Many small businesses have fluctuating needs from staff, peak and off-peak periods, and less room to accommodate downtime in staff hours, and therefore need or want the flexibility to vary employees’ hours, either permanently or temporarily. But it’s not necessarily simple to do so. Here are some things you need to consider:
Think ahead
Identify from the start whether or not you may need to vary someone’s hours, and to what extent/frequency this is likely to happen. It may be that a zero hours contract is appropriate, or a contract giving a minimum number of hours weekly with overtime added. Getting your requirements clear at the beginning reduces complication later.
Contracts
If you may need to vary hours, but a zero hours contract isn’t necessary or appropriate, ensure there is a relevant clause drafted into their contract from the beginning enabling you to vary hours according to business need.
Terms and conditions
Be careful – even if you have put such a clause into an employee’s contract, that doesn’t necessarily mean you can just give the requisite notice and change hours without problem. A change will need to be reasonable, and you will also need to consider whether any proposed change to a number of employees’ hours might be indirectly discriminatory, if it disproportionately disadvantages employees from certain groups. For example if you want to exercise a clause in employees contracts allowing you to vary hours and insist everyone works variable shifts, weekends or evenings, this may disproportionately affect female staff who are more likely to have caring responsibilities.
Even if the contract gives no specified hours in terms of numbers of hours, or days/times worked, if the employee regularly works a set number of hours each week, and/or works the same days and times regularly, those hours can become their established terms and conditions, meaning varying them will not be straightforward.
Exercise flexibility to retain it
If you want to genuinely retain any flexibility of hours you have given yourself in an employment contract, exercise that flexibility regularly to avoid any particular arrangement becoming established as permanent by default over time.
Making a change to established hours
If you want to make a change to someone’s hours and these hours are either specified in their contract or have become established terms and conditions over a period of time, then changing hours will constitute a change to terms and conditions. You will need to consult about the proposed change and seek the consent of the employee/s in question. If this consent is not given, and you have good business reasons for the change, you may be able to force it through, but take advice about your circumstances first in order to ensure you protect your business from possible legal claims.
Holiday entitlement
If someone’s hours vary regularly week to week, their holiday entitlement should be accrued on the basis of the hours they’ve worked. Assuming you offer full time staff the basic statutory minimum holiday entitlement of 5.6 weeks a year, then staff with varying hours should accrue holiday at the rate of 12.07% of the hours they work.
Overtime and holiday
If someone’s hours are varying through use of overtime, recent case law means that this overtime may need to be incorporated when calculating someone’s holiday pay. You should take advice on your particular circumstances to establish whether this applies, and there are likely to be further developments in this area, but if the overtime is compulsory and/or regular, it may well need to be included.
If you would like advice on varying hours in your business, do get in touch.