HR & Employment · 10 November 2021

The ultimate guide to contracted hours vs actual hours

Contracted hours vs actual hours

When it comes to contracted hours vs actual hours, you may be wondering what the difference is. There are many employees who are working significantly more or less than the number of hours shown in their employment contract who may be wondering where they stand in regards to laws around working hours.

The number of hours that an employee is contracted to work is the minimum number of hours that their employer must provide to the employee and pay them for, even if the actual number of hours that have been worked are higher or lower on any given week.

Understanding the difference

Typically, contracted hours are set out in a contract of employment issued at the start of a new role between an employer and employee. This contract will include information on how, when and where these contracted hours are to be worked, including any requirements around overtime, holiday and sick leave. During the course of doing their job, employees may find that they work more or less than their contracted hours in a given week. It’s the sum of those hours actually worked that would be referred to as ‘actual hours’.

Read on to find out more about contracted hours, why they might vary from the actual hours worked and the working hours regulations that employers and employees should be aware of. 

What are contracted hours?

Contracted hours are the agreed number of hours that an employer is contractually obliged to provide work for and pay an employee for. On the flip side, contracted hours are also the number of hours that an employee must be available for, and work in a normal working week, unless other arrangements have been made such as a shift swap with a colleague. If your employer cannot give the minimum number of hours agreed, they are required to pay you in lieu.

This number of hours is usually agreed in the employee’s contract or employment where one exists but the number of actual hours worked won’t always match the contracted hours due to holidays and sickness.

For example, if an employee’s contract of employment states they will work a 35-hour week, the employer must provide the opportunity for them to complete those hours. If they cannot, they will be in breach of the contract. Similarly, if an employee doesn’t work their full 35 hours, they could be in breach of their employment contract.

What are actual hours?

If contracted hours are the minimum number of hours that an employer is required to pay an employee, actual hours are the hours that the employee has physically worked in a given time period, regardless of the type of activities. and if the hours worked are different to any usual shift pattern that may exist.

Factors that affect the number of actual hours worked include overtime, annual leave, sick leave or other types of absences and additional workload. In regards to overtime, some companies include mandatory overtime in their contracts of employment which obligates the employer to work more hours in certain situations. Most of the time however, overtime is voluntary and is usually incentivised to promote the take up of additional hours by employees.

For example, if an employee contracted hours at 35 hours per week but 5 hours of overtime have been worked, then the actual hours worked could be 40 hours for that week and this is what the employer would need to pay the employer for.

The way actual hours are calculated and recorded will vary between employers. Some may use a clocking system, others will operate manual timesheets, but whatever time the employee has spent working for the company, this must be paid at the agreed rate set out in the contract of employment.

What about zero hours contracts?

What about zero hours contracts

The term ‘zero hours Contract’ describes a type of employment contract between an employer and employer where there is no minimum number of working hours that the employer is required to offer or pay the employee for.

In this scenario, the contract differs from a typical employment contract in that the employee will only be paid for the actual hours worked, and they are not obliged to accept any hours offered to them.

These types of contacts are common in hospitality, gigging, delivery driving, warehouse and care industries where demand for services can rise and fall. A zero-hours contract gives both employers and employees flexibility to boost or reduce their staffing levels or income at short notice.

How does holiday and sick pay affect things?

The actual hours worked in any given time period will be affected by absence or additional workload.

Absence due to sickness or annual leave will reduce the number of actual hours worked, whereas any overtime worked will increase the number of actual hours worked.

In most organisations, annual leave is counted as paid time off, so in those scenarios, the number of hours the employee is paid for wouldn’t be impacted by taking a day off.

Sick leave payments vary between employers, with some choosing to offer this benefit after a probationary period is complete for example. It’s important therefore that employees check their terms of employment as to whether they are eligible for company sick pay. If they are, then they will be paid for some or all of the time they are off due to being unwell.

In the absence of a company sick pay policy, employees are entitled to receive £96.35 per week Statutory Sick Pay (SSP) from the government if they’re too ill to work. This amount is paid by the employer for up to 28 weeks once certain criteria are met.

What does the law say about hours worked?

Employment law on hours worked

There are strict rules on the number of hours that employees can work in any given week based on their age and type of work that they are employed to do.

When working out the number of hours of overtime available or creating shift patterns for employees, it’s important that employers pay attention to the rules below and any specific guidelines relating to the industry they operate in.

Equally, employees are required to adhere to these requirements too, so if they work more than one job, it will be their responsibility to ensure that they are not overworking.

The working time regulations law states:

  • Nobody should work more than 48 hours a week on average. The average is usually calculated over 17 weeks unless they do a job not covered by the law on working hours
  • Individuals under 18 can’t work for more than 8 hours a day or 40 hours a week.
If the hours you work each week vary, you may wonder how to keep track of what your working average is. To calculate an individual’s weekly working hours you should take the total number of hours worked over a 17 week period and divide the total by 17 to provide the average hours worked.

Working more than the average

Employers can ask employees over 18 years old to work more than 48 hours on average per week but in order to do this, the employee must ‘opt out’ of the 48-hour regulations.

Employees can also refuse requests by their employer to work more than the 48-hour average, and they cannot be sacked or penalised for this.

Due to the nature of their roles, air transport jobs, lorry, bus and coach drivers and crew, river and lake transport and seafaring jobs all have their own working time laws and other industries also operate with allowed exceptions to the rules.

For full information on what the law says about maximum working hours in a week, visit gov.uk 

Exceptions & variations to working hours laws

Due to the specialised nature of some roles, their location, need to be available at short notice and manage emergency situations or being independent workers, there are some roles that are exempt or have flexibility from regular working time regulation law.

In practice, this means that workers in certain roles will have a higher number of actual hours than their contracted hours and may also exceed the recommended working week averages on occasion without penalty.


 
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