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Document updated/added on 11.06.2021

Topic: Contractual clauses

Annualised hours clause
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Annualised hours clause

Annualised hours clause

One specific type of flexible working option is where the employee works on an annualised hours basis, so our clause covers this arrangement.

How it works

Under an annualised hours arrangement, the employee’s working hours are calculated on an annual basis, rather than their hours being fixed on a weekly basis, and they then work those hours at times that you stipulate during the year. The benefit to the employee is that it gives them some flexibility around their hours. The benefit to you is that you can use the arrangement to accommodate variations in demand in your business, whilst still guaranteeing the employee a minimum amount of work (and pay) during the year. As part of the arrangement, you should therefore ensure that the employee can be required to work during key business periods, whether that is key periods of the day, week, month or year.

Drafting strategy

We’ve drafted our Annualised Hours Clause so that it constitutes amendments to the relevant clauses in our Written Statement of Employment Particulars to reflect the annualised hours working pattern. There are provisions covering hours of work, pay and holidays.

Hours of work and pay

The number of hours that the employee is required to work needs to be expressed as a figure for the whole year but excluding annual leave and bank holidays. For example, an employee who works 35 hours over five days each week is committed to working 1,820 hours a year (35 hours x 52 weeks). From that, you subtract the number of hours’ holiday to give their annual working hours, e.g. if they receive four weeks’ annual leave plus eight bank holidays, you would subtract 196 hours (7 hours x 28 days). Remember that the Working Time Regulations 1998 still apply to employees working annualised hours, in particular the provisions relating to the maximum average 48-hour working week and rest breaks/rest periods. Also, an annualised hours arrangement normally reduces the need for overtime, but it may not eliminate it. So, we’ve still kept an option in our clause for additional hours and overtime pay.

Holidays

With an annualised hours arrangement, it’s usually easier to express paid annual leave entitlement in hours rather than days. In the example given above, it would be 196 hours’ holiday, which you then need to pay when the annual leave is taken (and this is in addition to the pay for the total number of annual working hours).

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