervene promptly if you see structural overtime developing, so that tacit consent is not assumed.
• Have existing contracts and arrangements periodically legally reviewed for currency.

Frequently asked questions about overtime

As an employer, do I always have to pay overtime?

Not always. Whether overtime must be reimbursed or compensated depends on the employment contract and any applicable collective labour agreement. However, it is a rule that an employee's total wages for all hours worked combined may not fall below the statutory minimum wage; if the wage falls below that limit as a result, you are in principle required to pay out.

Is time tracking mandatory in the Netherlands?

The Working Hours Act requires employers to keep records of working and rest times, and European case law emphasizes the need for an objective and reliable recording system. Even without a specifically prescribed system, proper record-keeping is therefore highly recommended, partly due to your evidentiary position in the event of disputes.

Who has to prove that overtime was worked?

In principle, it is the employee who claims the overtime. However, if you, as an employer, do not keep records of hours worked, a detailed timesheet from the employee can serve as the starting point, and the burden of proof effectively shifts to you.

Can I agree in the employment contract that overtime will not be compensated?

This is possible under certain conditions, but your freedom is limited. An applicable collective labour agreement may set mandatory rules, and the minimum wage constitutes a lower limit. Therefore, always have such a clause legally reviewed before relying on it.

Do overtime hours count towards the minimum wage?

Yes. Overtime and additional work fall under the Minimum Wage and Minimum Holiday Allowance Act. Per pay period, the total of all hours worked, including overtime, may not fall below the minimum wage.

Legally secure the overtime policy?

Overtime may seem like a detail, but an unclear arrangement can lead to substantial wage claims afterwards. A watertight overtime policy requires a tailored approach where the employment contract, the collective labour agreement, and statutory limits align. The specialists at MKB Juristen are happy to assist you with drafting or reviewing your employment contracts and with questions regarding employment law . Do you have an ongoing conflict or a question about your situation? View our legal assistance options or schedule a no-obligation intake so that you are not left with unanswered questions.