Annualization of working time: calculation and definition

Annualization of working time : Definition

Annualization of working time is a process of organizing hours according to more or less intensive work weeks.
Thus, the working hours usually calculated per week of 35 hours, are smoothed over an annual period of twelve months.
In some cases, we speak of the modulation of hours over a shorter cycle, of six (6) months for example.

During this period of 12 consecutive months, the employee declares high weeks of high activity, and low weeks of low activity, which compensate each other.

In other words, annualization consists of varying the weekly working hours according to the peak of activity.
This mode of operation must be governed by a framework agreement in which all the parties, employer and staff representatives, give their approval.
Indeed, labor law recommends setting up an annualization agreement which specifies the operating rules and conditions of application:

º The annual hourly volume that the employee will have to accomplish within the framework of the annualization
º The weekly hours cap not to be exceeded. Conventionally, the maximum hourly volume is set at 48 hours per week, unless otherwise provided in the modulation agreement
º The breakdown of overtime hours and remuneration conditions...Payment for hours is generally noted at the end of the period
º The agreement must specify the reference period of twelve (12) consecutive months, from January to December, or other annual period.
For example, depending on the specificity of your activity, the reference period can go from June of year N, until May of year N+1.
º The conditions for taking paid leave, as well as other specific absences, such as compensatory rest, or sick leave .
Depending on the case, these absences can be deducted from the quota of annual hours.

Follow the annualization counter on a daily basis

The annualization of working time has the advantage of optimizing the organization of work according to periods of peak activity.
At the same time, the employee can maintain the same level of salary because the working hours are smoothed out so as to guarantee 35 hours per week over the year.
However, tracking annualized hours on a daily basis is a tedious task.
The fact of compiling the working hours week by week requires the involvement of the employees...To this is added the consideration of paid holidays and other unforeseeable absences, such as sick leave.
The annualization schedule must be readjusted in complete flexibility to take this type of situation into account in the daily management of employees.
In some cases, the employee can change his employment contract, changing his annual hourly volume.

Indeed, it can become gas factory, especially if you calculate the annualization indicators through excel files.

That said, there are tools for automating these time-consuming tasks which, moreover, have no real added value on the productivity of your company.
In the main menu at the top of this page, you can test our modulation tool to discover the time saving and efficiency that automating annualized hours brings.

In the field of working time modulation, not all organizations operate in the same way.
It happens that for the same company, the employment contracts are of a different nature in terms of the management of working hours.
It is common to see that some employees are subject to the annualization plan, but others to the framework contract plan with a flat rate per day.
Indeed, employment contracts can have different statuses:

º Employees with fixed-days executive status, with work time charged in days

º Employees subject to conventional overtime, beyond 35 hours.

º Employees subject to annualization with the possibility of paying hours at the end of the reference period.
This last part, which concerns annualization, has a very strong impact on the monitoring of hours on a daily basis because these must be added up over the entire period.

The key indicators in an annualization automation tool

Annualization follow-up:
(o) Via the timesheet module, the employee enters his actual hours worked.

(o) Via the annualization dashboard, the tool displays the key annualization monitoring indicators.

Remaining to work (Delta) & overtime balance:
These two indicators are complementary.
The delta corresponds to the remaining hours to work.
The overtime balance corresponds to the hours worked beyond the average weekly duration.
This balance may give rise to compensatory rest.
The employee can initiate the rest request independently.

Update during the period:
At time T, it is the balance of overtime hours that must be considered, because this is based on the hours actually worked to date.

However, at the end of the period, the annualization balance should be established = [Remaining to be worked on] - [Overtime balance].
In some cases, the Overtime Balance may be subject to payment for hours.

Retrieve hours:
Hours worked beyond the annualization quota are processed at the end of the period.
However, hours can be recovered during the period to regulate the annualization quota.

Annualization quota regulation:
Unless otherwise specified in your annualization agreement, the Recovery of hours should not be assimilated to effective working time, because it is a question of recovering hours worked beyond the contractual duration.

For example, when analyzing the formula of DELTA = Annual Quota - (Hours Achieved + Absences Effective Work)

It can be seen that if recuperation is assimilated to effective working time, this implies a deficit delta, whereas recuperation is intended to regulate the delta.

Leave and absence tracking:
The annualization dashboard offers a leave and absence monitoring module, in the context of annualization.

Consequently, even if the leave reference period is different from that of the annualization, the leave taken is determined over the annualization period.
In other words, the period of taking leave is equivalent to the period of annualization.

Pre-requisites in setting up hours:
(o) First, define the annual quota to work on each Employee file (Ex. 1607 h / year).

(o) Authorization of negative overtime => this setting allows you to highlight strong and weak weeks.

(o) Possibility of feeding the provisional schedule on the modulation of hours.
This schedule provides a benchmark on the progress of the annualization of working time, both for the employee and for the HR manager.

Annualization calculation rules

Through this paragraph we present the rules for calculating annualization from our SaaS Solution specializing in annualization.

Entering working hours:

(o) Via the timesheet module, the employee enters his actual hours worked.
(o) Via the annualization dashboard, the software displays the key indicators of working time modulation.

Remaining to work & Annualized hourly balance:

These two indicators are complementary.
Example of 35h contract without increase, over 3 weeks, quota to work = 105h.

1) Employee with high weeks:
Remaining to work = 105 - (36 + 36 +36) = -3
Hourly balance = +1 +1 +1 = +3
Interpretation:
Rest to work = -3, assumes that the company owes the employee 3 hours.
It turns out that these 3 hours are reflected in Hourly Balance.

2) Employee with low weeks:
Remaining to work = 105 - (34 + 34 +34) = 3
Hourly balance = -1 -1 -1 = -3
Interpretation:
Rest to work = 3, assumes that the employee owes the company 3 hours.
It turns out that these -3h are reflected in the hourly balance.

3) Case of high weeks with a week of sick leave:
Remaining to work = 105 - [36 + 36 +35(illness)] = -2
Hourly balance = +1 +1 +0 = +2
Interpretation:
In this case, the company owes the employee 2 hours, and this is indeed reflected in Hourly Balance

Conclusion:
At time T, the hourly balance determines the annualization balance.
NOTE-1: Depending on the agreement, any increases may apply in the calculation of overtime.
NOTE-2: The Hourly Balance may be subject to compensatory rest (recovery of hours).
Depending on your organization, the employee can initiate the recovery request independently.
However, the software allows the recovery button to be hidden, by the employee.
To do this, go to the settings of the Time tracking module.

Leave and absence tracking:

Paid leave is managed via the module dedicated to leave management.
However, the annualization dashboard offers a leave and absence monitoring module, in the context of annualization.

Consequently, even if the leave reference period is different from that of the annualization, the leave taken is determined over the annualization period.
In other words, the leave period is equivalent to the annualization period.

Prerequisites:

(o) First, define the annual quota to work on each Employee file (Ex. 1607 h / year).

(o) Annualization configuration, via the parameters module: reference period and deductible absences

(o) Authorization of negative overtime => this setting allows you to highlight strong and weak weeks.

(o) Possibility of feeding the provisional schedule of annualized hours.
This schedule of hours modulation provides a benchmark on the progress of the annualization.