Exemption from overtime: positions of trust and management roles

Service page: A claim against an employer for wages, pension and overtime.

You were promoted, and told that from now on you are in an “exempt” position. But every morning you must be at the office at eight, and every evening you leave at seven. This guide explains exactly what the section says, who decides in a dispute, and what a “global wage” (a fixed wage said to include overtime) means.

What does the overtime pay exemption in the Hours of Work and Rest Law say?

As a rule, the Hours of Work and Rest Law, 5711-1951 limits the working day to 8 hours and the working week to 45 hours (sections 2–3; since April 2018 an extension order has shortened the working week in the economy to 42 hours). It requires overtime pay of at least 125% of the regular wage for the first two overtime hours in a day, and at least 150% for each overtime hour after them (section 16(a)). Section 30(a) states that the Law “does not apply to the employment” of six groups of employees:

The exclusion is from the whole Law. An employee who falls into one of the groups is not entitled under the Law to overtime pay, and the Law’s provisions on the length of the working day and on pay for work during the weekly rest (section 17) do not apply to them either. Paragraphs (1)–(4) deal with certain occupations. Outside them, the question is usually whether the employee falls under paragraph (5) or paragraph (6).

What is the difference between “a management or personal trust position” and “no possibility of supervision”?

Paragraph (5) deals with the role itself: management positions, or positions “that require a special degree of personal trust”. The Law does not define these terms, and does not mention a title, a rank or a wage level. So the title “manager” in the contract or on the payslip does not decide the matter by itself; the question is what the role actually is.

Paragraph (6) deals with the working conditions: employees whose “working conditions and circumstances do not allow the employer any supervision” of their hours of work and rest. The wording of the paragraph is not satisfied by the employer not supervising in practice; it speaks of conditions that do not allow “any supervision”. Working outside the office does not decide the matter by itself. What is tested is whether the employer has the possibility of supervising the hours.

Who decides whether an employee is exempt from overtime pay?

When there is a dispute over whether an employee belongs to one of the groups, the employee, the employer, the workers’ committee at the workplace (if there is one) or a labor inspector may ask the Labor Court to decide. The court gives the workers’ committee an opportunity to be heard (section 30(b)). Since the Law does not define “management positions” or “special personal trust”, the decision is made on the facts of each role. A claim for overtime pay is filed with the Regional Labor Court (section 24(a)(1) of the Labor Court Law, 5729-1969).

Does a “global wage” exempt the employer from paying overtime?

Not by itself. Section 5 of the Wage Protection Law, 5718-1958 deals with an employee to whom the Hours of Work and Rest Law applies and whose wage was set to include payment for overtime or pay for work during the weekly rest. For such an employee, the wage set is treated as a regular wage only, unless a collective agreement approved for this purpose by the Minister of Labor provides otherwise. In other words, overtime pay is paid on top of the global wage.

Also: when the employer did not give the employee a payslip, or gave a payslip that did not include the overtime pay components, it is presumed that the employee was given an all-inclusive wage contrary to section 5, insofar as it applies to them. The wage paid is then treated as a regular wage that does not include those components, unless the employer proves otherwise (section 26B(c)).

Section 5 applies only to an employee to whom the Hours of Work and Rest Law applies. So the first question is always whether the employee falls under section 30(a). A global wage agreement alone does not put them there.

Who has to prove the working hours?

An employer must keep a working-hours register, with an ongoing record of the actual working hours, the weekly rest hours and the overtime hours (section 25(a)–(a1) of the Hours of Work and Rest Law). In a claim for overtime pay where the hours are in dispute, if the employer did not present attendance records from the register (where it is required to keep one), the burden shifts to the employer. It must prove that the employee was not available for work during the disputed hours, up to 15 overtime hours a week or 60 a month (section 26B(a)–(b) of the Wage Protection Law).

What should an employee do on finding they are not exempt from overtime pay?

1. Collect evidence of your working hours: emails, messages, entry and exit records, and anything that shows fixed hours or work beyond them.
2. Check your payslips: do they show the overtime components (section 26B(c) of the Wage Protection Law)?
3. Calculate the gap using the overtime pay rates in section 16 of the Hours of Work and Rest Law; see Overtime: calculation, rights and common traps.
4. Watch the deadlines: the limitation period for a claim that is not about land is seven years (section 5(1) of the Prescription Law); see Limitation period for wage and employment claims: what becomes time-barred and when.
5. Check the claim before you leave your job: see Wage claim against an employer.

If you are an employer and it turns out that you classified employees by mistake, it is better to put this right on your own initiative. Compensation for late payment of wages is added to wages not paid on time (section 17 of the Wage Protection Law), and the court may reduce or cancel it in the circumstances set out in section 18.

Frequently asked questions

Is a manager entitled to overtime pay?

It depends on the role, not the title. The Hours of Work and Rest Law does not apply to the employment of “employees in management positions or in positions that require a special degree of personal trust” (section 30(a)(5)), but the Law does not define these terms and does not mention a title. A manager who does not fall under section 30(a) is entitled to overtime pay under section 16. In a dispute, the Labor Court decides (section 30(b)).

What is a “position of trust” in relation to overtime?

It is the common name for paragraph (5) of section 30(a) of the Hours of Work and Rest Law: “positions that require a special degree of personal trust”. The Law does not define the phrase, so each case is examined by the actual role, and in a dispute by the decision of the Labor Court (section 30(b)).

Does a global wage include the overtime?

For an employee to whom the Hours of Work and Rest Law applies, a wage set as including payment for overtime is treated as a regular wage only, unless a collective agreement approved for this purpose by the Minister of Labor provides otherwise (section 5 of the Wage Protection Law). When the employer did not give a payslip, or gave a payslip without the overtime component, it is presumed that an all-inclusive wage was set contrary to section 5, unless the employer proves otherwise (section 26B(c)).

Is an employee who works outside the office and sets their own hours exempt from overtime?

Not necessarily. Section 30(a)(6) of the Hours of Work and Rest Law excludes employees whose “working conditions and circumstances do not allow the employer any supervision” of their hours of work and rest. The question is whether the employer has the possibility of supervising the hours, and in a dispute the Labor Court decides (section 30(b)).

How many years back can you sue for overtime pay?

The limitation period for a claim that is not about land is seven years from the day the cause of action arose (sections 5(1) and 6 of the Prescription Law). If the employer did not present attendance records from the working-hours register (where it is required to keep one), the burden of proving that the employee was not available for work during the disputed hours shifts to the employer, up to 15 overtime hours a week or 60 a month (section 26B of the Wage Protection Law).