Bank of Hours: what it is, how it works and changes in Labor Reform

Share on facebook
Share on twitter
Share on linkedin
Share on reddit
Share on stumbleupon
Bank of Hours: what it is, how it works and changes in Labor Reform

Table of Contents

The hour bank it is an agreement where the extra hours worked in one day are compensated with the reduction of the workload in another day.

In many companies, it is natural to have projects that demand more execution time, especially those related to deadlines. And often, employees exceed their working period to meet this type of requirement.

Faced with this scenario, companies need to know how they will compensate employees who worked late for a certain period.

This type of compensation exists and is called annual leave.

O annual leave is provided for in Consolidation of Labor Laws (CLT), in the paragraph 2 of article 59, mhas undergone some changes since the approval of the labor reform.

In force since November 11, 2017, the new law brought changes related to the way in which the annual leave it is agreed and managed by both companies and workers.

Thus, the entrepreneur and the human resources sector must be attentive to changes in legislation. And, for that, it is important to adopt measures that avoid any kind of problem in the future.

Understand what it is and how the hour bank works in the content we've prepared below.

What is an hour bank?

O annual leave it is a compensation agreement in which the excess hours worked in one day are compensated with the corresponding reduction of the workday in another moment. It is foreseen in the Consolidation of Labor Laws (CLT), in paragraph 2 of article 59.

To better understand, imagine the following situation:

An employee works nine hours from Monday to Thursday and eight hours on Friday, totaling 44 hours a week. That is, he worked four hours more a day from Monday to Thursday than legally predicted. So, he has a “balance” of 4 hours in his annual leave.

These excess hours can be compensated by reducing the workday on another day, previously agreed with the employer.

According to hour bank law, it can only be carried out by means of a collective labor agreement or convention and must be accepted or not by the employee. It is the employer's decision whether or not to implement the annual leave in the company.

The main advantage of this agreement is that the worker is able to make the overtime compensation worked and the employer does not need to pay them.

Next, we’ll explain more about how the annual leave.

How does the hour bank work?

As it is a compensation agreement, the overtime they need to be used by the worker with the workload reduced on another day. That is, all overtime are transformed into periods of rest for the worker.

Hours worked beyond the day can be compensated in different ways. The employee can enter the service later or leave early. He may also have days off the week or extend the annual vacation.

The workday limit is 10 hours daily. The worker can only do 2 overtime per day. The compensation agreement is valid for 1 year.

In the event of non-compliance with the daily overtime limit or the one-year period for settling these hours, the annual leave becomes invalid and all excess hours must be paid including the additional overtime.

There are two forms of hour bank compensation: open and closed.

At open, the employee works the extra hours, but does not know when he will be able to enjoy the time off. In compensation closed a negotiation is made between the company and the employee to define the time off.

In both cases, it is necessary that the form of compensation is provided for in the collective bargaining agreement.

It is worth mentioning that the annual leave it can be deducted from the salary when the employee has a “negative balance”, that is, when he owes hours to the company. This discount must be aligned with the point control.

Overtime or hour bank?

When carrying out an employee's absence management, the company needs to define how the time compensations will be made, especially when the employee stays at the company after his or her working hours.

This moment includes two options for the manager: creating a annual leave or make payment of overtime.

As we said earlier, the annual leave it has a compensation system through time off, that is, this positive balance is paid in the same format in hours.

Unlike the annual leave, at overtime they are paid in cash. Each hour has an additional of at least 50% over the normal hourly rate. On Sundays and holidays the increase is 100%.

As these hours are paid in cash, they also comprise labor costs such as vacations, thirteenth salary and FGTS.

If, on the one hand, the payment of overtime is beneficial for the employee who will receive an increase in his income. For the company, it can be a significant increase in spending, increasing the chances of compromising its working capital in the future.

In any case, it is important that the hour bank management be done very well, otherwise it can lead to very expensive labor lawsuits.

Next we’ll explain more about the hour bank in the new labor law, approved in 2017.

Bank of hours in labor reform

THE labor reform represents a series of changes made to UK residents labor legislation. As it has been generating controversy and diverse interpretations by jurists, businessmen, unions and workers, it is important to note what determines the law and the courts.

This reform brought important changes to the rules of union contribution, layoffs, working hours, vacations, compensation, outsourcing and even impacted the hour bank.

O bank of hours in labor reform it underwent some changes in the format of the agreement between company and employee and in the validity of excess hours.

Before labor reform, companies could only use the hour bank if there was a collective agreement, that is to say, through the participation of the Union of the category formalizing the possibility.

