Overtime: Rate Increase and Legal Calculation 2026

Calculating overtime seems simple: beyond thirty-five hours, a premium applies. In practice, most audits and labor court rulings don't turn on the rate applied, but on three points that employers rarely handle with the same rigor: tracking working time, exceeding the annual overtime allowance, and proof. This article covers the applicable rules, then these three points of failure.

What triggers an overtime hour

The legal duration of actual work is set at thirty-five hours per week. Any hour worked beyond that, at the employer's request, constitutes overtime. The count is done on a calendar-week basis, unless a working-time arrangement provides otherwise under an agreement. These rules apply regardless of the type of contract: the distinction between a permanent contract and a fixed-term contract has no effect here, as an employee on a fixed-term contract is entitled to overtime under the same conditions.

Two clarifications change many real-world situations.

First, the employer's request does not need to be in writing. Tacit agreement is enough: if the employer is aware of the hours worked and does not object, those hours become binding on them. A blanket ban on overtime in an internal memo is therefore not enough to avoid paying for it when the workload made it necessary.

Second, only actual work counts, meaning the time during which the employee is at the employer's disposal and follows their instructions without being able to attend to personal matters. Break times, unless they meet this definition, are excluded.

Premium rates

In the absence of a collective agreement, the rates are as follows:

• 25% for the first eight overtime hours of the week, i.e., from the thirty-sixth to the forty-third hour.
• 50% from the forty-fourth hour onward.

A company-level agreement or, failing that, an industry-level agreement may set a different rate. This flexibility is not unlimited: the negotiated rate cannot be lower than 10%. Where such an agreement exists, it applies, even if it is less favorable than the default statutory rates — which is why it's important to check the applicable collective bargaining agreement before doing any calculation.

The annual overtime allowance and the compensatory rest entitlement

This is the threshold most often overlooked, because it doesn't show up on a single pay stub.

In the absence of an agreement, the annual overtime allowance is 220 hours per year per employee. Below that, hours are simply paid at the premium rate. Beyond that, a mandatory compensatory rest entitlement is added on top of the premium: it amounts to 50% of the hours worked beyond the allowance in companies with twenty employees or fewer, and 100% in companies with more than twenty employees.

This entitlement is not optional for the employee: it is owed. A company with thirty employees that has an employee work ten hours beyond the allowance owes ten hours of rest, in addition to the premium pay. This is a liability that quietly builds up when no one tracks the annual total per employee. This tracking falls under payroll management, the only place where the annual total becomes truly visible before the threshold is crossed.

Replacement compensatory rest

A collective agreement may provide that payment for overtime be replaced, in whole or in part, by equivalent time off. An hour paid at a 25% premium then becomes one hour and fifteen minutes of rest.

Two points deserve attention. Replacement rest, when it fully covers the hour and its premium, removes that hour from the annual allowance count. And it is not the same as the mandatory compensatory rest entitlement mentioned above, which is added on top and replaces nothing.

Limits that cannot be exceeded

Regardless of pay, maximum durations apply:

• 10 hours per day, except where an exemption applies.
• 48 hours in a single week, an absolute ceiling.
• 44 hours on average over twelve consecutive weeks.

Exceeding these limits cannot be cured by payment: it constitutes an offense, regardless of the premium paid. Case law also holds that the mere finding of an excess over the maximum duration causes harm to the employee, without the employee having to prove it.

Time tracking: the obligation that decides disputes

The employer must keep a record of working time when employees do not work according to a posted collective schedule. This is a standalone obligation, and it is the real crux of litigation.

In case of a dispute, the burden of proof is shared. The employee must present sufficiently precise elements to allow the employer to respond — a timesheet, timestamped emails, access logs. The employer must then produce its own supporting records. Failing that, the judge rules based solely on the employee's evidence, and the outcome is predictable.

The practical consequence is clear: a company that doesn't keep a reliable record doesn't lose because the employee is right, it loses because it has nothing to counter with. A monthly record validated by the employee, dated and tamper-proof after the fact, completely changes the position. The same evidentiary logic applies to digital pay stubs, whose value in the event of a dispute depends on the demonstrable integrity of the document and its retention for the full legally required period.

The case of day-rate agreements

Executives with genuine autonomy in organizing their schedules may be covered by an annual day-rate agreement. In that case, they do not track hours and do not generate overtime.

This exclusion is fragile, and it is the subject of extensive litigation. A day-rate agreement requires an authorizing collective agreement, and a written individual agreement signed by the employee. It also requires effective monitoring of workload and an annual review meeting. Absent any one of these elements, the day-rate agreement is deprived of effect: the employee reverts to hourly tracking and can claim retroactive payment of overtime, with the corresponding premiums.

This is the point where proper documentation matters most. The individual day-rate agreement is a signed document, whose existence and date must be provable years later — just like the amendments that modify its terms, or the documents governing remote work, another arrangement where the written record determines enforceability.

Use cases

SME with no posted collective schedule. The individual time-tracking obligation applies in full. A self-reported record validated each month by the employee is the bare minimum that can be defended, and it must be retained.

Exceeding the allowance. As soon as an employee approaches the 220 annual hours, the mandatory compensatory rest entitlement becomes due on every subsequent hour. Tracking must be done annually and per employee, not monthly and in aggregate.

Day-rate executives. Check three things: the collective agreement authorizes it, the individual agreement is signed, and workload monitoring is documented. The absence of even one of these elements exposes the company to reclassification.

Frequently asked questions

Can an employer refuse to pay for hours not explicitly requested? Hardly. Tacit agreement is enough: if the employer knew about the hours worked and did not object, they are owed. A blanket prohibition does not prevent payment when the assigned workload made those hours necessary.

What rates apply? 25% for the first eight hours beyond thirty-five, 50% after that, unless a collective agreement sets other rates, which cannot go below 10%.

Can rest replace payment? Yes, if a collective agreement provides for it. The rest must be equivalent to the premium pay. It is not the same as the mandatory compensatory rest entitlement owed beyond the allowance, which is added on top.

What happens beyond 220 hours per year? The hours remain owed and paid at the premium rate, plus a mandatory compensatory rest entitlement of 50% in companies with up to twenty employees and 100% beyond that.

Is overtime tax-exempt? It benefits from a reduction in employee contributions and an income tax exemption, up to an annual cap. This cap changes over time: it must be checked for the year in question before calculating net pay.

Can a day-rate employee claim overtime? Yes, if the day-rate agreement is deprived of effect — due to the absence of an authorizing collective agreement, a signed individual agreement, or effective workload monitoring. The employee then reverts to hourly tracking, retroactively.

Key takeaways

Premium rates are the easy part of the topic, and the one that generates the fewest disputes. What actually costs money is three parallel obligations: tracking the annual allowance per employee so an invisible rest debt doesn't build up, respecting maximum durations that no payment can cure, and above all keeping a working-time record that holds up as evidence.

On this last point, what matters is not formal compliance but evidentiary standing. In a dispute, the employer who produces a dated record, validated by the employee and tamper-proof after the fact, argues over the facts. The one who produces none is at the mercy of the other side's version.