A complete guide to manage banked hours

13 of October, 2022

What are banked hours?

What are banked hours? Is it the same as a recoverable paid leave? Is there specific regulation regarding this matter? The meaning of bank of hours refers to a workday in which time is distributed evenly and is adapted when there is a higher work volume. Afterwards, the overtime worked is compensated during periods of lower work demand. 

How is the hourly exchange agreement reached?

A work schedule defines the working hours for which employees are hired and the working day is established in their Collective Labor Agreement. Therefore, the legal duration of the working day is set out in their agreements or contracts, and the maximum amount of working hours per week is specified.

The Workers’ Statute determines whether such working hours are distributed on an irregular or regular basis or whether employees and their employers agree. In any case, the distribution of hours must be in writing in the contract and both parties, the employee and the employer, must be aware of this agreement. This is referred to as “bank of hours” or “recoverable paid leave”.

In what companies is it advisable to agree on a bank of hours?

Generally, this type of distribution of the working day can be convenient in all sectors. However, in fields where there is a higher seasonal peak, the pace of work and production may be different depending on the time of the year. The bank of hours makes it easier to optimize the working days.

A flextime system allows a percentage of the hours of the workday to be divided irregularly. That is to say that by using an Excel template or a tool, the hours worked and not worked throughout the months are computed, creating positive and negative hour balances.

What are the minimum requirements for establishing a bank of hours?

In principle, a maximum of 10% of the employee’s working day can be distributed and such division must be complied with between the employee’s working days. If employees are asked to work on a non-working day, this is not an irregular distribution of hours, but rather a modification of their working conditions.

Another basic condition for the implementation of the bank of hours in the company is that the maximum working day, the rest period between working days and the weekly rest period must be respected.

How to automate banked hours and simplify its management?

Suite tools such as Sesame HR make it possible to automatize the bank of hours and optimize this functionality without causing a headache to the HR team. This is a functionality where all employees have access to the information about their bank of hours. It shows the actual hours, overtime, hours compensated for days off, hours compensated financially and the total overtime balance.

This clock in/out app defines a system of rules according to the company’s collective labor agreement and takes into account night shifts, worked public holidays or hours worked outside of regular working hours. In this sense, both the company and the admin can track in detail the ”bonus” generated thanks to the set of rules established and the employees’ clock ins and outs so that they can be dully compensated.

From the employee’s point of view, having a comprehensive tool such as Sesame that makes it so easy to manage their bank of hours allows them to request the compensation method they want, avoiding tedious procedures. In this way, your employees are aware of their overtime balance at all times and can better self-manage their time.

What to do with overtime in the bank of hours?

The HR department can monitor the overtime worked or if employees have worked fewer hours and track them in the bank of hours. If there is an excess of worked hours, employees can enjoy them as days off (days in lieu) or even get them paid as overtime. On the other hand, if employees have worked fewer hours, they can compensate the company by working more hours in the coming months. Another option is that the overtime is settled at the end of the year.

When setting up employee schedules and shifts, it is important to balance employee leaves, holidays and bank of hours balances. In fact, performing this task manually is an extra workload that you can spare your HR teams by digitalizing your HR department. Working with a time management software that has this functionality means automatic bank of hours tracking. This way, your Human Resources department can focus on what is really important: taking care of your team.