This hindered adherence due to bureaucracy and still caused some companies to have a annual leave informal, without the support of a collective agreement.

With the new labor reform, companies no longer need the endorsement of unions to use the annual leave. Being only necessary the individual hour bank agreement between the company and the employee.

This agreement, which does not even have to be a formal agreement, obliges companies to pay for hours that are not compensated within a up to six months with an increase of at least 50% of the hourly rate, according to the legislation.

Thus, if there is a collective agreement for the annual leave, the employee will be able to compensate his hours within the period of one year as he was before the reform.

But if there is only the individual hours compensation agreement, it should be done in up to six months.

How is the compensation regime with the changes?

The new law also makes the compensation regime established by individual agreement lawful, formalized or not. Perhaps this is the main change involving the right to annual leave.

The difference between compensation scheme it's the annual leave is that in the compensation regime the hours must be compensated within the month and the dates of extra work and the time off for compensation must be previously established.

This happens a lot with companies where the workload is 44 hours and people work nine hours from Monday to Thursday, and eight hours on Friday to avoid having to work on Saturday.

With that, in compensation for hours in labor reform, if the hours that are not compensated within the agreed period, must be paid with the addition of at least 50% additional to the hourly rate, unless there is an agreement to annual leave individual or collective.

The benefit for the worker is knowing that there will be a possibility to compensate for the overtime worked. For the employer, on the other hand, the advantage is not having to pay overtime nor its effects on other labor costs.

Does the labor reform authorize partial compensation?

The partial work regime that was previously established in working hours of up to 25 hours per week and with no possibility of overtime, had its shift changed in retirement to up to 26 hours a week, and it is possible to work up to six overtime hours or hours of up to 30 hours per week, without overtime permission.

As a result, overtime hours worked in partial hours of up to 26 hours can also be compensated until the week following annual leave it cannot be used in this regime.

So, what changes in practice?

Many companies already used the annual leave, even if they did not have the legal support for this, and others ended up not using it due to the bureaucracy necessary to have a collective agreement authorizing its use.

With the change, the trend is for more companies to use compensation and the hour bank legally, which will decrease their spending on overtime payments.

Overtime must limited to ten hours a day, according to the law. The daily increase will be a maximum of 2 (two) hours; and there is a mandatory one control of hour bank hours for each employee.

It is also important to remember that they cannot be carried out in the next semester negative overtime. That is, if the employee has more hours due than overtime, at the turn of a new semester this balance will be zeroed, starting a new bank of hours.

Of course, this can lead companies to demand more overtime from their employees, but at the same time, companies will really strive to make employees enjoy their time off within certain periods.

How to control the hour bank?

Although the legislation does not require more, having all the formalized agreements always helps the company in clarifying the doubts of the contributors payments and can still avoid labor lawsuits.

Precisely because the management of hours worked is a very important step in this process involving the annual leave.

Time control has been the subject of new strategies by companies. Among them, the one that has been most used is the use of online time tracking software.

Today, the market offers several options in systems and software that can be designed according to the needs of the company and offer more efficient management.

With uncomplicated software aimed at personnel department management, you are able to make processes simpler, more practical and intuitive.

In this way, you can safely administer and manage employees, the annual leave and payrolls.

In addition, it ensures an effective control of labor routines within your company in accordance with the legislation, even in line with the rules brought about by the recent labor reform.

Now that you know how the reform interfered with the rules that govern the hour bank and how it works, take the opportunity to get to know impacts of labor reform on remote work.

Help your employees work better

In addition to the hour bank, other corporate benefits can help improve well-being at work.

Get to know the tool HR Consultant UKy and learn how the system that implements the on-demand payment, that is, the employees of a company can anticipate part of their wages when they need it.

This tool is changing the way employees deal with their wages and generating more job satisfaction and motivation.

HR Consultant UKy can be one of the most valued benefits for those who work at your company. Talk to an expert and learn more!



Leave a Replay

Why HR Consultants UK!

HR Consultant UK Offers HR advice for local businesses in the UK. Our HR Consultants Near Me Page will help you get in contact with local HR Consultancy.

Alternatively, view our list of cities covered by HR experts.  Its time to get all your HR issues solved! 

Enjoy the Blog!

Recent Posts

Follow Us

Sign up for our Newsletter

Click edit button to change this text. Lorem ipsum dolor sit amet, consectetur adipiscing elit

Local HR Consultants

Local HR

Local HR advice with our partner’s Bark.

Finding A Recommended HR Consultant Near You Is Easy With Our Partner Bark. 100s of Top Rated Local Professionals Waiting to Help You Today. 

Book HR Consultants