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Introducing Annualised Hours
To tackle strategic workforce challenges, organisations with mobile workers and varying demand should ask, ‘what are annualised hours’?
Annualised hours is a rota method of calculating employees’ working time and pay over a standard year, rather than by the week. It is an established and proven way of organising field service operations to improve productivity, flexibility and employee wellbeing.
Annualised hours have been used since the mid-1970s to avoid waste, limit the use of overtime, and create more work-life balance options for mobile workers.
You can read more on the history of annualised hours here.
What are annualised hours contracts?
An annualised hours contract sets out an employee’s annual hours allowance that they must work across a year. This allowance is different to standard contracts that stipulate how many hours an individual will work on a weekly or daily basis.
Annualised hours contracts are central to adopting annualised hours. Changing an ‘hours per week’ contract to express the equivalent number of hours over a year provides much more flexibility around how and when this working time is deployed.
Instead of providing a constant ‘flat’ level of resource, an annualised hours contract ensures mobile workers’ hours can be aligned to demand and used when needed most.
What are annualised hours contracts benefits?
Annualised hours contracts offer a set of benefits for both employees and organisations with field service operations. Using annualised hours contracts effectively helps tackle important issues around productivity, job security and working conditions.
Benefits for employees:
- Stable income: Whilst total hours worked can vary week-to-week and month-to-month, annualised hours contracts pay a regular salary. This contract stabilises pay and provides more certainty, which is helpful if employees want to secure finance like a mortgage or loan.
- Predicable hours: As annualised hours contracts ensure working time is used in a more targeted way, it gives employees more visibility over when they will be required to work. Annualised hours reduce the need for short-notice working, which can impact work-life balance and make it hard for mobile workers to plan their personal lives. Annualised hours contracts also typically reduce long hours working, which can lead to fatigue and wellbeing issues.
- More choice: The increased flexibility created by annualised hours contracts enables shift pattern design which suits different demographics and work-life balance requirements. By providing more options around when to deploy contractual hours, annualised hours open up the potential to create appealing shift patterns that better suit personal commitments such as childcare.
Benefits for employers:
- Accurate resourcing: Using annualised hours contracts to match employee shift patterns with anticipated demand reduces the need for overtime and idle time while generating significant productivity benefits. Organisations with field service operations can achieve transformative financial and performance gains by introducing a well-planned and managed annualised hours system.
- Less need for an agency: Annualised hours ensure demand can be met using the total hours of a core contracted workforce. Contingent labour becomes a ‘top up’ mechanism rather than embedded in a resourcing model using annualised hours. Mobile workers on annualised hours contracts are typically more productive and provide better service levels than agency staff.
- Reduced complexity: Introducing annualised hours contracts standardises T&Cs and working practices, creating more fairness, transparency and fewer field service management issues. Annualised hours typically free up more management time to focus on other areas of performance improvement, recruitment, and retention.
How do you work out your annualised hours allowance?
Central to working out annualised hours allowance involves understanding how many productive hours employees work in a year.
A traditional working time contract might stipulate a 40-hour week and provide 25 days of paid annual leave, plus 8 days of public holidays. The organisation pays for 2,087 hours; Deducting 25 days of annual leave and 8 public holidays leaves you with 1,823 hours. However, other influences exist when working out annualised hours allowance, which may further reduce the 1,823 hours.
These can include:
- Sickness and jury service
- Parental and compassionate leave
- Training and paid breaks
Determining your mobile workers’ net hours’ is key to calculating an annualised hours allowance. Once this is complete, annualised hours contracts provide much more flexibility around how and when to deploy worker hours throughout a year. Understanding how many hours are available and the inherent flexibility creates a truly responsive annualised hours system with shift patterns ensuring the correct number of people are available when needed.
Annualised hours contracts benefit organisations with 24/7 field service operations, allowing a workforce to be much more flexible, productive, competitive and resilient.
If you’d like to understand more about the benefits of annualised hours, speak to one of Totalmobile’s shift work and rostering experts.
What does annualised pay mean?
People often approach us and ask what does annualised pay mean and what is an annualised salary? Annualised pay and an annualised salary begin with an annualised hours contract. Annualised hours contracts ensure pay is equal every month, even if the employee has worked more hours one month and less in another, throughout the year.
Do you get paid overtime on annualised hours?
It is possible for overtime pay on an annualised hours contract. However, this will depend on the contract’s terms and conditions. Alternatively, any additional hours worked will fall under the annualised hours contract and hours adjusted accordingly within the remaining months of the year.
Many organisations with field service operations incorporate a ‘Banked Hours’ system as part of annualised hours. These can use Flexi Shifts or Standby Shifts to manage demand variability without resorting to short notice overtime. Where ‘Banked Hours’ are used in an annualised hours system, employees should be given certainty over when they are working, when they are not due to work and when there is a need to be potentially flexible.
How do you manage annualised hours?
How you manage annualised hours will vary based on an individual employer and employees’ needs. However, annualised hours must be effectively planned and administered to ensure it delivers maximum benefits for your field service operations. Totalmobile’s shift work experts and rostering software will help you design, implement and manage annualised hours.
Contact us to speak to an expert in annualised hours or to demo our Organise software.
