Overhang seats can arise in elections under the traditional (i.e. as it originated in Germany) mixed member proportional (MMP) system, when a party is entitled to fewer seats as a result of party votes than it has won constituencies.

How overhang seats arise

Under MMP, a party is entitled to a number of seats based on its share of the total vote. If a party is entitled to ten seats, but wins only seven constituencies, it will be awarded three list seats, bringing it up to its required number. This only works, however, if the party's seat entitlement is greater than (or equal to) the number of constituencies it won. If, for example, a party is entitled to five seats, but wins six constituencies, the sixth constituency seat is called an overhang seat.

Two mechanisms to earn many overhang seats

The two mechanisms that together increase the number of overhang seats are

1. winning many constituencies
2. decreasing the number of party votes and therefore the number of seats to which the party is proportionally entitled

In many countries, overhang seats are rare — a party that is able to win constituency seats is generally able to win a significant portion of the party vote as well. There are, however, some circumstances in which overhang seats may arise relatively easily:

• Few major parties, large number of minor parties — When there are only one or two major parties, but a relatively large number of minor parties that, combined, achieve a significant share of the total proportional vote, but fail to elect any constituency seats, the large parties often end up with overhang seats.
• A large number of constituencies compared with the total number of seats — If too many seats are used for constituencies, the remainder are less likely to ensure strict proportionality.
• Unevenly sized constituencies — Candidates that win small constituencies by a narrow margin don't generate enough votes to justify their full seats under a proportional system.
• Low turnout in some constituencies — This has the same effect as small constituencies. Furthermore, turnout and party preferences may be highly correlated, e.g. rural vs. urban areas.
• Small number of constituencies — The higher the absolute number of constituencies, the more likely it is that different reasons for overhang seats will balance out between parties. E.g., in Germany the almost sole reason for overhang seats is the fact that compensation happens at the state level instead of the federal level.
• Individual candidates with strong local followings — Sometimes, a particular politician will have strong support in their own constituency, but will belong to a party with very low support, even in their own area. The candidate will be elected based on their own qualities, but the party they belong to will not receive enough votes to justify the candidate's seat. In the case of independent candidates, this is usually guaranteed — they have no party at all, and so obviously cannot win votes under MMP's party-list proportional representation. However, some countries, such as New Zealand
  Electoral system of New Zealand
  In 1994 New Zealand officially adopted mixed member proportional representation as its electoral system for the House of Representatives after many years of first-past-the-post voting. The first MMP election was held in 1996....
  
  , have special rules dealing with independents — seats won by these candidates are exempted from the proportional system altogether.
• Regional parties — Parties based in a particular region may win a substantial number of constituency seats in that region without necessarily gaining a large share of the national vote. Parties focused on particular ethnic or religions minorities may also come under this category, particularly if seats are reserved
  Reserved political positions
  Several politico-constitutional arrangements use reserved political positions, especially when endeavoring to ensure the rights of minorities or preserving a political balance of power...
  
   for these groups.
• Tactical voting — Voters in countries such as Germany
  Germany
  Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
  
   may cast two votes and they need not be for the same party. A voter might support one party in the list vote but vote for the candidate of another party in the local vote, perhaps because the former party lacks a candidate in his or her constituency or it has a candidate but he or she has little chance of winning. Parties that win many local seats but attract a reduced list vote may receive an overhang as a result.
• Decoy parties — Party labels in the constituencies can be deliberately mismatched with those in the proportional vote in an attempt to induce tactical voting
  Tactical voting
  In voting systems, tactical voting occurs, in elections with more than two viable candidates, when a voter supports a candidate other than his or her sincere preference in order to prevent an undesirable outcome.It has been shown by the Gibbard-Satterthwaite theorem that any voting method which is...
  
  . In Italy in 2001, two lists won a majority of the total number of seats, despite winning less than 50% of the proportional vote. While Italy's electoral system like Scotland's and Wales's was not a type of MMP in which overhangs could occur (the two systems are intended to be only partly compensatory forms of MMP so that proportional allocation is only applied to list seats), what happened could apply to MMP as described in this article.

Dealing with overhang seats

Overhang seats are dealt with in different ways by different systems. The three main methods are:

1. Allow the overhang — A party is allowed to keep any overhang seats it wins, but other parties are still awarded the same number of seats that they are entitled to. This means that a party with overhang seats has more seats than its entitlement. Other parties may be given additional list seats (sometimes called "balance seats") in order that they are not disadvantaged. This preserves the same ratio between parties as was established in the election. It also increases the size of the legislature, as overhang seats are added, and there may also be extra list seats added to counteract them. This system is used in the German Bundestag
   Bundestag
   The Bundestag is a federal legislative body in Germany. In practice Germany is governed by a bicameral legislature, of which the Bundestag serves as the lower house and the Bundesrat the upper house. The Bundestag is established by the German Basic Law of 1949, as the successor to the earlier...
   
    (without "balance seats") and the National Assembly of Venezuela
   National Assembly of Venezuela
   The National Assembly is the legislative branch of the Venezuelan government. It is a unicameral body made up of a variable number of members, who are elected by "universal, direct, personal, and secret" vote partly by direct election in state-based voting districts, and partly on a state-based...
   
   . The New Zealand Parliament uses this system, and two extra list seats were added in the 2008 election
   New Zealand general election, 2008
   The 2008 New Zealand general election was held on 8 November 2008 to determine the composition of the 49th New Zealand parliament. The conservative National Party, headed by its Parliamentary leader John Key, won a plurality of votes and seats, ending 9 years of government dominated by the social...
   
   . The number of extra seats that may be created is sometimes limited to avoid an excessive increase in the size of the assembly, which approaches the second option:
2. Take the number of additional list seats off from the other parties' proportional entitlement — A party is allowed to keep any overhang seats it wins, and the corresponding number of list seats allocated to other parties is eliminated to maintain the number of assembly seats. This means that a party with overhang seats has more seats than its entitlement, and other parties have fewer. This approach is used in the Chamber of Deputies of Bolivia and the National Assembly of Lesotho
   National Assembly of Lesotho
   The National Assembly of Lesotho is the lower chamber of the country's bicameral Parliament.The current National Assembly, formed following elections held on 17 February 2007, has a total of 120 members. 80 members are elected in single member constituencies using the simple majority system...
   
   , and was recently recommended by the Ontario Citizens' Assembly on Electoral Reform for adoption by the Legislative Assembly of Ontario
   Legislative Assembly of Ontario
   The Legislative Assembly of Ontario , is the legislature of the Canadian province of Ontario, and is the second largest provincial legislature of Canada...
   
   . While for the first two additional list seats are simply denied to parties, in the last case a fairer procedure was proposed of subtracting the constituency seats won by parties with overhang seats from the total number of seats and recalculating the quota (the largest remainder method
   Largest remainder method
   The largest remainder method is one way of allocating seats proportionally for representative assemblies with party list voting systems...
   
   was also recommended) to proportionally redistribute the list seats to the other parties.
3. Non-awarding of overhang seats — A party is not allowed to keep any overhang seats it wins, with its number of seats actually being reduced until it fits the party's entitlement. This method raises the question of which constituency seats the party is not allowed to keep. After that is determined, it would then have to be decided who, if any, will represent these constituencies.