Management employees at numerous firms work significantly more time than the weekly working time set down in the company regulations would allow.
Many employers take this for granted, assuming that this is permitted by labour law without limitation and that their management employees have no claim to time off in lieu or additional salary for the additional work they do.
It is true, labour law makes provision for no claim by management employees to time off in lieu or overtime payments. However, this does not mean that, as employer, you do not run any risk in relation to management employees. Below, we outline what the risks are and how you can ring-fence them as much as possible.
Is your “management employee” truly a management employee within the meaning of the RD of 10 February 1965?
The first pitfall lies in the classification of an employee as management.
What employees carry out a management function (or occupy a position of trust) and therefore do not fall under the provisions of labour law is determined in the RD of 10 February 1965 (the RD). The RD sets out a limited list of management functions and positions of trust, the commonest of which are: managers, sub-managers, management secretaries, persons able to contract for the company with third parties, branch managers and persons in charge who exercise true authority or bear true responsibility.
It is by far not enough just to label an employee formally or contractually as “management” or as occupying a “position of trust” and to treat him or her as such. On the contrary, it must actually be apparent from the employee’s activities and duties that his or her function falls under one of the limited list of management or trust positions laid down in the RD.
The problem with the RD is that the listed functions and job descriptions are very out-dated and no longer accord with modern economic reality. The positions of “equerry”, “chief boilerman”, “head of mechanography” really are no longer current.
On the basis of an evolutionary interpretation of the functions that are listed, it would be possible to argue that certain modern positions do indeed fall under the RD’s limited list. The courts have for instance already taken the view that the following positions fall under the definition of management or trust position: chief accountant, head of ICT and head of accounting and personnel.
On the other hand, most judges are of the view that the RD must be interpreted strictly and are not always prepared to take account of economic reality. The courts have rejected the following as being management or trust positions: assistant to the finance manager, project leader (with the task of just monitoring works) and security agents employed by security firms.
If the court holds that a contractual appellation as a management employee does not accord with economic and legal reality, the employer could face a significant financial headache in the form of claims for payment of arrears of pay and overtime. Such claims can date back to the time at which the employee was wrongly classified as management. Moreover, the employment of workers outside their applicable work schedule – in so far as they carry out a management function or hold a position of trust within the meaning of the RD – can carry criminal penalties.
Does your management staff have a right to overtime pay?
For “true” management employees as listed in the RD of 10 February 1965, it is clear that they cannot lay claim to time off in lieu or overtime payments for the time they have worked over and above the usual full-time working time within the undertaking.
Less obvious is the answer to the question of whether management can claim normal pay for the additional hours worked, for the labour laws say nothing in this regard.
The issue has therefore repeatedly come up in the courts. In the majority of cases, it has been answered in the positive, albeit under two provisos.
1. The management employee has to be able to cite another legal source than labour law in order to be entitled to overtime pay, such as:
- agreement:
If it appears that a certain salary was agreed for a given weekly working time (e.g. €3,200 gross for 40 hours a week), the employer runs the risk of having to pay extra for time worked on top of the weekly working time. The existence of such agreement is generally inferred from the employment contract or work regulations.
- custom:
A management employee will be able to claim additional salary for overtime if this salary was repeatedly paid in the past or if other management employees have been recompensed for overtime.
- reasonableness:
Some courts rule that, if the manager’s pay is too low to cover the hours worked outside the normal working schedule, the employee can also claim additional pay.
2. The management employee must produce clear evidence of the extra time worked and the scope thereof.
If the management employee succeeds in this twin-pronged proof, you as employer risk having to pay him or her additional regular salary for the overtime worked.
Practical tips
To prevent your management employees being able to claim arrears of salary for overtime, we can offer the following practical tips:
a) Do not classify employees as management if, on the basis of their activities and responsibilities, it is not actually apparent that their functions fall under one of the management or trust positions laid down in the RD.
b) Avoid clauses in employment contracts or work regulations that make it appear that the agreed salary corresponds to a given weekly working time. Instead, include a clause that the salary of management already takes account of any overtime they work.
In particular, if one of your employees is promoted to a management function, it is important to adjust the employment contract as described above and accord a higher salary that takes account of any overtime working.
c) Do not maintain a time-recording system for your management employees. These details can be used to prove they have worked overtime.
d) Do not allow usage to come into being whereby additional salary is paid to management employees for overtime, since the employees concerned, and other management employees, could cite this in future to enforce additional salary payments.
