Dealing with increase to employee’s working hours

If you agree to a part-time employee permanently increasing their hours of work, you must ensure that you properly address any changes to their employment terms which are consequent on that increase. But what do you need to do?  Pamela Singh keeps you fully informed.

A written confirmation of increase
Sometimes, part-time staff may ask if they can increase their working hours. But it’s entirely up to you whether you wish to consent to a request of this kind. They could use a statutory flexible working request to apply to increase their hours, as the relevant legislation isn’t limited just to hours reductions. But they are unlikely to do this as they probably won’t view their request as being one for flexible working. Assuming that you are willing to consent to their request, you should confirm your agreement in writing.

Issuing a letter confirming the hours increase will also ensure you comply with the Employment Rights Act. This requires you to provide a written statement of change where any change is made to an employee’s written statement of employment particulars. This must be given no later than one month after the change in question.

Impact on salary and benefits
When an employee’s hours of work increase, so will their annual salary if they are a salaried worker. This should rise proportionately. If they are on an hourly pay rate, that would stay the same. You should also adjust any other benefits that are tied to working hours or salary, such as an annual bonus, pension scheme contributions, life assurance and so on.

You should check if the new hours affect how any overtime pay is calculated, e.g. if overtime rates only apply once an employee has worked full-time hours.

Increasing annual leave
One of the key benefits that needs to be recalculated is annual leave. Any annual leave that has already accrued as at the date of the hours change doesn’t need to be recalculated retrospectively to take account of the increased hours of work. However, future annual leave entitlement from that point must be recalculated to reflect the increased hours.

The employee’s annual leave should be calculated pro rata for each period separately and then the totals combined.

EXAMPLE
Michael increases his working hours with effect from 1 July from 21 hours to 35 hours per week (his employer’s full-time hours). His entitlement is to 5.6 weeks annual leave and his holiday year is the calendar year. When he was part time, his leave entitlement was 16.8 days. Now that he’s full time, his leave entitlement will rise to 28 days and he will get this full amount from the start of the next holiday year. For the current holiday year, his leave entitlement must be adjusted from the point his hours increased. As this is exactly half-way through the holiday year, it means he will have accrued 8.4 days before that point and he will accrue 14 days after that point, totalling 22.4 days. His employer can round this up to 22.5 days but does not have to do so.

If the employee has already taken any annual leave, deduct that from the total adjusted leave entitlement.

You can apply this calculation to bank holidays too, if those are part of annual leave entitlement.

IN SUMMARY
In addition to changes to salary, bonus, pension contributions and so on, you will need to recalculate annual leave entitlement. This should be recalculated to reflect the increased hours of work from the point of increase, but you don’t have to retrospectively recalculate annual leave that accrued before the point of increase. You should confirm all changes in writing.

Contact the JRW Hogg & Thorburn team to discuss this further and any other related questions you may have.