Annual Hour System is the term used to describe a contract which states the agreed number of hours the

employee is contracted to work through a twelve month period. The employee has to work a certain number of hours over the year but they have some flexibility about when they work. Once the annual hours of work have been agreed these hours are usually distributed in a schedule. There are sometimes core hours which the employee regularly works each week, and they work the rest of their hours flexibly or when theres extra demand at work. For example, a cold drinks manufacturer may find their business peaks during the hot summer weather. In this case the employee will be required to work more hours during the summer than during the winter. A business can introduce an annual hours system in order to maximise productivity, reduce, abolish or control overtime or to reduce the working week BENEFITS OF AN ANNUALISED HOURS SYSTEM Employers: The biggest gain for employers is that their wage costs become more stable and are easier to control Its an opportunity to maximise productivity and efficiency Improved employee attendance, motivation and flexibility Employees: Improvement of the basic salary A better better opportunity for working flexibly, especially relevant for those with caring responsibilities Shifts can be swapped with colleagues THE DISADVANTAGES Employers: Work Schemes can be very complex to set up initially, Some shifts can be difficult to cover .. Employees are paid for flexible hours, whether worked or not. This could create a potential disincentive for employees to fulfil this commitment. Employees: Most annual hours agreements specify that employees can be asked to work extra hours at short notice. This can reduce the freedom of employees to plan their free time Some workers may not be happy about the prospect of working longer shifts at peak times Domestic and social life could be affected if working hours are irregular