What is Compensatory Time?

wiseGEEK Writer

Compensatory time is a worker reimbursement concept that is interpreted differently by region. It has to do with the issue of overtime and how companies compensate their employees for it. When people get compensatory time, what they essentially receive is time off for having worked extra hours. This time off is frequently in lieu of receiving overtime pay. Depending on where an employee works in the world, this may be a typical compensation strategy or it can be illegal. Some people have to be given overtime pay and can’t be given time off instead.

Employees who work overtime might be given time off to compensate for the extra hours they put in.
Employees who work overtime might be given time off to compensate for the extra hours they put in.

In a normal compensatory time strategy, the person who puts in extra hours at work would then have time off that he or she would probably use right away. If full-time is described as 40 hours, the person who had worked two extra days for a total of 56 hours would then have 16 hours of compensatory time. In many instances this could be applied the next week, and the person would take two days’ off of work. For both weeks, the employee would be paid for 40 hours of work, and occasionally, there is slightly more pay involved. Usually, this levels out compensation and makes up for the hours worked by providing extra free time.

There are many places where compensatory time is not allowed. Employees meeting regular conditions like being full-time workers and not independent contractors often have to get paid overtime for any work hours that exceed a 40 hour work week. In these cases, especially in places like the US, workers are paid time and half for extra hours worked, and they usually don’t get any free time the following week. A few employers could offer free time, but it’s an unlikely scenario. Essentially, most workers have to be compensated by additional pay, not additional time off to level out the workweeks.

Employees may have different opinions on the benefits or shortfalls of compensatory time. Some really like the time off and consider that more valuable than extra pay. Other people who live in regions where overtime is awarded with time off would frankly rather have the extra money and keep working. There can also be problems if an employer can’t award the compensatory time right away. Part of the benefit of this trade-off is getting a nice break right after working extra, and if the employer doesn’t have the staff to allow employees to take that time off right away, the system isn’t working very well.

Given that compensatory time may either be usual employment practice or illegal employment practice, individuals are advised to understand their rights from a regional perspective. There may also be exceptions for certain types of workers like federal employees, contractors, part-time employees, or workers belonging to unions. Understanding specific rights to compensation is always advisable in determining if what an employer offers is fair and legal.

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