Although a relatively small proportion of Irish organisations have introduced annualised hours pay systems to date, a number of our survey companies have moved in this direction.
One company saw it as a key condition in the development of teamwork, and introduced it following a period of intensive negotiations extending over six days. As a result, an overtime driven culture, was replaced by a situation where the team notices it when someone is missing. The motivational drivers are now felt to be more closely aligned with the needs of the organisation.
A typical example of an annualised hours structure involves the following calculation:
- Basic working year = 39 hours per week X all normal weeks worked in the year excluding holidays
- + a reserve of 400 hours.
- 200 of the reserve hours must be worked
- The other 200 are liable to be worked, but it is not planned to work them.
- Extra hours are very unlikely.
- Total annual income = basic + a new work pattern allowance reflecting past overtime / shift patterns.
- + at introduction, a declining percentage of the any difference between current gross pay and the new income.
The scheme will normally include provision for sickness, the unexpected, variations in demand and training.
The success of an annualised hours systems depends on being able to plan manpower requirements and on developing a mechanism for ensuring that target effectiveness levels are achieved. This would seem to exclude many businesses where demand is five to six week cycles, and to isolate the periods of greatest volatility. Employees are normally contracted to work 1,700 to 1,900 hours per year, and each employee’s working time, holidays, and reserve are neatly pegged up to 12 months in advance.
In the case of maintenance craftsmen, a "downtime governer" may cause a reduction in earnings where an agreed maximum level of line downtime is exceeded as a direct result of breakdown and maintenance. Such mechanisms are incorporated to ensure effectiveness targets are achieved.
An annual hours scheme can deliver a variety of benefits, including :
- reduced overtime costs.
- employees work fewer hours for similar pay.
- labour productivity rises.
- versatility – this is especially true of quiet periods when a skeleton staff must keep the show going.
- Multi-skilling, team working and self help become the order of the day.
There were companies which had considered annual hours but found it unsuited to their situation. Other companies still would probably find the concept anathema and running counter to an achievement and commitment ethic.
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