Employment Law SOS: annualised hours

Lean manufacturing requires a workforce that is aligned to the variations in production demand and, as a result, manufacturing is the sector which utilises annualised hours contracts more than any other sector. Under an annualised hours contract, an employee will be aware of the total number of hours that they are required to work in each year. The majority of those hours will be rostered but a minority will be unrostered and employees will be requested to work these with the agreed prior notice. The implementation of annualised hours will involve a change to contracts of employment. Any unilateral change, without prior consultation with recognised trade unions or employee representatives for up to 90 days, may result in claims for constructive or unfair dismissal, unpaid wages and a 'protective award' (an award made by a tribunal to employees who are not properly consulted) of up to one quarter of the annual payroll. Prior to making any presentation to the workforce, the employer must undertake a review of its annualised production plan to understand how it would wish the annualised hours contract (including overtime) to align with production demands – however, be aware of any obligations under the Working Time Regulations. When presenting the plan, sell the benefits for both parties. Salary costs become constant, no matter what hours are worked in any pay period, and this will reflect to some extent the consolidation of shift and production allowances. In return, employees will acknowledge the importance of providing a level of flexibility to their working hours.