How To Save On Overtime
Help Your Employees Help You
By Julie Goh (29 Dec 2022)
As we are nearing the new year, this means the new amendments to the Employment Act will soon take effect. Many businesses are concerned over the increased labour cost as a result of the new amendments – shortened work hours (from 48 hours to 45 hours weekly) and increased salary threshold for overtime (from RM2,000 to RM4,000).
Instead of asking how you can cut overtime and set up restrictions and policies for overtime claims, you should be asking what you have done - to help your employees HELP YOU cut overtime.
If, as per your current work process and SOP, it takes x number of hours to complete a job – that is not going to change. It makes no sense to tell employees to reduce their overtime (i.e., reduce the number of hours worked) when the work still requires the same number of hours to complete. And when these employees cannot complete the work according to the previously set due date, they will then be deemed incapable of completing their work on time and will receive bad reviews in their appraisals. When employees are unhappy, they look for new opportunities elsewhere.
Illustration
Before EA Amendment
Employee is required to complete the job in 3 days. To do this, she works late for those 3 days. There were no overtime expenses because her salary is RM3,000. So, to the company: -
- Work is completed in 3 days
- No extra cost as the employee is not eligible for overtime
After EA Amendment
Employee is now eligible for overtime. So now the labour cost has increased.
The Company has 3 choices: -
- Option 1– everything remains status quo. The Company bears the extra expenses for overtime.
- Option 2– disallow overtime claim. Work now takes 5 days to complete. Will this disrupt your operations?
- Option 3– review and improve the process to shorten the hours required to complete the work.
As a manager or supervisor, what you should do is help the employees work efficiently. You need to review the current process and identify if there are: -
- Job duplications with another employee or department. Both are doing the same or similar work but are not sharing information
- Job repetitions. Are your employees doing the same job but in a different manner – for example, having an e-leave system but still keeping leave records in Excel?
- Too many “distractions”. Employee needs to handle a lot of requests – for example, to check leave balance, print EA forms and payslips. These might seem minute but when added together, they do take up time and disrupts concentration on the actual work.
- Too much unnecessary paperwork and filing job. Filing might seem an easy job, but it not only takes up time, but also storage space and money. Think of all the paper and file binders used. In this age and time, are all these filings still necessary? Are you still keeping the job applications from candidates you interviewed 5 or 10 years ago?
When was the last time you reviewed and/or updated your work processes to keep them current?
Just cutting overtime alone will not help the company save cost. You could end up spending more money from having to constantly replace unhappy employees or you might end up with shoddy work.
If you want to find a way to control your costs – First, do the necessary and help your employees help the company save costs by improving your work process and SOPs.
The author is an award-winning HR Sifu with Kakitangan.com, who has made significant improvements in how HR operates in multiple retail and high-volume/fast-paced companies. Complimentary consultation sessions with HR Sifu are available for all paying Kakitangan.com customers.
Subscribe to Kakitangan.com’s FB community page for more useful HR and business tips here.