What are Annualised Hours and how this Sussex-based Institute has benefitted from implementing them
Annualised hours are a working arrangement where you have a set number of hours to work over a year, with the flexibility to work those hours at different times. It’s a system that can adapt to the peaks and troughs of business demands.
With this setup, your annual hours are calculated by considering the total yearly contracted hours and subtracting entitlements like annual leave. So you might start with a gross figure of 1,950 hours in a year (based on a standard 37.5-hour week) and then deduct 20 days of annual leave and 8 bank holidays, the UK standard.
These hours can be split into core hours and flexible hours. Core hours are the times when you’re expected to be available or working, while flexible hours are reserved for busier times or when extra work is needed. For full-time and part-time employees looking for greater work-life balance, an annualised hours contract can be a good alternative to the standard nine-to-five work schedule. With this model, your working hours could vary week-by-week or month-by-month to align with the demands of the workplace.
Annualised hours vs Full-time, Part-time and Zero-hour Contracts
When comparing full-time and part-time contracts to annualised hours, the key difference lies in the predictability of hours. Full-time typically involves a consistent 35-40 hour work week, while part-time could mean any number of hours fewer than this, but still on a predictable schedule.
In contrast, zero-hour contracts offer no guaranteed hours, meaning you could work varied hours week-to-week with little to no notice. Annualised hours provide a middle ground, with guaranteed hours annually but flexibility in how the shift pattern is worked.
Talking to Kerry Coxon, Director of People and Organisational Development, Roffey Park Institute
Q: Before we dive into the nuts and bolts of annualised hours, can you tell us a little be about Roffey Park Institute?
A: Roffey Park was founded post World War II to support individuals back into the world of work and since then has continuously supported individuals and organisations to thrive in ever changing environments. To this day, our mission is rooted in breaking down barriers within workplaces, striving to create environments that are conducive to growth and success. As a charitable organisation, our research and thought leadership drives innovation which delivers measurable impacts throughout solutions globally. We collaboratively design solutions with our clients, developing organisations, teams and individuals to navigate organisational life, inspire those around them and support one another through everyday and longer term strategic change.
Q: When and why did you decide to implement Annualised Hours?
A: 1st Aug, 2021, after the COVID pandemic. When COVID hit and we had to work from home, we needed to re-engineer how we delivered our solutions, so we went digital. Initially all employees were contracted to set hours and set days in the week with their base on site, at Horsham. However, eventually we realised all employees didn’t need to be on-site. After reviewing various flexible working arrangements, we focused on home-working and annualised hours. The attraction towards annualised hours was because it enables demand-led resourcing, thus people are at work when you need them to be and not otherwise. The difference is that employees are contracted to work for a number of hours per year, not per day or week.
Another advantage is, when we work on international projects that require employees to start their day early/work for longer hours – they can do that and then take some additional hours off when business is slow. This way work feels more purposeful and our people have more flexibility.
Q: How is it implemented and tracked?
A: We allow a 2% debit/credit on hours. Overtime up to 2% is adjusted the following year, but anything beyond that is a loss. We’ve never had anyone go under their hours. Employees are encouraged to use their leave by year-end. Tracking is flexible; employees use our HR system or spreadsheets, whichever they agree with their line manager.
Q: Did you do a trial run before implementing this?
A: The only way to implement this is through consultation, as it requires changing employment contracts. When we decided to do it, we had a joint consultation for both working from home and annualised hours. After that, everyone got new contracts starting from 1st August 2021. While it was a protracted process, it paid off by maximising productivity and efficiency since people were only working when needed.
Q: In your experience, what are the benefits of annualised hours?
A: In terms of attendance, motivation, and flexibility, we saw significant improvements. Absence rates and turnover dropped drastically. Although we didn’t lose any employees due to the policy, we noticed that annualised hours could help reduce staff numbers in other overstaffed organisations. For our on-site staff, it created opportunities to trade shifts if they couldn’t be on-site as scheduled. During quieter times, our people can take off hours they have accrued during busier periods. This doesn’t come out of their annual leave, but from their annualised hours, allowing them to take a day, days or a week off, based on the hours they’ve worked. This has created a more flexible working environment and gave employees more chances to take time off when they needed it. For our staff, they still receive the same monthly salary whether they have gone over or under their hours so can still financially plan.
Q: What challenges did you face initially?
A: Thankfully, our employees were on board from the start. The main challenge was clearly explaining the concept and guiding employees on managing their hours. Trust and transparent processes are crucial. We allowed flexible tracking methods and emphasised the importance of the 2% policy. If your organisation has a ‘presenteeism’ culture, annualised hours is not for you. Trusting your employees is a prerequisite for this policy.
Q: How does it impact employee performance evaluations?
A: At Roffey Park, performance evaluations are mutual. We assess if employees meet goals and maintain a healthy work-life balance. This approach ensures our policy supports a healthy and productive workplace.
Q: What is the first step to implementing annualised hours, and how do you know if your organisation is ready?
A:
- Ensure management supports the idea.
- Decide whether to be fully flexible or include some core hours.
- Present the idea to employees, addressing any concerns.
- Draft a suitable policy and update employment contracts accordingly.
We are happy to share that, as sponsors of the Best Practice in Flexible Working category for the Gatwick Diamond Business Awards 2024, Flexibility Matters named Roffey Park Institute as the winner for their exemplary flexible working policies. We hope other businesses can take inspiration and rethink their approach to workplace culture.
As a recruitment consultancy dedicated to flexible working, we have a wealth of experience in finding and training result-oriented and career-focussed candidates that thrive in forward thinking flexible working companies. To find out how we can help you recruit flexibly feel free to contact Emma at emma@flexmatters.co.uk or on 07810 541599.
