Annual or annualised hours contracts can be beneficial for both employers and employees, but in order to be efficient, they need to be managed correctly.
When looking to use annualised hours, you first need to see if this is suitable for your business. In an annualised hours contract the hours are usually listed as the total hours that will be completed over the year, (for example 20 hours x 52 weeks = 1040 hours).
These type of contracts are mostly used in industries such as Manufacturing, hospitals and emergency departments etc. Annualised hours can be most useful to employers who have varying demands for products or services, as this can help them to roster the employees for the busiest periods of the year, so the employees are utilised to the full potential and avoid any overtime costs.
However, in some instances employee may be required to work over their contractual hours and this should be paid accordingly. These type of contracts can also be of benefit to employees as they can provide flexibility.
When setting annualised hours, you need to calculate how many hours will be rostered hours and how many will be ‘on-reserve’. In some instances, the employer will have set hours for the whole year, alternatively where it’s more unpredictable in nature, an employer should include ‘on-reserve’ hours.
It is vital to include a degree of flexibility in case the workload changes over the year. An employer needs to clearly state in the contract, terms of pay and the pay reference period, (whether 12 equal instalments or paid for the hours worked in that month, employees on these contracts are usually salaried paid) holidays as to when can these be taken and sickness notification procedure.
Employers will need to ensure that any ‘on-reserve’ hours are used up. An employer should keep track of each employee's on-reserve to ensure that all employees complete all allocated hours, as otherwise, this could lead to overpayments or disagreements between staff. An employer should make consequences known to employees who do not work up allocated hours.
As there may be long periods between when the employees are required to attend work, it is advised employers keep employees fully up to date with any news or communications in the workplace.
If you have any questions in relation to annualised hours, please contact our expert employment law advisors on the 24 Hour Advice Service on 01 855 5050
