Flexible employment contracts with banking of hours
The Workers’ Statute contemplates the possibility of structuring an irregular distribution of working hours in cases provided for in the applicable collective bargaining agreement or under an agreement between workers’ representatives and the company.
However, in reality, the irregular distribution of working hours does not provide the necessary flexibility often required in multiple business environments.
Full-time contracts, be they indefinite-term or temporary agreements, often prevent the adapting of contracted services to actual market demand. Therefore, in order to deal with greater workloads at peak times, the only solution under such contracts is overtime. However, overtime has a number of drawbacks, such as the 80-hour annual maximum, the costly nature of overtime due to the Social Security contribution regime and the fact that overtime depends on the willingness of the worker, as it cannot be imposed by the employer.
In addition, at times of less work, either due to a decline in orders received, a decrease in sales volume or simply because there is less work, indefinite-term contracts can force employers to bear the additional costs of non-productive hours, without flexibility mechanisms that fully solve the problem under conditions of legal certainty
Perhaps the habit of using standard contracts has prevented flexible employment contracts with the banking of hours from receiving the attention they deserve. Article 12 of the Workers’ Statute allows employers to hire workers on a part-time basis –for an indefinite or temporary term – with an “additional hours agreement”, under which the employer can demand more hours’ work when required, provided a minimum of 10 hours per week has been contracted, which is calculated on an annual basis.
The advantage lies not only in the fact that the employer decides whether or not the hours are to be worked, but also that the mandatory banking of hours can reach up to 30% of ordinary working hours under the contract, provided the collective bargaining agreement does not state otherwise. In addition to this 30%, employers can offer workers up to 15% more hours if their part-time contract is indefinite, although in this case, the worker voluntarily decides whether or not to work the hours and can refuse to do so. Furthermore, the hours are not considered as overtime, meaning that the cost to the employer is the same as that of ordinary working hours.
If the percentages are added, employers can increase a part-time employee’s hours by up to 45%, turning a 25-hour per week contract into 36-hours, at the employer’s request. Moreover, companies with a facilitating collective bargaining agreement, can increase the 45% maximum to 90% (60% mandatory additional hours plus 30% voluntary additional hours) meaning that 38 hours can be worked under a part-time contract of 20 hours per week at the employer’s request.
With no further restrictions than compliance with statutory prior notice and the daily, weekly and annual rest period regulations set forth in the Workers’ Statute, employers have at their disposal a truly flexible tool to deal with peak business times and adapt their employees’ working hours to times of reduced workloads.
Garrigues Department of Labor and Employment Law
