IDS HR Study 861, January 2008

Annual hours

• Explains the concept of annual hours and what it means for employers and employees
• Looks at who works annual hours
• Examines the process of implementing annual hours and the importance of good employee communications
• Includes a detailed company case study and provides summaries of the annual hours schemes operating in a further 26 organisations
• Looks at seasonal working patterns adopted by four employers

More than one in 20 full-time UK employees work annual hours. Such schemes are particularly attractive to employers whose businesses are characterised by uneven demand or pronounced seasonal variations in work. By arranging working time flexibly across a 12-month period – rather than on the basis of a standard working week – organisations aim to be in a better position to match staffing levels to demand.

The annual hours total typically comprises a high proportion of basic rostered hours and a small number of flexible or reserve hours, which are built into schemes to cover any unpredicted surges in workload. Overtime is only paid in the rare event that the reserve hour allocation is completely exhausted.

Annual hours systems can be complex and time-consuming to implement, but they can maximise output and cut costs – staff are at work when the business needs them to be and not at work when demand is slack. For their part, employees receive a more stable income and, potentially, an improved work-life balance.

Drawing on the details of the annual hours schemes in place at 27 organisations, this Study examines how annual hours work in practice, including scheme design, the use of reserve hours and the associated payment systems. A detailed case study examines how annual hours was introduced at WBB Minerals.