Annualised hours: What are they and who are they for?
In some workplaces, a system of annual or annualised hours can be beneficial for both employers and employees. What is annual hours working, when might it be used and what are the advantages and disadvantages?
In an annual hours system an employee works a certain number of hours over the whole year, but with a certain degree of flexibility about when those hours are worked. Normally, a period of regular hours or shifts forms the core of the arrangement, with the remaining time left unallocated and used on an 'as needed' basis.
Sometimes, the employee is paid in advance for the unallocated time, and may be called upon at short notice, perhaps to cover colleagues or according to a surge in demand.
Annualised hours are most often used for shiftworkers, but in theory they can be applied to any employee. They're most useful when dealing with big variations in demand throughout the year, and can help reduce overall working hours and overtime. In manufacturing, they are sometimes used to achieve continuous production throughout the year. Organisations that need to run 24 hours a day all year, such as hospitals and the emergency services, can also find this arrangement beneficial.
On the plus side, the system gives managers greater control over working patterns, with more potential to maximise productivity and efficiency. Employees may also benefit from longer and more regular breaks, and higher basic pay that's received in even sums as a salary.
But if employees are currently enjoying high overtime earnings, annualised hours may be a disadvantage. Managers may want to consider a lump sum payment to compensate employees for loss of overtime. Under most annual hours systems, overtime is removed and consolidated into basic pay. Employees may be required to work extra hours at short notice, which may disrupt planned leisure time, and be expected to work longer hours seasonally, including through the summer.
A successful annualised hours system depends on good design following consultation with employees and their representatives, and adequate time to prepare for its introduction.
Acas provides a wealth of information on The right to request flexible working and provides training on Flexible working issues, as well as how best to change or improve Contracts and terms and conditions.
Visit the Acas Training and Business Solutions area for more information.