Until the Court of Appeal ruled, it was common for employers to pay their employees 12.07% of their annualized hours as vacation pay. This percentage has been calculated as follows: it can be seen that both the process of drawing up an agreement for the determination and implementation of annual working hours and the day-to-day management of the system are complex. An annualized salary is a salary where the employer pays a salary for the whole year, in equal instalments each month, even if the amount paid in one month is less than normal and the amount of work done in another month is higher than usual. Workers with annual working time contracts may have long periods of time when they do not have to come to work (especially if there is a high ratio between reserve hours and hours of service). An employee`s right to vacation remains the same as for a weekly employment contract, but is expressed in hours rather than days. It is still possible to use the traditional system where employees go to their supervisors with a request for leave. Incorporate flexibility into the annual hours contract so you can change the service ratio to reserve hours as needed. Now let`s look at the example of an employee contract where each employee has to work 37 hours/week, and the default shift model is 3 x 8 hours. We have a problem if we want to maximize production. When we use weekly planning periods, we use too many primes and too many integers for simplicity. Here we may need to use 4 x 8 hours of work, plus 1 x 5 hours per person to get 37 hours. This could leave a shift unstaffed for 3 hours! We could have others occupying this time in their 5-hour shift, but that would give us an overlap of 2 hours! The fundamental problem is that we allow the personnel contract to determine our operating models – whether the personnel contract is to meet our operational needs.
Organizing employees who work on an annual basis allows for much more flexibility, but it`s more administratively complex and usually requires some IT support to effectively manage the process. Employers must call employees to work their reserve hours. They will want to ensure that all employees in annualized hours work their full number of reserve hours and will have to manage the conscription process accordingly to prevent anyone from falling through the cracks. Check out our example above on an annual basis. If we start with the 40-hour week, then the annualized hours for each employee would be 40 x 52 = 2080 hours per year (ignore leap years for simplicity and that in a normal year there are 52 weeks and one day). If annual public holidays and 5-week holidays (25 days or 200 hours) are deducted, the annual working time to be performed is 1880 (2080-200) hours. This equates to 235 8-hour shifts or 188 10-hour shifts, etc. Part-time workers would work shifts in proportion to their commitment, but leave would be properly taken into account. The first consideration is how you would call employees for their non-essential hours.
You need to explain how this will be done, by whom and, most importantly, what notification should be given. You should also decide what is reasonable if you try to call an employee when they are on a day off or if it is in the very short term. It is important to highlight the policy of annual working time, especially when it comes to remuneration, leave entitlements, sick leave and other benefits. As the name suggests, calculate these hours annually. It must correspond to the minimum annual minimum number of hours set out in the annual employment contract. For more information on annual employment contracts, visit XpertHR Some employers with permanent employees who are employed throughout the year but only work part of the year have become accustomed to paying their employees what is known as “accumulated vacation pay”. Here, an employee is paid for the vacation he would have had. Because there are long periods of time during which the employee is not at work anyway. This scenario is common in education, where the employee can only work on a semi-annual basis, or in other jobs where there is a spike in activity for a few weeks or months and then no work for a series of weeks. If an employee with annual hours of work at the end of the year has not completed all of their reserve hours, this could result in employees being paid equal installments throughout the year in overpaid. .